Case C‑938/19
Energieversorgungscenter Dresden-Wilschdorf GmbH & Co. KG
v
Bundesrepublik Deutschland
(Request for a preliminary ruling from the Verwaltungsgericht Berlin)
Judgment of the Court (Fifth Chamber), 11November 2021
(Reference for a preliminary ruling– Environment– Directive 2003/87/EC– Greenhouse gas emission allowance trading scheme– Article2(1)– Scope– Article3(e)– Concept of ‘installation’– Effect on emissions and pollution– Ancillary units not generating as such greenhouse gas emissions– Article10a– Transitional rules for free allocation of allowances– Data Collection Template– Corrected eligibility ratio– Method of calculation– Decision 2011/278/EU– Third subparagraph of Article6(1)– Export of cooling to an entity that belongs to a sector exposed to a significant risk of carbon leakage)
1.Questions referred for a preliminary ruling– Expedited preliminary ruling procedure– Conditions– Circumstances justifying swift processing– None
(Statute of the Court of Justice, Art.23a; Rules of Procedure of the Court of Justice, Art.105(1))
(see paragraphs40-46)
2.Environment– Atmospheric pollution– Directive 2003/87– Scheme for greenhouse gas emission allowance trading– Scope– Installation– Concept– Ancillary unit not emitting greenhouse gases– Included– Conditions– Ancillary unit having a technical connection with the activity of the installation– Ancillary unit having a potential effect on the greenhouse gas emissions of that activity
(European Parliament and Council Directive 2003/87, Arts2(1) and 3(e) and AnnexesI and II)
(see paragraphs49-73, operative part1)
3.Environment– Atmospheric pollution– Directive 2003/87– Scheme for greenhouse gas emission allowance trading– Transitional regime for free allocation of quotas– Collectionof reference data– Corrected eligibility ratio– Calculation– Comprehensive approach to the heat flows for a heat benchmark sub-installation
(European Parliament and Council Directive 2003/87, Art.10a; Commission Decision 2011/278, Arts3(c) and 7(5))
(see paragraphs78-90, 94, 95, operative part2)
4.Environment– Atmospheric pollution– Directive 2003/87– Scheme for greenhouse gas emission allowance trading– Transitional regime for free allocation of quotas– Incumbent installations– Division into sub-installations– Heat benchmark sub-installation– Processes regarded as relating to a sector or sub-sector exposed to a significant risk of carbon leakage– Supply of cooling to an installation belonging to a sector exposed to a significant risk of carbon leakage– Not included
(European Parliament and Council Directive 2003/87, Art.10a(11) and (12); Commission Decision 2010/2; Commission Decision 2011/278, Arts3(c) and 6(1), third subparagraph)
(see paragraphs102-110, operative part3)
Résumé
Energieversorgungscenter Dresden-Wilschdorf GmbH & Co. KG (‘EDW’) is a German company which operates an industrial, gas engine combined heat and power plant that is subject to the greenhouse gas emission allowance trading scheme at EU level (‘the ETS’). That cogeneration plant includes, as ancillary units, absorption chillers, which convert heat into cooling without emitting greenhouse gases themselves.
EDW’s cogeneration plant supplies hot water, cold water and warm water exclusively to Global Foundries’ semiconductors manufacturing factory, which is not subject to the ETS and whose activity, pursuant to EU rules, belongs to a sector exposed to a significant risk of carbon leakage.(1) The warm water supplied by EDW is in particular produced from the heat released by the absorption chillers as well as by using the heat which returns from Global Foundries’ cooling circuit to those chillers.
In 2014, the German Emissions Trading Authority (the DEHSt’) granted EDW only a portion of the free emission allowances requested by the latter. In that context, the DEHSt took the view, inter alia, that the absorption chillers formed part of EDW’s installation subject to the ETS, which had an impact on the number of free emission allowances to be granted to EDW. Furthermore, it refused to find that the cooling supplied by the absorption chillers to Global Foundries is covered by the rules applicable to sectors or sub-sectors exposed to a significant risk of carbon leakage. In addition, the DEHSt refused to recognise any allowance entitlement as regards the heat flow from the warm water, in so far as the heat results from energy released by the operation of the absorption chillers. The DEHSt also deducted from the amounts of heat claimed by EDW the heat imported from Global Foundries’ cooling circuit.
EDW brought an action before the Verwaltungsgericht Berlin (Administrative Court, Berlin, Germany) against DEHSt’s decisions. Called upon to rule on the number of free emission allowances to be allocated to EDW, that court decided to request a preliminary ruling from the Court of Justice on the interpretation of various provisions of EU law applicable in that area.
In answer to those questions referred for a preliminary ruling, the Court provides clarification on, inter alia, the scope of the directive on the scheme for greenhouse gas emission allowance trading,(2) by interpreting the concept of ‘installation’ within the meaning of that directive.
Findings of the Court
In the first place, the Court confirms that the directive on the scheme for greenhouse gas emission allowance trading does not preclude national legislation which permits the inclusion, within the boundaries of an installation subject to the ETS, of ancillary units which do not emit greenhouse gases, provided that they meet the definition of ‘installation’ within the meaning of that directive.
Consequently, having regard to the definition of the term ‘installation’ in Article3(e) of that directive, ancillary units, such as the absorption chillers which are ancillary to EDW’s cogeneration plant, can be included in an installation covered by the ETS only if their activity has a technical connection with an activity listed in AnnexI to the directive which is carried out in the installation and that activity could have an effect on emissions and pollution as regards the greenhouse gases listed in AnnexII to the directive.
With regard to the criterion concerning the ‘effect on emissions and pollution’, the Court notes, next, that, if an activity does not satisfy that criterion on account of emissions and pollution which do not relate to greenhouse gases, Article3(e) of the directive does not require that activities should emit greenhouse gases themselves, but only that there be a potential effect on emissions and pollution in respect of such gases. An activity which could influence the level of greenhouse gas emissions of an activity coming within AnnexI to the directive may, consequently, be included within the boundaries of the same installation as that latter activity.
It follows that, in the present case, the absorption chillers that are ancillary to EDW’s cogeneration plant and that thermal power plant could be regarded as forming one and the same installation covered by the ETS, provided that those absorption chillers could have an effect on the level of emissions and pollution generated by that plant and that the other criteria laid down in Article3(e) of the directive on the scheme for greenhouse gas emission allowance trading are met.
In the second place, the Court gives a ruling on the method of calculating the corrected eligibility ratio referred to in the Data Collection Template drawn up by the European Commission,(3) which is used to determine the number of emission allowances to be allocated free of charge.
In accordance with the applicable legislation,(4) Member States are required to collect from operators of installations which are eligible for the free allocation of emission allowances the relevant information regarding the activities of those installations and their sub-installations. In the present case, the Data Collection Template drawn up by the Commission provided, as regards heat benchmark sub-installations, for the calculation of the total amount of measurable heat available at the installation.
In that regard, the Court notes that the corrected eligibility ratio is a single ratio calculated and applied on the basis of a comprehensive approach to the heat flows for the heat benchmark sub-installation. It follows that, for the purpose of calculating the number of emission allowances allocated free of charge to a heat benchmark sub-installation, that corrected eligibility ratio must be calculated and applied on the basis of a comprehensive approach to the heat flows for that sub-installation, even where the measurable heat imported from an installation not subject to the ETS can be attributed to a particular heat flow in the sub-installation concerned.
In the third place, the Court answers in the negative the question whether, in accordance with the applicable legislation,(5) an installation such as that of EDW may be covered, for the purposes of the free allocation of emission allowances, by the rules applicable to sectors exposed to a significant risk of carbon leakage(6) for the part of the heat which it does not export directly to an installation belonging to a sector deemed to be exposed to such a risk, such as Global Foundries, but which is consumed within the absorption chillers in order to produce cold water that is routed to that installation.
1Commission Decision 2010/2/EU of 24December 2009 determining, pursuant to Directive 2003/87/EC of the European Parliament and of the Council, a list of sectors and sub-sectors which are deemed to be exposed to a significant risk of carbon leakage (OJ 2010 L1, p.10); Commission Decision 2014/746/EU of 27October 2014 determining, pursuant to Directive 2003/87/EC, a list of sectors and sub-sectors which are deemed to be exposed to a significant risk of carbon leakage, for the period 2015 to 2019 (OJ 2014 L308, p.114).
2Directive 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’).
3This template was drawn up by the Commission pursuant to Article7(5) of Commission Decision 2011/278/EU of 27April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article10a of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2011 L130, p.1) (‘Decision 2011/278’).
4Article7 of Decision 2011/278.
5Third subparagraph of Article6(1) of Decision 2011/278.
6Article10a(12) of the directive on the greenhouse gas emission allowance trading scheme introduced an exception to the general rule that the number of allowances allocated free of charge to the installations concerned was to decrease progressively each year. Pursuant to that exception, installations in sectors or sub‑sectors which were exposed to a significant risk of carbon leakage were to be allocated allowances free of charge at 100% of the quantity determined.