Arcelor SA v European Parliament and Council of the European Union.

• Jurisdiction: European Union
• Court: General Court (European Union)
• Date: 02 March 2010

JUDGMENT OF THE GENERAL COURT (Third Chamber)

2 March 2010 (*)

(Environment – Directive 2003/87/EC – Scheme for greenhouse gas emission allowance trading – Action for annulment – Lack of direct and individual concern – Action for damages – Admissibility – Sufficiently serious breach of a higher-ranking rule of law conferring rights on individuals – Right to property – Freedom to pursue a trade or profession – Proportionality – Equal treatment – Freedom of establishment – Legal certainty)

In Case T‑16/04,

Arcelor SA, established in Luxembourg (Luxembourg), represented initially by W. Deselaers, B. Meyring and B. Schmitt-Rady, and subsequently by W. Deselaers and B. Meyring, lawyers,

applicant,

v

European Parliament, represented initially by K. Bradley and M. Moore, and subsequently by L. Visaggio and I. Anagnostopoulou, acting as Agents,

and

Council of the European Union, represented initially by B. Hoff-Nielsen and M. Bishop, subsequently by E. Karlsson and A. Westerhof Löfflerova, and subsequently by A. Westerhof Löfflerova and K. Michoel, acting as Agents,

defendants,

supported by

European Commission, represented by U. Wölker, acting as Agent,

intervener,

APPLICATION for partial annulment 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), on the one hand, and application for compensation for the damage suffered by the applicant following the adoption of that directive, on the other,

THE GENERAL COURT (Third Chamber),

composed of J. Azizi (Rapporteur), President, E. Cremona and S. Frimodt Nielsen, Judges,

Registrar: K. Pocheć, Administrator,

having regard to the written procedure and further to the hearing on 15 April 2008,

gives the following

Judgment

Legal context

I – Rules of the EC Treaty

1 Article 174 EC provides inter alia:

‘1. Community policy on the environment shall contribute to pursuit of the following objectives:

– preserving, protecting and improving the quality of the environment,

– protecting human health,

– prudent and rational utilisation of natural resources,

– promoting measures at international level to deal with regional or worldwide environmental problems.

2. Community policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Community. It shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay.

…

3. In preparing its policy on the environment, the Community shall take account of:

– available scientific and technical data,

– environmental conditions in the various regions of the Community,

– the potential benefits and costs of action or lack of action,

– the economic and social development of the Community as a whole and the balanced development of its regions.

…’

2 Article 175(1) EC provides:

‘The Council, acting in accordance with the procedure referred to in Article 251 [EC] and after consulting the Economic and Social Committee and the Committee of the Regions, shall decide what action is to be taken by the Community in order to achieve the objectives referred to in Article 174 [EC].’

II – The contested directive

3 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 contested directive’), which came into force on 25 October 2003, establishes a scheme for greenhouse gas emission allowance trading within the European Community (‘allowance trading scheme’), in order to promote reductions of greenhouse gas emissions, in particular carbon dioxide (‘CO₂’) in a cost-effective and economically efficient manner (Article 1 of the contested directive). It is based on the Community’s obligations under the United Nations Framework Convention on Climate Change and the Kyoto Protocol. The Protocol was approved by Council Decision 2002/358/EC of 25 April 2002 concerning the approval, on behalf of the European Community, of the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the joint fulfilment of commitments thereunder (OJ 2002 L 130, p. 1). The Kyoto Protocol came into force on 16 February 2005.

4 The Community and its Member States entered into commitments to reduce their aggregate anthropogenic emissions of greenhouse gases listed in Annex A to the Kyoto Protocol by 8% compared with 1990 levels in the period from 2008 to 2012 (recital 4 in the preamble to the contested directive). To that end, they agreed to fulfil their commitments to reduce emissions jointly, in accordance with Article 4 of the Kyoto Protocol, under what is known as the ‘Burden Sharing’ Agreement; the table of contributions for each Member State appears in Annex II to Decision 2002/358.

5 The Kyoto Protocol sets out three mechanisms to permit the participating countries to achieve their objectives to reduce greenhouse gas emissions, namely, first, the international trade in emission allowances, second, the joint implementation of reduction projects and, third, the ‘clean’ development mechanism, the last two mechanisms also being known as ‘flexible mechanisms’. While the joint implementation of reduction projects is designed to reduce greenhouse gas emissions in the countries participating in the Kyoto Protocol, the ‘clean’ development mechanism relates to emission reduction projects to be implemented in those developing countries which have not subscribed to the objectives of the Kyoto Protocol.

6 For the purposes of implementing within the Community the reduction objectives set out in the Kyoto Protocol and Decision 2002/358, the contested directive provides that, within the framework of the allowance trading scheme, the operators of the installations set out in Annex I to the directive must cover their greenhouse gas emissions by allowances which are allocated to them in accordance with national allocation plans (‘NAPs’). If an operator succeeds in reducing its emissions, it may sell the excess allowances to other operators. Conversely, the operator of an installation from which the emissions are excessive may buy the necessary allowances from an operator with a surplus.

7 Under Annex I to the contested directive, certain combustion installations in particular fall within its scope, namely those for the production of energy and for the production and processing of ferrous metals such as ‘[i]nstallations for the production of pig iron or steel (primary or secondary fusion) including continuous casting, with a capacity exceeding 2.5 tonnes per hour’.

8 The contested directive provides for an initial phase running from 2005 to 2007 (‘the first allocation period’), which precedes the first period of commitments laid down by the Kyoto Protocol, then a second phase running from 2008 to 2012 (‘the second allocation period’), which corresponds to that first period of commitments (Article 11 of the contested directive). During the first allocation period, the contested directive applies to only one of the greenhouse gases listed in Annex II, namely CO₂, and only to emissions from the activities listed in Annex I (Article 2 of the contested directive), including the production and processing of ferrous metals.

9 More specifically, the allowance trading scheme is founded, first, on the requirement to hold a permit before emitting greenhouse gases (Articles 4 to 8 of the contested directive), and, second, on the principle of allowances authorising the permit-holding operator to emit a certain quantity of those gases, with an obligation on that operator to surrender each year the amount of allowances equal to the total emissions from that installation (Article 12(3) of the contested directive).

10 Thus, any installation referred to in Annex I to the contested directive must hold a permit issued by the competent national authority. Under Article 4 of the contested directive, ‘Member States shall ensure that, from 1 January 2005, no installation undertakes any activity listed in Annex I resulting in emissions specified in relation to that activity unless its operator holds a permit issued by a competent authority in accordance with Articles 5 and 6, or the installation is temporarily excluded from the Community [allowance trading] scheme pursuant to Article 27’ of that directive.

11 Moreover, Article 6(2) of the contested directive provides:

‘Greenhouse gas emissions permits shall contain the following:

…

(c) monitoring requirements, specifying monitoring methodology and frequency;

(d) reporting requirements; and

(e) an obligation to surrender allowances equal to the total emissions of the installation in each calendar year, as verified in accordance with Article 15 [of the contested directive], within four months following the end of that year.’

12 The conditions and procedures under which the competent national authorities allocate allowances to operators of installations on the basis of a NAP are set out in Articles 9 to 11 of the contested directive.

13 The first subparagraph of Article 9(1) of the contested directive stipulates:

‘For each period referred to in Article 11(1) and (2) [of the contested directive], each Member State shall develop a [NAP] stating the total quantity of allowances that it intends to allocate for that period and how it proposes to allocate them. The [NAP] 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 [EC] Treaty, by 31 December 2003...