Case C‑271/20
Aurubis AG
v
Bundesrepublik Deutschland
(Request for a preliminary ruling from the Verwaltungsgericht Berlin)
Judgment of the Court (Fifth Chamber), 25November 2021
(Reference for a preliminary ruling– Scheme for greenhouse gas emission allowance trading– Scheme for the free allocation of allowances– Decision 2011/278/EU– Article3(d)– Fuel benchmark sub-installation– Concepts of ‘combustion’ and ‘fuel’– Primary copper production by flash smelting– Request for allocation– Allowances requested and not yet allocated on the date of expiry of a trading period– Possibility of issuing such allowances during the subsequent trading period by way of enforcement of a judicial decision given after that date)
1.Environment– Atmospheric pollution– Directive 2003/87– Scheme for greenhouse gas emission allowance trading– Transitional scheme for the free allocation of allowances– Primary copper production installation– Division into sub-installations– Fuel benchmark sub-installation– Concept– Flash smelting foundry causing the sulphur present in the copper concentrate used as a raw material for the production of primary copper to be oxidised– Included
(European Parliament and Council Directive 2003/87, Arts 3(t), 10a and AnnexI; Commission Decision 2011/278, Arts 3(d) and 6)
(see paragraphs53-77, operative part 1)
2.Environment– Atmospheric pollution– Directive 2003/87– Scheme for greenhouse gas emission allowance trading– Transitional scheme for the free allocation of allowances– Temporal scope– Allocation of allowances after the date on which a trading period expires by way of enforcement of a judicial decision given after that date– Included
(European Parliament and Council Directive 2003/87, Arts 10a and 13; Commission Decision 2011/278)
(see paragraphs79-90, operative part 2)
Résumé
Aurubis AG is a company governed by German law that operates a primary copper production installation which is subject to the EU-wide greenhouse gas emission trading scheme (‘the ETS’) as established by the directive on the scheme for greenhouse gas emission allowance trading.(1) In that context, that installation falls within a sector of activity for which free emission allowances can be allocated under Decision 2011/278.(2)
Aurubis’s primary copper production installation comprises two sub-installations, one of which is a foundry in which primary copper is obtained by using a sulphur-containing copper concentrate as a raw material. The sulphur present in that concentrate is oxidised, successively, in a flash smelting furnace, in a converter and in an anode furnace, which produces non-measurable heat. During that process, the foundry at issue emits carbon dioxide into the atmosphere due to the presence of small quantities of carbon in the copper concentrate.
In 2014, the Deutsche Emissionshandelsstelle (German Emissions Allowance Trading Authority, Germany) (‘the DEHSt’) allocated a number of free emission allowances to Aurubis for the third trading period (2013 to 2020). However, in 2018, the DEHSt required some of those allowances to be returned, claiming that the production of copper in that foundry did not fulfil the criterion to constitute a ‘fuel benchmark sub-installation’ within the meaning of Article3(d) of Decision 2011/278 and had to be attached to a ‘process emissions sub-installation’ within the meaning of Article3(h) of that decision. According to the DEHSt, in order for a sub-installation to constitute a ‘fuel benchmark sub-installation’, first, the primary purpose of the combustion of a material must be the production of heat, and, second, complete combustion of that material has to occur and that material has to be capable of being replaced by other fuels. That is not the case with the copper concentrate, which is both a raw material and a fuel.
Hearing an appeal against the decision of the DEHSt, the Verwaltungsgericht Berlin (Administrative Court, Berlin, Germany) decided to seek a ruling from the Court of Justice on the interpretation, first, of Article3(d) of Decision 2011/278 and, second, of the temporal scope of that decision in respect of the third trading period, which expired on 31December 2020.
Findings of the Court
First of all, the Court points out that installations covered by the transitional scheme for the free allocation of emission allowances introduced by Decision 2011/278 must be divided into sub-installations. In that regard, Article6 of that decision provides for four categories of sub-installation, namely ‘product benchmark’, ‘heat benchmark’, ‘fuel benchmark’ and ‘process emissions’ sub-installations, that list being hierarchical in nature.
After ascertaining that the foundry at issue does not fall within the first two categories of sub-installation, the Court then examines whether it falls within the concept of a ‘fuel benchmark sub-installation’, defined in Article3(d) of Decision 2011/278, which includes ‘inputs, outputs and corresponding emissions… relating to the production of non-measurable heat by fuel combustion consumed for the production of products…’.
As regards the scope of that concept, the Court notes, in the first place, that the meaning of the words ‘fuel combustion’ referred to therein covers any oxidation of fuels. In that respect, it observes that it is not apparent from the directive on the scheme for greenhouse gas emission allowance trading or from Decision 2011/278 that combustion must be excluded from the fuel benchmark where the substances used as fuels are present in the raw material used in the industrial activity concerned or where their carbon content is lower than that of other materials more frequently used. There is nothing in those pieces of legislation to indicate that the application of the transitional scheme for the allocation of allowances must be limited to activities which use a material with a high carbon content and thus generate amounts of emissions exceeding a certain threshold.
In that regard, the Court finds that an approach which is tantamount to adding, to the definition in Article3(d) of Decision 2011/278, requirements or exclusions that are not provided for therein and which cannot be inferred from that definition would run counter to the principle of legal certainty. In response to the DEHSt’s concern regarding the allocation of allowances to Aurubis on the basis of the fuel benchmark which would exceed its needs and allow it to sell a large part of those allowances, the Court adds that the fact that an operator that has reduced its emissions by investing in innovative techniques derives, for that reason, greater profit from allowances received free of charge does not undermine the objective of the ETS.
The Court states, in the second place, that an allocation of allowances on the basis of the fuel benchmark does not require that one of the purposes, let alone the primary purpose of the activity concerned, be the production of heat. It is apparent from the wording itself of Article3(d) of Decision 2011/278 that the production of that heat is not the purpose of the sub-installations referred to therein, but rather the necessary means to fulfil the purpose consisting, inter alia, in the production of a product.
In the light of the above, the Court holds that Article3(d) of Decision 2011/278 must be interpreted as meaning that the concept of a ‘fuel benchmark sub-installation’ covers, within an installation producing primary copper, a flash smelting foundry that causes sulphur present in a copper concentrate that is used as a raw material to be oxidised.
As regards the temporal scope of Decision 2011/278 in the context of the third trading period (2013 to 2020), the Court finds that that decision must be interpreted as meaning that free allowances to which the operator of an installation is entitled in respect of that period may still be issued to the latter, if they are available, after 31December 2020 by way of enforcement of a judicial decision given after that date.
1Directive 2003/87/EC of the European Parliament and of the Council of 13October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L275, p.32), as amended by Directive 2009/29/EC of the European Parliament and of the Council of 23April 2009 (OJ 2009 L140, p.63) (‘the directive on the scheme for greenhouse gas emission allowance trading’).
2Commission Decision 2011/278/EU of 27April2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article10a of Directive2003/87/EC of the European Parliament and of the Council (OJ 2011 L130, p.1) (‘Decision 2011/278’), repealed with effect from 1January 2021.