ExxonMobil Production Deutschland GmbH v Bundesrepublik Deutschland.
Date: 2019-06-20
45


If that were the case, as the Advocate General has observed in point 36 of his Opinion, the answer to the questions referred would be of no relevance for resolving the dispute in the main proceedings and, therefore, this request for a preliminary ruling would be hypothetical. Only installations whose activities fall, in accordance with Article 2 of Directive 2003/87, within the scope of the emission allowance trading scheme are eligible for the allocation of such free allowances (judgment of 28 February 2018, Trinseo Deutschland, C‑577/16, EU:C:2018:127, paragraph 68).
47


In that regard, it should be recalled that, by virtue of Article 2(1) of Directive 2003/87, which defines the latter’s scope, the directive is to apply to ‘emissions’ of greenhouse gases — which are listed in Annex II thereto and include CO2 — ‘from the activities listed in Annex I’ (see, to that effect, judgments of 28 July 2016, Vattenfall Europe Generation, C‑457/15, EU:C:2016:613, paragraph 28; of 28 February 2018, Trinseo Deutschland, C‑577/16, EU:C:2018:127, paragraphs 42, 45 and 46; and of 17 May 2018, Evonik Degussa, C‑229/17, EU:C:2018:323, paragraph 31). Annex I includes, in particular, in respect of the emission of CO2, the activity of combustion of fuels in an installation with a total rated thermal input exceeding 20 MW.
55


Such an interpretation is also consistent with the objective pursued by Directive 2003/87, which, as stated in Article 1 thereof, consists in promoting reductions of greenhouse gas emissions in a cost-effective and economically efficient manner (see, inter alia, judgments of 12 April 2018, PPC Power, C‑302/17, EU:C:2018:245, paragraph 18, and of 17 May 2018, Evonik Degussa, C‑229/17, EU:C:2018:323, paragraph 41).
56


As is apparent, inter alia, from recital 8 of Directive 2003/87, the achievement of that objective presupposes the inclusion in that scheme of activities which have some potential to reduce greenhouse gas emissions (judgment of 17 May 2018, Evonik Degussa, C‑229/17, EU:C:2018:323, paragraph 42).
62


In that regard, it should be recalled that Directive 2003/87 has the purpose of establishing an emission allowance trading scheme which seeks to reduce greenhouse gas emissions into the atmosphere to a level that prevents dangerous anthropogenic interference with the climate system and the ultimate objective of which is protection of the environment (see, inter alia, judgments of 8 March 2017, ArcelorMittal Rodange et Schifflange, C‑321/15, EU:C:2017:179, paragraph 24; of 22 February 2018, INEOS Köln, C‑572/16, EU:C:2018:100, paragraph 26; and of 28 February 2018, Trinseo Deutschland, C‑577/16, EU:C:2018:127, paragraph 39).
63


There is an economic logic underlying the scheme that encourages a participant in the scheme to emit quantities of greenhouse gases that are less than the allowances originally allocated to it, in order to sell the surplus to another participant which has emitted more than its allowance (see, inter alia, judgments of 8 March 2017, ArcelorMittal Rodange et Schifflange, C‑321/15, EU:C:2017:179, paragraph 22; of 22 February 2018, INEOS Köln, C‑572/16, EU:C:2018:100, paragraph 27; and of 28 February 2018, Trinseo Deutschland, C‑577/16, EU:C:2018:127, paragraph 40).
64


Directive 2003/87 thus aims to reduce, by 2020, the overall greenhouse gas emissions of the European Union by at least 20% in comparison with 1990 levels, in an economically efficient manner (judgments of 8 September 2016, E.ON Kraftwerke, C‑461/15, EU:C:2016:648, paragraph 23; of 22 February 2018, INEOS Köln, C‑572/16, EU:C:2018:100, paragraph 28; and of 28 February 2018, Trinseo Deutschland, C‑577/16, EU:C:2018:127, paragraph 41).
65


To that end, Article 10a of Directive 2003/87 set up transitional arrangements which, in order to prevent undertakings from losing competitiveness as a result of the establishment of a scheme for emission allowance trading (see to that effect, inter alia, judgments of 26 February 2015, ŠKO-Energo, C‑43/14, EU:C:2015:120, paragraph 28, and of 12 April 2018, PPC Power, C‑302/17, EU:C:2018:245, paragraph 20), provide for the allocation to installations falling within certain sectors of activity of free emission allowances, the amount of which, in accordance with Article 10a(11), is decreased gradually over the period running from 2013 to 2020, with a view to reaching their complete abolition by 2027 (judgments of 8 September 2016, E.ON Kraftwerke, C‑461/15, EU:C:2016:648, paragraph 24; of 26 October 2016, Yara Suomi and Others, C‑506/14, EU:C:2016:799, paragraph 46; of 22 February 2018, INEOS Köln, C‑572/16, EU:C:2018:100, paragraph 29; and of 28 February 2018, Trinseo Deutschland, C‑577/16, EU:C:2018:127, paragraph 67).
68


Consequently, since 2013 the auctioning of allowances, as is clear from the intention of the EU legislature expressed in recitals 15 and 19 of Directive 2009/29, has been the rule for electricity generators (see, to that effect, judgments of 17 October 2013, Iberdrola and Others, C‑566/11, C‑567/11, C‑580/11, C‑591/11, C‑620/11 and C‑640/11, EU:C:2013:660, paragraph 40, and of 28 April 2016, Borealis Polyolefine and Others, C‑191/14, C‑192/14, C‑295/14, C‑389/14 and C‑391/14 to C‑393/14, EU:C:2016:311, paragraph 82).
71


In accordance with the Court’s settled case-law, in interpreting a provision of EU law it is necessary to consider not only its wording but also its context and the objectives pursued by the rules of which it forms part (see, inter alia, judgment of 31 May 2018, Länsförsäkringar Sak Försäkringsaktiebolag and Others, C‑542/16, EU:C:2018:369, paragraph 39).
72


It is apparent from Article 3(u) of Directive 2003/87 that an installation which, first, has produced electricity ‘for sale to third parties’ at any time from 1 January 2005 onwards and in which, second, none of the activities listed in Annex I to the directive is carried out other than the combustion of fuels with a total rated thermal input exceeding 20 MW must be classified as an ‘electricity generator’ (see, to that effect, judgments of 8 September 2016, Borealis and Others, C‑180/15, EU:C:2016:647, paragraph 33, and of 26 October 2016, Yara Suomi and Others, C‑506/14, EU:C:2016:799, paragraph 23).
81


It is admittedly true that, as ExxonMobil has pointed out in its written observations, the general prohibition, set out in Article 10a(3) of Directive 2003/87, preventing the Member States from allocating free emission allowances was established, as is apparent from recitals 15 and 19 of Directive 2009/29, in order to put an end to the possibility exploited by electricity generators until 2013 of making windfall profits by passing on, in the absence of sufficient competitive pressure, the value of the free emission allowances in the electricity price paid by consumers (see, to that effect, judgment of 17 October 2013, Iberdrola and Others, C‑566/11, C‑567/11, C‑580/11, C‑591/11, C‑620/11 and C‑640/11, EU:C:2013:660, paragraph 40).
82


However, it should, first of all, be borne in mind that, as is already apparent from paragraphs 65 and 66 of the present judgment, the free allocation of emission allowances which is provided for in Article 10a of Directive 2003/87 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 that directive (see, to that effect, judgment of 18 January 2018, INEOS, C‑58/17, EU:C:2018:19, paragraph 36).
84


Furthermore, it is to be noted that Article 10a(1), (3) and (5) of Directive 2003/87 lays down the division on which the directive’s provisions are founded, consisting in a distinction between the installations falling within Article 10a(3), which include ‘electricity generators’ within the meaning of Article 3(u) of the directive, and other installations that generate greenhouse gas emissions, generally referred to as ‘industrial installations’ (see, to that effect, judgments of 28 April 2016, Borealis Polyolefine and Others, C‑191/14, C‑192/14, C‑295/14, C‑389/14 and C‑391/14 to C‑393/14, EU:C:2016:311, paragraph 70, and of 28 July 2016, Vattenfall Europe Generation, C‑457/15, EU:C:2016:613, paragraphs 40 et 41).
85


That distinction between installations that are covered by the concept of ‘electricity generator’, within the meaning of Article 3(u) of Directive 2003/87, and other installations that generate greenhouse gas emissions directly affects the calculation of the ‘uniform cross-sectoral correction factor’, provided for in Article 10a(5) of the directive, the application of which to the preliminary annual amount of free emission allowances that is calculated by the Member States determines the final annual amount of such allowances to be allocated by the Member States to the industrial installations eligible for them (see, to that effect, judgment of 28 April 2016, Borealis Polyolefine and Others, C‑191/14, C‑192/14, C‑295/14, C‑389/14 and C‑391/14 to C‑393/14, EU:C:2016:311, paragraph 71).
86


Under Article 10a(5) of Directive 2003/87, where the preliminary amount of emission allowances allocated free of charge to installations not covered by Article 10a(3) of that directive exceeds the industry ceiling corresponding to the maximum annual amount of allowances that is referred to in Article 10a(5), the Member States must make a proportionate reduction of that preliminary amount by applying the ‘uniform cross-sectoral correction factor’ provided for in that provision, which corresponds to the ratio between the preliminary amount and the ceiling (see, to that effect, judgments of 28 April 2016, Borealis Polyolefine and Others, C‑191/14, C‑192/14, C‑295/14, C‑389/14 and C‑391/14 to C‑393/14, EU:C:2016:311, paragraphs 62 and 63, and of 22 February 2018, INEOS Köln, C‑572/16, EU:C:2018:100, paragraph 37).
87


As is apparent from the express terms of Article 10a(5) of Directive 2003/87, emissions generated by electricity generators are not taken into account when calculating that factor, as those emissions are excluded from the maximum annual amount of allowances defined in that provision, which is limited to the emissions of ‘installations which are not covered by [Article 10a(3)]’ (see, to that effect, judgments of 28 April 2016, Borealis Polyolefine and Others, C‑191/14, C‑192/14, C‑295/14, C‑389/14 and C‑391/14 to C‑393/14, EU:C:2016:311, paragraphs 64, 68, 72, 74, 75 and 83, and of 26 October 2016, Yara Suomi and Others, C‑506/14, EU:C:2016:799, paragraph 24, 26 and 32).
90


In accordance with the Court’s settled case-law, the principle of equal treatment, as a general principle of EU law, requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified (see, inter alia, judgments of 16 December 2008, Arcelor Atlantique et Lorraine and Others, C‑127/07, EU:C:2008:728, paragraph 23, and of 29 March 2012, Commission v Estonia, C‑505/09 P, EU:C:2012:179, paragraph 64).
94


First, as is apparent from Article 10a(12) of Directive 2003/87, the inclusion of a sector or subsector in that list is not concerned in the slightest with derogation from Article 10a(3). Rather, such inclusion has the sole consequence that, for the trading period running from 2013 to 2020, installations in sectors or subsectors which are exposed to a significant risk of carbon leakage are to be allocated allowances free of charge representing 100% of the quantity determined in accordance with the measures referred to in Article 10a(1) (see, to that effect, judgment of 26 October 2016, Yara Suomi and Others, C‑506/14, EU:C:2016:799, paragraph 47).
101


In accordance with Article 10a(1) of Directive 2003/87, the Commission established, by Decision 2011/278, harmonised EU-wide rules for the free allocation of emission allowances. Those harmonised rules give concrete expression to the essential requirement that distortions of competition in the internal market be minimised (judgments of 22 June 2016, DK Recycling und Roheisen v Commission, C‑540/14 P, EU:C:2016:469, paragraph 53; of 18 January 2018, INEOS, C‑58/17, EU:C:2018:19, paragraph 26; and of 22 February 2018, INEOS Köln, C‑572/16, EU:C:2018:100, paragraph 30).
102


Thus, pursuant to Article 10a(2) of Directive 2003/87, the Commission is to determine, within that framework, benchmarks by sector or subsector (see, to that effect, judgments of 8 September 2016, Borealis and Others, C‑180/15, EU:C:2016:647, paragraph 60, and of 18 January 2018, INEOS, C‑58/17, EU:C:2018:19, paragraph 27).
103


It is in that context that Article 10(1) and (2) of Decision 2011/278 provides that, by multiplying those benchmarks by the level of historical activity of each sub-installation, the Member States are to calculate the preliminary annual number of allowances to be allocated free of charge. To that end, they are required to distinguish, in accordance with Article 6 of that decision, the sub-installations on the basis of their activity, in order to be able to determine whether it is necessary to apply a ‘product benchmark’, a ‘heat benchmark’, a ‘fuel benchmark’ or a specific factor for ‘process emissions sub-installations’ (judgments of 8 September 2016, Borealis and Others, C‑180/15, EU:C:2016:647, paragraph 61, and of 18 January 2018, INEOS, C‑58/17, EU:C:2018:19, paragraph 28).
104


In that regard, the Court has already pointed out that the definitions, set out in Article 3 of Decision 2011/278, of product benchmark sub-installations, heat benchmark sub-installations, fuel benchmark sub-installations and process emissions sub-installations are mutually exclusive (judgments of 8 September 2016, Borealis and Others, C‑180/15, EU:C:2016:647, paragraph 62, and of 18 January 2018, INEOS, C‑58/17, EU:C:2018:19, paragraph 29).
105


Article 3(c) of Decision 2011/278 defines heat benchmark sub-installations as inputs, outputs and corresponding emissions not covered by a product benchmark sub-installation relating to the production, or the import from an installation or other entity covered by the EU scheme, or both, of measurable heat. That provision specifies that this heat must, inter alia, be consumed for the production of products or exported to an installation or other entity not covered by the EU scheme with the exception of export for the production of electricity (judgment of 8 September 2016, Borealis and Others, C‑180/15, EU:C:2016:647, paragraphs 64 and 116).
107


As ExxonMobil has rightly pointed out in its written observations, Article 3(c) of Decision 2011/278 thus implements the second sentence of the third subparagraph of Article 10a(1) and the third subparagraph of Article 10a(7) of Directive 2003/87, which preclude the free allocation of emission allowances in respect of the production of electricity, with the exception of, first, cases falling within Article 10c of the directive, which grants Member States the option of issuing free allowances for the modernisation of electricity generation, and, second, electricity produced from waste gases (see, to that effect, judgment of 26 July 2017, ArcelorMittal Atlantique et Lorraine, C‑80/16, EU:C:2017:588, paragraph 20).
111


In prohibiting, without prejudice to the rules laid down by other provisions, the allocation of free emission allowances to electricity generators, Article 10a(3) of Directive 2003/87 lays down a fundamental rule (see, to that effect, judgment of 28 April 2016, Borealis Polyolefine and Others, C‑191/14, C‑192/14, C‑295/14, C‑389/14 and C‑391/14 to C‑393/14, EU:C:2016:311, paragraph 66).
112


As is apparent from the Court’s settled case-law, Decision 2011/278 must be interpreted in accordance with the provisions of that directive (see, to that effect, judgments of 19 January 2017, Schaefer Kalk, C‑460/15, EU:C:2017:29, paragraphs 40 to 42; of 28 February 2018, Trinseo Deutschland, C‑577/16, EU:C:2018:127, paragraph 68; and of 17 May 2018, Evonik Degussa, C‑229/17, EU:C:2018:323, paragraph 29).
118


Any other interpretation would conflict with the objectives pursued byDirective 2003/87, while conferring on the Commission powers that lack any legal basis (see, by analogy, judgment of 29 March 2012, Commission v Estonia, C‑505/09 P, EU:C:2012:179, paragraph 82).
120


However, as is already clear from paragraphs 91 and 92 of the present judgment, installations which, like the installation at issue in the main proceedings, produce heat while carrying out, as the only activity falling within Annex I to Directive 2003/87, solely the activity of ‘combustion of fuels in installations with a total rated thermal input exceeding 20 MW’ are not in a situation that is comparable to that of installations which produce heat while carrying out, in addition, another activity falling within that annex. In the emission allowance trading scheme, such a difference in treatment cannot therefore be regarded as distorting competition between installations (see, by analogy, judgment of 19 January 2017, Schaefer Kalk, C‑460/15, EU:C:2017:29, paragraph 47).
129


It is only quite exceptionally that the Court may, in application of the general principle of legal certainty inherent in the EU legal order, decide to restrict for any person concerned the opportunity of relying on a provision which it has interpreted with a view to calling into question legal relationships established in good faith. Two essential criteria must be fulfilled before such a limitation can be imposed, namely, that those concerned should have acted in good faith and that there should be a risk of serious difficulties (see, inter alia, judgments of 27 February 2014, Transportes Jordi Besora, C‑82/12, EU:C:2014:108, paragraph 41, and of 19 April 2018, Oftalma Hospital, C‑65/17, EU:C:2018:263, paragraph 57).