Case C‑180/15

Borealis AB and Others

v

Naturvårdsverket

(Request for a preliminary ruling

from the Nacka Tingsrätt –Mark- och miljödomstolen)

‛Reference for a preliminary ruling — Scheme for greenhouse gas emission allowance trading within the European Union — Directive 2003/87/EC — Article 10a — Method of allocating free allowances — Calculation of the uniform cross-sectoral correction factor — Decision 2013/448/EU — Article 4 — Annex II — Validity — Determination of the product benchmark for hot metal — Decision 2011/278/EU — Annex I — Validity — Article 3(c) — Article 7 — Article 10(1) to (3) and 8 –Annex IV — Free allowances for the consumption and for the export of heat — Measurable heat exported to private households — Prohibition on double-counting of emissions and of double allocation of allowances’

Summary — Judgment of the Court (Sixth Chamber), 8 September 2016

Environment — Atmospheric pollution –Directive 2003/87– Scheme for greenhouse gas emission allowance trading — Transitional regime for free allocation of quotas — Notion of ‘heat benchmark sub-installations’ — Inclusion of the activity of exporting the measurable heat from an installation subject to the emissions trading system to a steam network — Conditions

Environment — Atmospheric pollution — Directive 2003/87– Scheme for greenhouse gas emission allowance trading — Transitional regime for free allocation of quotas — Prohibition of double counting of emissions and double allocation of allowances — Refusal to allocate additional allowances free of charge in respect of the emissions related to the production of measurable heat by burning waste gases generated by a hot metal benchmark installation — Lawfulness

Environment — Atmospheric pollution — Directive 2003/87– Scheme for greenhouse gas emission allowance trading — Transitional regime for free allocation of quotas — Baseline data collection — Obligation for Member States to ensure that there is no double counting between sub-installations — Adjustment of data submitted by operators in the case of double counting of emissions — Lawfulness

Environment — Atmospheric pollution — Directive 2003/87 — Scheme for greenhouse gas emission allowance trading — Transitional regime for free allocation of quotas — Allocation of free allowances for emissions linked to production and consumption or export of heat — Prohibition of double counting of emissions — Prohibition of the allocation of free allowances to an operator for consumption, in heat benchmark sub-installation, of heat taken into account in the context of fuel benchmark sub-installation

Environment — Atmospheric pollution — Directive 2003/87– Scheme for greenhouse gas emission allowance trading — Transitional regime for free allocation of quotas — Allocation of free allowances for emissions linked to production and consumption or export of heat — Allocation of allowances free of charge to a fuel benchmark sub-installation producing heat and to a heat benchmark sub-installation exporting the same heat — Prohibition of double counting of emissions and double allocation of quotas between sub-installations

Questions referred for a preliminary ruling — Assessment of validity — Declaration of invalidity of the provisions of a Commission Decision relating to the correction factor applied by the Member States for the purpose of determining the quantity of greenhouse gas emission allowances to be allocated free of charge — Effects — Temporal limitation

Environment — Atmospheric pollution — Directive 2003/87– Scheme for greenhouse gas emission allowance trading — Transitional regime for free allocation of quotas — Allocation method — Calculation on the basis of the maximum annual amount of such allowances to be allocated — Consideration, in the determination of that amount, of emissions from installations subject to the quota exchange system before 2013 — Unlawful

Environment — Atmospheric pollution — Directive 2003/87 — Scheme for greenhouse gas emission allowance trading — Transitional regime for free allocation of quotas — Benchmarks to apply for the calculation of the allowance — Commission decision determining the benchmark values for hot metal — Complex evaluation of economic matters — No manifest error of assessment

Environment — Atmospheric pollution — Directive 2003/87 — Scheme for greenhouse gas emission allowance trading — Transitional regime for free allocation of quotas –Allocation method — Calculation on the basis of the maximum annual amount of such allowances to be allocated — Consideration, in the determination of that amount, of emissions from electricity generators — Unlawful

Questions referred for a preliminary ruling — Jurisdiction of the Court — Identification of the relevant aspects of EU law — Reformulation of the questions

See the text of the decision. (see paras 32, 56)

See the text of the decision. (see paras 33-41, operative part 1)

See the text of the decision. (see paras 45-50, operative part 2)

See the text of the decision. (see paras 51-53, operative part 3)

See the text of the decision. (see para. 54, operative part 4)

Article 10a of Directive 2003/87 establishing a scheme for greenhouse gas emission allowance trading within the Community as amended by Directive 2009/29, and Article 10(1) to (3) and (8) of Decision 2011/278 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87 must be interpreted as permitting, in order to avoid a double allocation, non-allocation of allowances to a heat benchmark sub-installation when it exports, to private households, heat which it has recovered from a fuel benchmark sub-installation. That interpretation results from the prohibition on double counting of emissions and double allocation of allowances that precludes the production of heat-related emissions being taken into account twice, namely when the free allowances are allocated, first, to the installation that produces them and, second, to the installation that consumes or exports them. Thus, in so far as the heat exported by a fuel benchmark sub-installation is not part of the historical activity of the heat benchmark sub-installation, the median annual historical emissions of that sub-installation can be determined from the emissions related to the production of that heat. It is therefore conceivable that the application of the prohibition on double counting of emissions can lead the national authority responsible for allocating allowances not allocating allowances for heat exported to private households. (see paras 78-80, operative part 5)

Article 10(8) of Decision 2011/278, determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87, must be interpreted as precluding free greenhouse gas emission allowances being allocated to an operator for the consumption, in a heat benchmark sub-installation, of heat taken into account in connection with a fuel benchmark sub-installation. (see para. 84, operative part 6)

Article 7 of, and Annex IV to, Decision 2011/278 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87, must be interpreted as allowing a Member State, when collecting the data covered by those provisions, not to take into account all the emissions related to the heat production exported by a heat benchmark sub-installation to private households in order to avoid double counting. In addition, Article 7 of, and Annex IV to, Decision 2011/278 must be interpreted as not precluding a Member State, when collecting the data covered by those provisions, from adjusting the figures obtained by the Member State so that the greenhouse gas emissions attributable to the combustion of waste gases by a heat benchmark sub-installation are equivalent to those from the combustion of natural gas, in so far as a product benchmark takes account of emissions linked to the production of waste gases. (see paras 92, 113, operative part 7 and 9)

Article 10a(1) and (4) of Directive 2003/87, establishing a scheme for greenhouse gas emission allowance trading within the Community, as amended by Directive 2009/29, and Article 10(3) of Decision 2011/278 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87 must be interpreted as permitting the non-allocation of additional free greenhouse gas emission allowances related to the production of measurable heat by burning waste gases generated by a hot metal benchmark installation, when the amount of greenhouse gas emission allowances determined based on the heat benchmark is lower than the median annual historical emissions related to the production of that heat. In that regard, even if the combustion by a heat benchmark sub-installation waste gases generated by a hot metal benchmark installation, for the supply of heat to a district heating network permits, pursuant to the second indent of Article 3(c) and Article 10(2)(b) of Decision 2011/278, the allocation of free allowances on the basis of the heat benchmark, it is contrary to the prohibition on double counting of emissions and of double allocation of allowances to allocate, on the basis of Article 10(3) of Decision 2011/278, extra allowances for measurable heat exported to private households on the grounds that the amount of allowances determined based on the heat benchmark is lower than the median annual historical emissions related to the production of that heat, in so far as the hot metal benchmark in fact takes account of the emissions related to the production of waste gases. (see paras 98, 106, 107, operative part 8)