Judgments nº T-183/07 of Court of First Instance of the European Communities, September 23, 2009

• Resolution Date: September 23, 2009
• Issuing Organization: Court of First Instance of the European Communities
• Decision Number: T-183/07

In Case T-183/07,

Republic of Poland, represented initially by E. O-niecka-Tamecka, then by T. Nowakowski, then by T. Kozek, then by M. Dowgielewicz, and finally by M. Dowgielewicz, M. Jarosz and M. Nowacki, acting as Agents,

applicant,

supported by

Republic of Hungary, represented by J. Fazekas, R. Somssich and M. Fehér, acting as Agents,

and

Republic of Lithuania, represented by D. Kriau-i-nas, acting as Agent,

and

Slovak Republic, represented initially by J. -orba, and subsequently by B. Ricziová, acting as Agents,

interveners,

v

Commission of the European Communities, represented by U. Wölker and K. Herrmann, acting as Agents,

defendant,

supported by

United Kingdom of Great Britain and Northern Ireland, represented initially by Z. Bryanston-Cross and C. Gibbs, acting as Agents, assisted by H. Mercer, Barrister, and subsequently by I. Rao and S. Ossowski, acting as Agents, assisted by J. Maurici, Barrister,

intervener,

APPLICATION for the annulment, in whole or in part of Commission Decision C(2007) 1295 final of 26 March 2007 concerning the national allocation plan for the allocation of greenhouse gas emission allowances notified by Poland for the period from 2008 to 2012 in accordance with 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 (OJ 2003 L 275, p. 32),

THE COURT OF FIRST INSTANCE OF THE EUROPEAN COMMUNITIES (Second Chamber),

composed of I. Pelikánová, President, K. Jürimäe (Rapporteur) and S. Soldevila Fragoso, Judges,

Registrar: K. Poche-, Administrator,

having regard to the written procedure and further to the hearing on 10 February 2009,

gives the following

Judgment

Legal context

I - International and Community rules concerning the United Nations Framework Convention on Climate Change and the Kyoto Protocol

1 The United Nations Framework Convention on Climate Change, adopted at New York on 9 May 1992 (-the UNFCCC-), approved in the name of the European Community by Council Decision 94/69/EC of 15 December 1993 concerning the conclusion of the UNFCCC (OJ 1994 L 33, p. 11), is ultimately designed to stabilise concentrations of greenhouse gases in the atmosphere at a level preventing any dangerous man-made disruption of the climate system. Annex I to the UNFCCC contains a list of State parties, including the Republic of Poland, which is also classified there as a country in transition towards a market economy. The UNFCCC entered into force in the Community on 21 March 1994. The UNFCCC was ratified by the Republic of Poland on 28 July 1994 and entered into force there on 26 October 1994.

2 In order to attain the ultimate objective of the UNFCCC, the Kyoto Protocol to the UNFCCC was adopted on 11 December 1997 (Decision 1/CP.3 -Adoption of the Kyoto Protocol [to the UNFCCC]-). Annex A to the Kyoto Protocol contains the list of greenhouse gases and the list of sectors/categories of sources covered by the Kyoto Protocol. Annex B to the Kyoto Protocol contains the list of parties to the Kyoto Protocol with their commitments, with figures, to limit or reduce emissions.

3 On 25 April 2002, the Council of the European Union adopted Decision 2002/358/EC concerning the approval, on behalf of the European Community, of the Kyoto Protocol to the [UNFCCC] and the joint fulfilment of commitments thereunder (OJ 2002 L 130, p. 1). The Kyoto Protocol, and Annexes A and B thereto, are reproduced in Annex I to Decision 2002/358. The table of commitments, with figures, for limiting or reducing emissions, intended to establish the respective quantities of emissions attributed to the Community and its Member States in accordance with Article 4 of the Kyoto Protocol, appears in Annex II to Decision 2002/358.

4 the Republic of Poland ratified the Kyoto Protocol on 13 December 2002. The Kyoto Protocol entered into force in the Community and the Republic of Poland on 16 February 2005.

II - Legislation concerning the Community-s greenhouse gas emission allowance trading system

5 Article 1 of 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 (OJ 2003 L 275, p. 32) (-the Directive-), as amended by European Parliament and Council Directive 2004/101/EC of 27 October 2004 (OJ 2004 L 338, p. 18) provides:

-This Directive establishes a scheme for greenhouse gas emission allowance trading within the Community ... in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner.-

6 Article 9 of the Directive reads:

-1. For each period referred to in Article 11(1) and (2), each Member State shall develop a national plan stating the total quantity of allowances that it intends to allocate for that period and how it proposes to allocate them. The plan shall be based on objective and transparent criteria, including those listed in Annex III, taking due account of comments from the public. The Commission shall, without prejudice to the Treaty, by 31 December 2003 at the latest develop guidance on the implementation of the criteria listed in Annex III.

For the period referred to in Article 11(1), the plan shall be published and notified to the Commission and to the other Member States by 31 March 2004 at the latest. For subsequent periods, the plan shall be published and notified to the Commission and to the other Member States at least 18 months before the beginning of the relevant period.

2. National allocation plans shall be considered within the committee referred to in Article 23(1) [of the Directive].

3. Within three months of notification of a national allocation plan by a Member State under paragraph 1, the Commission may reject that plan, or any aspect thereof, on the basis that it is incompatible with the criteria listed in Annex III or with Article 10. The Member State shall only take a decision under Article 11(1) or (2) if proposed amendments are accepted by the Commission. Reasons shall be given for any rejection decision by the Commission.-

   7 According to Article 11(2) of the Directive:

   -For the five-year period beginning 1 January 2008, and for each subsequent five-year period, each Member State shall decide upon the total quantity of allowances it will allocate for that period and initiate the process for the allocation of those allowances to the operator of each installation. This decision shall be taken at least 12 months before the beginning of the relevant period and be based on the Member State-s national allocation plan developed pursuant to Article 9 and in accordance with Article 10, taking due account of comments from the public.-

   8 Annex III to the Directive sets out 12 criteria applicable to national allocation plans. Criteria Nos 1 to 3, 5 and 6, 10 and 12 of Annex III provide respectively as follows:

   -1. The total quantity of allowances to be allocated for the relevant period shall be consistent with the Member State-s obligation to limit its emissions pursuant to Decision 2002/358 and the Kyoto Protocol, taking into account, on the one hand, the proportion of overall emissions that these allowances represent in comparison with emissions from sources not covered by this Directive and, on the other hand, national energy policies, and should be consistent with the national climate change programme. The total quantity of allowances to be allocated shall not be more than is likely to be needed for the strict application of the criteria of this Annex. Prior to 2008, the quantity shall be consistent with a path towards achieving or over-achieving each Member State-s target under Decision 2002/358 and the Kyoto Protocol.

2. The total quantity of allowances to be allocated shall be consistent with assessments of actual and projected progress towards fulfilling the Member States- contributions to the Community-s commitments made pursuant to [Council Decision 93/389/EEC of 24 June 1993 for a monitoring mechanism of Community CO 2 and other greenhouse gas emissions].

3. Quantities of allowances to be allocated shall be consistent with the potential, including the technological potential, of activities covered by this scheme to reduce emissions. Member States may base their distribution of allowances on average emissions of greenhouse gases by product in each activity and achievable progress in each activity.

   -

5. The plan shall not discriminate between companies or sectors in such a way as to unduly favour certain undertakings or activities in accordance with the requirements of the Treaty, in particular Articles 87 and 88 thereof.

6. The plan shall contain information on the manner in which new entrants will be able to begin participating in the Community scheme in the Member State concerned.

   -

10. The plan shall contain a list of the installations covered by this Directive with the quantities of allowances intended to be allocated to each.

    -

12. The plan shall specify the maximum amount of [certified emission reductions (CERs)] and [emission reduction units (ERUs)] which may be used by operators in the Community scheme as a percentage of the allocation of the allowances to each installation. The percentage shall be consistent with the Member State-s supplementary obligations under the Kyoto Protocol and decisions adopted pursuant to the UNFCCC or the Kyoto Protocol.-

    Background to the dispute

    9 By letter of 30 June 2006, the Republic of Poland notified the Commission of the European Communities, in accordance with Article 9(1) of the Directive, of its national allocation plan for the period from 2008 to 2012 (-the NAP-). According to the NAP, the Republic of Poland intended to allocate to its national industry covered by the Directive an average annual total of 284.648332 million tonnes-equivalent of carbon dioxide (-CO 2 -).

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