Opinion of the Advocate General — ECLI:EU:C:2021:764
Date: 2021-09-23
Language of the case: German
Subject matter: Environment;Pollution
Procedure: Reference for a preliminary ruling
Origin: Germany

Summary C-165/20 — 1 
Case C-165/20 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged: 
16 April 2020 
Referring court: 
Verwaltungsgericht Berlin (Germany) 
Date of the decision to refer: 
30 March 2020 
Applicant: 
ET, as insolvency administrator of Air Berlin PLC & Co. 
Luftverkehrs KG (AB KG) 
Defendant: 
Federal Republic of Germany 
  
Subject matter of the main proceedings 
Action for annulment of a decision on the allocation of aviation allowances 
Subject matter and legal basis of the reference 
Interpretation of EU law, specifically provisions of Directives 2003/87/EC and 
2008/101/EC and Regulation (EU) No 2013/389; Article 267 TFEU 
Questions referred 
1. Having regard to recital 20 of Directive 2008/101/EC, are Directive 
2003/87/EC and Directive 2008/101/EC to be interpreted as precluding the 
annulment of the free allocation of aviation allowances to an aircraft operator for 
the years 2018 to 2020 if the allocation for the years 2013 to 2020 has been made 
and the aircraft operator ceased its aviation activities in 2017 due to insolvency? 
EN 
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Is Article 3f(1) of Directive 2003/87/EC to be interpreted as meaning that the 
annulment of the allocation decision after aviation activities have been ceased due 
to insolvency is dependent on whether there has been a continuation of the 
aviation activities by other air transport operators? Is Article 3f(1) of Directive 
2003/87/EC to be interpreted as meaning that there has been a continuation of 
aviation activities if landing rights at so-called coordinated airports (slots) have 
been sold in part (for the insolvent air carrier’s short- and medium-haul 
operations) to three other air transport operators? 
2. If Question 1 is answered in the affirmative: 
Are the provisions in Article 10(5), Article 29, Article 55(1)(a) and (3) and 
Article 56 of Regulation No 389/2013 (Registry Regulation 2013) compatible 
with Directive 2003/87/EC and Directive 2008/101/EC and valid if they preclude, 
in the event that the air transport operator has ceased flight operations due to 
insolvency, the issuing of free aviation allowances that have been allocated but 
not yet issued? 
3. If Question 1 is answered in the negative: 
Are Directives 2003/87/EC and 2008/101/EC to be interpreted as meaning that an 
annulment of the decision on the free allocation of aviation allowances is 
mandatory under EU law? 
4. In the event that Question 1 is answered in the affirmative and in the event 
that Question 3 is answered in the negative: 
Are Article 3c(3a), Article 28a(1) and (2) and Article 28b(2) of Directive 
2003/87/EC, as amended by Directive (EU) 2018/410, to be interpreted as 
meaning that, for aircraft operators, the third trading period does not end at the 
end of 2020, but rather continues until 2023? 
5. If Question 4 is answered in the negative: 
Can entitlements to a further free allocation of emission allowances for aircraft 
operators for the third trading period be met after the end of the third trading 
period with allowances of the fourth trading period where the existence of the 
allowance entitlement is established by a court only after expiry of the third 
trading period, or do allowance entitlements that have not yet been met lapse on 
expiry of the third trading period? 
Provisions of EU law cited 
Directive 2003/87/EC of the European Parliament and of the Council of 
13 October 2003 establishing a scheme for greenhouse gas emission allowance 
trading within the Community and amending Council Directive 96/61/EC, as 
amended by Directive 2009/29/EC of the European Parliament and of the Council 
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of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the 
greenhouse gas emission allowance trading scheme of the Community, 
in particular Article 10a(19) and (20) of Directive 2003/87 as amended by 
Decision (EU) 2015/1814 of the European Parliament and of the Council of 
6 October 2015 
Article 10a(19) and (20) of Directive 2003/87/EC as amended by Directive (EU) 
2018/410 of the European Parliament and of the Council of 14 March 2018, 
Article 3c(1), (2) and (3a), Article 3f(1) and (8), Article 28a(1), (2) and (4) of 
Directive 2003/87 as amended by Directive 2018/410, 
Article 10, point 5, Article 29, Article 55(1)(a) and Article 56(3) of Commission 
Regulation (EU) No 389/2013 of 2 May 2013 establishing a Union Registry 
Decision 377/2013/EU of 24 April 2013, Regulations (EU) No 421/2014 of 
16 April 2014 and (EU) 2017/2392 of 29 December 2017 
Articles 107 and 119 TFEU, Articles 17 and 20 of the Charter of Fundamental 
Rights of the European Union 
Directive 2008/101/EC of the European Parliament and of the Council of 
19 November 2008 amending Directive 2003/87/EC so as to include aviation 
activities in the scheme for greenhouse gas emission allowance trading within the 
Community, recital 20 
Provisions of national law cited 
Gesetz über den Handel mit Berechtigungen zur Emission von Treibhausgasen 
(Law on greenhouse gas emission allowance trading, ‘the TEHG’), 
Paragraph 2(6), Paragraph 9(6), Paragraph 11 (in the version as amended by the 
Law of 15 July 2013) and Paragraph 11(1) and (6) (in the version as amended by 
the Law of 18 January 2019), Paragraph 30 
Verordnung über die Zuteilung von Treibhausgas-Emissionsberechtigungen in der 
Handelsperiode 2013 bis 2020 (Regulation on the allocation of greenhouse gas 
emissions allowances in the 2013 to 2020 trading period, ‘the ZuV 2020’), 
Verwaltungsverfahrensgesetz (Law on administrative procedure, ‘the VwVfG’), 
Paragraphs 48, 49 
Brief summary of the facts and procedure 
1 Air Berlin PLC & Co. Luftverkehrs KG (AB KG) (‘Air Berlin’) was a commercial 
aircraft operator until into the second half of 2017 and was subject to the 
emissions trading obligation. By decision of 12 December 2011, the Deutsche 
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Emissionshandelsstelle (German Emissions Trading Authority) allocated a total of 
28 759 739 aviation allowances to Air Berlin for the 2012 and 2013-2020 
allocation periods. A total of 3 174 922 aviation allowances per year were 
allocated for the years 2013-2020. By decision of 15 January 2015, the German 
Emissions Trading Authority partly withdrew the allocation decision of 
12 December 2011 due to the suspension, introduced by Regulation (EU) 
No 421/2014, of the inclusion of the international flights referred to in that 
regulation in the emissions trading obligation for the years 2013-2016 and set the 
allocation at 18 779 668 aviation allowances. That withdrawal decision is final. 
2 On 15 August 2017, Air Berlin filed a request for insolvency proceedings to be 
opened in relation to its own assets. The competent insolvency court ordered a 
preliminary self-administration (‘vorläufige Eigenverwaltung’) of Air Berlin. On 
28 October 2017, Air Berlin officially ceased flight operations. The main 
insolvency proceedings were opened by order of the insolvency court of 
1 November 2017. ET was appointed as the insolvency administrator on 
16 January 2018. 
3 On 28 February 2018, the German Emissions Trading Authority issued a five-
point decision concerning ET in his capacity as insolvency administrator. In 
point 1, it partly withdrew the decision of 12 December 2011 in the form of the 
withdrawal decision of 15 January 2015 and adjusted the allocation for the years 
2013-2020 to 12 159 960 allowances. In point 2, it partly withdrew the allocation 
for the 2013-2020 allocation period to the extent that it exceeds 7 599 975 aviation 
allowances after having deducted the aviation allowances allocated for the 2012 
allocation period. It was stated that the adjusted allocation for the years 2013-2017 
had already been issued in full, while no allocation had been issued for the years 
2018-2020. 
4 The reasoning given was that the withdrawal in point 1 resulted from the 
continuation of the suspension of the inclusion of certain international flights in 
the surrender obligation by Regulation (EU) 2017/2392 for the years 2017-2020. 
The withdrawal in point 2 resulted from the fact that, according to its own 
statements, Air Berlin ceased flight operations on 28 October 2017 after 
insolvency proceedings had been opened. The EU operating licence expired on 
1 February 2018. 
5 The opposition filed against the decision of 28 February 2018 was rejected by the 
German Emissions Trading Authority by opposition decision of 19 June 2018. By 
his action, ET essentially challenges point 2 of the decision of 28 February 2018 
in the form of the opposition decision. 
Principal arguments of the parties to the main proceedings 
6 The applicant takes the view that the partial withdrawal in point 2 of the decision 
could not be based on Paragraphs 48 and 49 VwVfG (withdrawal of an unlawful 
administrative act or revocation of a lawful administrative act). The reason for this 
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was that neither Paragraph 11 TEHG nor the other provisions of the TEHG 
contained a provision on the annulment of a decision allocating allowances to an 
aircraft operator once it had been taken. The intention of the European Union 
legislature also militated against an annulment of the allocation. Recital 20 of 
Directive 2008/101/EC stated the following: ‘Aircraft operators that cease 
operations should continue to be issued with allowances until the end of the period 
for which free allowances have already been allocated.’ The European Union 
legislature unequivocally stipulated that the entitlement to allocation continued to 
exist. This was also appropriate, as the total quantity of emission allowances 
allocated remained unchanged. The applicant refers to the explanatory 
memorandum to the draft law amending the legal bases for the further 
development of European emissions trading of 27 June 2018. The future provision 
in a newly added subparagraph 6 of Paragraph 11 TEHG covered precisely the 
case at issue here. However, this enabling provision did not actually exist yet, and 
was to be created only for the future. Therefore, such an enabling provision did 
not currently exist. 
7 In any event, Air Berlin had legitimate expectations that were worthy of 
protection regarding the continued existence of the allocation decision and had 
already sold the majority of the aviation allowances issued to it in 2017 in 
spring/summer 2017. This was done in expectation of and in reliance upon the 
emission allowances to be issued in the following years of the emissions trading 
period. The legitimate expectations regarding the continued existence of the 
allocation decision were also worthy of protection. The insolvency could not have 
been foreseeable when the aviation allowances issued in 2017 were sold. 
8 Based on the information currently available to the applicant, Air Berlin was 
unexpectedly denied financing on 11 August 2017, which led to its insolvency. 
Even if insolvency had already been foreseeable at the time of the sale, Air 
Berlin’s legitimate expectations would have been worthy of protection. It 
followed from recital 20 to Directive 2008/101, cited above, that Air Berlin could 
have expected to be allocated allowances for the current allocation period even if 
it ceased operations. 
9 All the aircraft in Air Berlin’s fleet were leased from various lessors. In the course 
of the provisional insolvency proceedings, and also after the insolvency 
proceedings had been opened, the slots allocated to Air Berlin which were 
required to use the airport infrastructure at so-called coordinated airports on 
certain days at certain times for take-off and landing were sold to Deutsche 
Lufthansa, Easyjet and Thomas Cook in connection with the sale of assets. The 
applicant was not aware of whether these undertakings actually used the slots they 
had taken over in the same way as Air Berlin had used them or whether they 
served other routes. Slots for short- and medium-haul operations had been sold. 
10 The applicant takes the view that the continuation of aviation activities within the 
meaning of Article 3f(1) of Directive 2003/87 was not relevant to the question of 
the continuation of the allocation for air transport operators. Moreover, the 
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question of when a continuation within the meaning of the aforementioned 
provision was to be assumed had not yet been clarified in the case-law. 
11 It was also incomprehensible why the public interest in a functioning emissions 
trading system would be jeopardised if the allocation decision were not annulled 
and why Air Berlin would be given an unfair advantage to the detriment of other 
market participants. There was no threat of a distortion of competition because Air 
Berlin no longer competed on the market at all. 
12 The defendant argues that Paragraphs 48 and 49 VwVfG constituted a sufficient 
basis for the withdrawal of the allocation for the years 2018-2020. 
13 The allocation was originally made for the years 2013-2020 on the basis that Air 
Berlin would carry out its aviation activities subject to compulsory emissions 
trading until 2020. From the point at which it definitively ceased flight operations, 
Air Berlin was no longer subject to the emissions trading scheme and therefore no 
longer fell within the scope of the TEHG. Air Berlin’s status as an aircraft 
operator ceased to exist upon the expiry of its operating licence. Pursuant to the 
TEHG, the entitlement to allocation was linked to the existence of the emissions 
trading obligation. This was not precluded by EU law. In its judgment of 
28 February 2018, Trinseo Deutschland (C-577/16, EU:C:2018:127), the Court of 
Justice expressly stated that an installation fell within the scope of the greenhouse 
gas emission allowance trading scheme only if they generated direct CO2 
emissions. According to that judgment, only installations whose activities fell, in 
accordance with Article 2(1) of Directive 2003/87, within the scope of the 
emissions allowance trading scheme were eligible for the allocation of such free 
allowances. These statements applied mutatis mutandis to aviation activities. 
14 Accordingly, Article 10(5) of Regulation No 389/2013 provided that the account 
of an aircraft operator which no longer operated flights covered by the emissions 
trading scheme was to be set to excluded status. Pursuant to Article 10(6) of 
Regulation No 389/2013, processes may no longer be initiated from such an 
account, unless they were for the period during which the account status was not 
yet set to excluded. Article 56(1) of Regulation No 389/2013 provided that the 
national administrator was to indicate for aircraft operators and for each year 
whether or not the aircraft operator should receive an allocation for that year in the 
national aviation allocation table. The inclusion of those provisions in Regulation 
No 389/2013 demonstrated that the withdrawal of allocation decisions must be 
permissible. 
15 Recital 20 of Directive 2008/101 conflicted with the emissions trading scheme. 
That recital was drafted before the adoption of Regulation No 389/2013 — which 
clearly conflicted with it — and was not repeated in Regulations Nos 421/2014 of 
16 April 2014 and 2017/2392 of 13 December 2017, by which Directive 2003/87 
was amended in relation to aviation. 
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16 The applicant also could not invoke a legitimate expectation worthy of protection 
on the part of Air Berlin. The possible legitimate expectation would be worthy of 
protection only if, when selling the allowances allocated to it for 2017, Air Berlin 
could have assumed that it would still receive the allocation even if it ceased 
operations. Neither the allocation rules nor the defendant’s conduct provided a 
basis for such an assumption. The withdrawal was also in the public interest. The 
principle of emissions trading law would be undermined if the allowances were to 
be placed on the market. It would distort the market price. 
17 Maintaining the allocation after aviation activities had been ceased was 
incompatible with the prohibition of aid under Article 107 TFEU, the principle of 
an open market economy with free competition under Article 119(1) TFEU, the 
right to freedom to conduct a business under Article 17 of the Charter and the 
principle of equality under Article 20 of the Charter. 
Brief summary of the basis for the reference 
18 The first question referred serves to clarify the meaning of recital 20 of 
Directive 2008/101. The referring court takes the view that no specific provision 
of the relevant secondary law contains a rule that conflicts with the content of that 
recital. The court is not convinced by the outcome of being able to retain allocated 
aviation allowances despite having ceased aviation activities. 
19 According to the settled case-law of the Court of Justice, in interpreting Directive 
2003/87 it is also necessary to consider the objectives pursued by the rule. The 
primary objective of the directive is to protect the environment by means of a 
reduction of greenhouse gas emissions. The free allocation of emission allowances 
falls within the framework of a specific regime of transitional rules, which 
derogates from the principle that emission allowances must be allocated under the 
auctioning mechanism established in Article 10 of Directive 2003/87 (see 
judgment of 20 June 2019, ExxonMobil Deutschland, C-682/17, EU:C:2019:518, 
paragraphs 71 and 82, and judgment of 28 July 2016, Vattenfall Europe 
Generation, C-457/15, EU:C:2016:613, paragraph 39 and the case-law cited). 
However, in the absence of a provision in secondary law, this question requires 
conclusive clarification by the Court of Justice in the light of the objections raised 
by the defendant in relation to the prohibition of aid under Article 107 TFEU, the 
principle of an open market economy with free competition under Article 119(1) 
TFEU and Articles 17 and 20 of the Charter. 
20 Regarding the continuation of aviation activities pursuant to Article 3f(1) of 
Directive 2003/87, it has not yet been clarified what is required for continuation 
within the meaning of that provision and whether the possibility of being able to 
retain allocated aviation allowances depends on whether the aviation activities 
have been continued in whole or in part within the meaning of that provision. 
21 If the first question is answered in the affirmative, the second question referred 
seeks clarification as to the interpretation and validity of the provisions of 
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Articles 10(5), 29, 55 and 56 of Regulation No 389/2013. Those provisions 
concern the consequences of an aircraft operator ceasing activity as regards the 
account status and the transfer of allowances to the account. 
22 The third question referred, which seeks to ascertain whether EU law requires 
that an allocation decision be annulled in the event that aviation activities are 
ceased, is relevant for the purposes of interpreting the national rules on the 
withdrawal and revocation of administrative acts in Paragraphs 48 and 49 VwVfG 
in accordance with EU law. If the third question is answered in the affirmative, 
this will have an impact on the national rules regarding the discretion granted to 
the authority in Paragraphs 48 and 49 VwVfG and also regarding the point in time 
from which the allocation decision can or must be annulled. 
23 If a final decision cannot be adopted in these proceedings before the end of the 
third trading period, the fourth and fifth questions referred will be relevant for the 
referring court’s judgment. 
24 For operators of installations subject to the emission allowance trading scheme, 
the third trading period ends on 31 December 2020. The provisions in 
Article 28b(2) of Directive 2003/87 and in Paragraph 11(1) TEHG in the version 
of 18 January 2019 raise the question of whether, for aircraft operators, unlike for 
installation operators, the end of 2020 has no effect on the allocation entitlements 
still outstanding at that date. 
25 The fourth question referred is intended to clarify when the third trading period 
ends for aircraft operators. 
26 If the answer to the fourth question referred is that the third trading period ends on 
31 December 2020 for air transport operators also, the referring court takes the 
view that the answer to the fifth question referred will be relevant for its 
judgment. 
27 According to the case-law of the German courts, when the first and second trading 
periods ended, allowance entitlements outstanding until 30 April of the year 
following the end of the trading period could no longer be met and, as there was 
no explicit transitional arrangement in national law, they lapsed. Nor does national 
law include a transitional arrangement in the third trading period for outstanding 
allowance entitlements still pending before the courts. The reason given for this 
lack of national transitional arrangements is that the rules for the free allocation of 
allowances in the trading period running from 2021 to 2030 are laid down 
conclusively in the EU Allocation Regulation and it is only permitted to balance 
allocation entitlements across periods if so provided for in the EU Allocation 
Regulation for the fourth trading period. 
28 The referring court would welcome a uniform decision in EU law on outstanding 
allocation entitlements. It notes that neither Directive 2003/87 nor Decision 
2011/278 expressly regulates this matter. Nor does Commission Delegated 
Regulation (EU) 2019/331 of 19 December 2018 (OJ 2019 L 59, p. 8) (EU 
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Allocation Regulation), enacted in the meantime, have a rule governing the 
balancing of allocation entitlements across periods, for example in the form of a 
reserve in respect of pending cases. 
29 A reserve exists only for new entrants pursuant to Article 10a(7) of Directive 
2003/87 and Article 18 of the EU Allocation Regulation, and as a special reserve 
for air transport operators pursuant to Article 3f of Directive 2003/87. The rule in 
Article 13 of Directive 2003/87 on the validity of allowances makes no reference 
to the question of allowances that have still not been allocated at the end of the 
third trading period. According to recital 7 of Decision (EU) 2015/1814 of the 
European Parliament and of the Council of 6 October 2015, allowances not 
allocated to installations pursuant to Article 10a(7) of Directive 2003/87 and 
allowances not allocated to installations because of the application of 
Article 10a(19) and (20) of the directive (‘unallocated allowances’), should be 
placed in the reserve in 2020. In the opinion of the referring court, recital 7 
suggests that the transition from the third to the fourth trading periods does not 
cause the additional allocation entitlements not met at that point to lapse. 
However, there is no unequivocal rule on what happens to additional allocation 
entitlements not met by the end of the third trading period. 
30 This question has arisen in several actions that are pending before the referring 
court and before the national courts at other instances. As it will not be possible to 
deliver final judgment by the end of the trading period in all the proceedings and 
the case-law of the German courts to date gives installation operators cause to fear 
that allocation entitlements will lapse, urgent proceedings have already been 
initiated before the chamber to protect their legal rights. The chamber cannot 
anticipate in such urgent proceedings to protect legal rights the ruling of the Court 
needed on this question. 
31 The referring court therefore asks the Court to clarify the question what effect the 
end of the third trading period will have on the allowance entitlements not met by 
then, even independently of a ruling on the other questions referred, as this is a 
fundamental question that has arisen in all proceedings still pending in the 
European Union for an additional allocation of emission allowances and urgently 
needs to be clarified to ensure legal certainty and the uniform application of EU 
emissions trading law.