Aurubis AG v Bundesrepublik Deutschland.

• Jurisdiction: European Union
• ECLI: ECLI:EU:C:2021:959
• Docket Number: C-271/20
• Date: 25 November 2021
• Celex Number: 62020CJ0271
• Court: Court of Justice (European Union)

Provisional text

JUDGMENT OF THE COURT (Fifth Chamber)

25 November 2021 (*)

(Reference for a preliminary ruling – Scheme for greenhouse gas emission allowance trading – Free allocation of allowances – Decision 2011/278/EU – Article 3(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)

In Case C‑271/20,

REQUEST for a preliminary ruling under Article 267 TFEU from the Verwaltungsgericht Berlin (Administrative Court, Berlin, Germany), made by decision of 11 June 2020, received at the Court on 19 June 2020, in the proceedings

Aurubis AG

v

Bundesrepublik Deutschland,

THE COURT (Fifth Chamber),

composed of E. Regan, President of the Chamber, K. Lenaerts, President of the Court, acting as Judge of the Fifth Chamber, C. Lycourgos (Rapporteur), President of the Fourth Chamber, I. Jarukaitis and M. Ilešič, Judges,

Advocate General: G. Hogan,

Registrar: M. Krausenböck, Administrator,

having regard to the written procedure and further to the hearing on 19 May 2021,

after considering the observations submitted on behalf of:

– Aurubis AG, by S. Altenschmidt and D. Helling, Rechtsanwälte,

– Bundesrepublik Deutschland, by J. Steegmann and A. Leskovar, acting as Agents,

– the European Commission, by B. De Meester, C. Hermes and G. Wils, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 24 June 2021,

gives the following

Judgment

1 This request for a preliminary ruling concerns the interpretation, first, of Article 3(d) of Commission Decision 2011/278/EU of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2011 L 130, p. 1) and, second, of the temporal scope of that decision in respect of the third trading period (2013 to 2020).

2 The request has been made in proceedings between Aurubis AG and the Bundesrepublik Deutschland (Federal Republic of Germany), represented by the Umweltbundesamt, Deutsche Emissionshandelsstelle (Federal Environment Agency, German Emissions Trading Authority, ‘the DEHSt’), relating to greenhouse gas emission allowances (‘the emission allowances’) to be allocated to Aurubis for free in respect of its primary copper production activity.

Legal context

EU law

Directive 2003/87

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), in the version applicable when Decision 2011/278 was adopted and which is relevant for the purpose of examining the first question, includes the amendments made by Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 amending Directive 2003/87 so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community (OJ 2009 L 140, p. 63) (‘Directive 2003/87’).

4 Directive 2003/87 was subsequently amended again on numerous occasions, including by Decision (EU) 2015/1814 of the European Parliament and of the Council of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87 (OJ 2015 L 264, p. 1) and by Directive (EU) 2018/410 of the European Parliament and of the Council of 14 March 2018 amending Directive 2003/87 to enhance cost-effective emission reductions and low-carbon investments, and Decision 2015/1814 (OJ 2018 L 76, p. 3). Article 10(1), Article 10a(5) and (7), and Article 13 of Directive 2003/87, in the version as amended by Directive 2018/410, are relevant for the purpose of examining the second question. The wording of the other provisions of Directive 2003/87, as cited below, was already in force when Decision 2011/278 was adopted and is still in force today.

5 Article 1 of Directive 2003/87, headed ‘Subject matter’, provides, in the first paragraph:

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

6 Article 2 of that directive, headed ‘Scope’, provides, in paragraph 1:

‘This Directive shall apply to emissions from the activities listed in Annex I and greenhouse gases listed in Annex II.’

7 Article 3 of that directive, headed ‘Definitions’, states:

‘For the purposes of this Directive the following definitions shall apply:

…

(t) “combustion” means any oxidation of fuels, regardless of the way in which the heat, electrical or mechanical energy produced by this process is used, and any other directly associated activities, including waste gas scrubbing;

…’

8 Article 10 of that directive, headed ‘Auctioning of allowances’, provides, in paragraph 1, in the version as amended by Directive 2018/410:

‘From 2019 onwards, Member States shall auction all allowances that are not allocated free of charge in accordance with Articles 10a and 10c of this Directive and that are not placed in the market stability reserve established by Decision [2015/1814] or cancelled …

…’

9 Article 10a of Directive 2003/87, headed ‘Transitional Union-wide rules for harmonised free allocation’, provides, in paragraph 1:

‘…

The [harmonised measures adopted by the European Commission for free allocation of allowances] shall, to the extent feasible, determine Union-wide ex-ante benchmarks so as to ensure that allocation takes place in a manner that provides incentives for reductions in greenhouse gas emissions and energy efficient techniques, by taking account of the most efficient techniques …

…’

10 Further, Article 10a(5) and (7), in the version as amended by Directive 2018/410, provides:

‘5. In order to respect the auctioning share set out in Article 10, for every year in which the sum of free allocations does not reach the maximum amount that respects the auctioning share, the remaining allowances up to that amount shall be used to prevent or limit reduction of free allocations to respect the auctioning share in later years. Where, nonetheless, the maximum amount is reached, free allocations shall be adjusted accordingly. …

…

7. Allowances from the maximum amount referred to in paragraph 5 of this Article which were not allocated for free by 2020 shall be set aside for new entrants, together with 200 million allowances placed in the market stability reserve pursuant to Article 1(3) of Decision [2015/1814]. Of the allowances set aside, up to 200 million shall be returned to the market stability reserve at the end of the period from 2021 to 2030 if not allocated for that period.

From 2021, allowances that pursuant to paragraphs 19 and 20 are not allocated to installations shall be added to the amount of allowances set aside in accordance with the first sentence of the first subparagraph of this paragraph.

…’

11 Article 13 of Directive 2003/87, headed ‘Validity of allowances’, provides, in the version as amended by Directive 2018/410:

‘Allowances issued from 1 January 2013 onwards shall be valid indefinitely. Allowances issued from 1 January 2021 onwards shall include an indication showing in which ten-year period beginning from 1 January 2021 they were issued, and be valid for emissions from the first year of that period onwards.’

12 Article 19 of Directive 2003/87, which is headed ‘Registries’, provides, in paragraph 1:

‘Allowances issued from 1 January 2012 onwards shall be held in the [Union] registry for the execution of processes pertaining to the maintenance of the holding accounts opened in the Member State and the allocation, surrender and cancellation of allowances …’

13 Article 20 of that directive, headed ‘Central Administrator’, provides, in paragraph 1:

‘The Commission shall designate a Central Administrator to maintain an independent transaction log recording the issue, transfer and cancellation of allowances.’

14 Annex I to that directive contains a table listing the categories of activities to which the directive applies. They include the ‘production or processing of non-ferrous metals, including production of alloys, refining, foundry casting, etc., where combustion units with a total rated thermal input (including fuels used as reducing agents) exceeding 20 [megawatts (MW)] are operated’.

15 Annex II to that directive lists the greenhouse gases covered. It includes, inter alia, carbon dioxide (CO2).

Directive 2009/29

16 According to recital 37 of Directive 2009/29:

‘In order to clarify the coverage of all kinds of boilers, burners, turbines, heaters, furnaces, incinerators, calciners, kilns, ovens, dryers, engines, fuel cells, chemical looping combustion units, flares, and thermal or catalytic post-combustion units by Directive [2003/87], a definition of “combustion” should be added.’

Decision 2011/278

17 Recitals 1, 12 and 18 of Decision 2011/278 stated:

‘(1) Article 10a of [Directive 2003/87] requires that the [Union-wide] and fully harmonised implementing measures for the allocation of free emission allowances should, to the extent feasible, determine ex-ante benchmarks so as to ensure that the free allocation of emission allowances takes place in a manner that provides incentives for reductions in greenhouse gas emissions and energy efficient techniques, by taking account of the most efficient techniques, substitutes, alternative production processes, high efficiency cogeneration, efficient energy recovery of waste gases, use of biomass and capture and storage of carbon dioxide, where such facilities are available, and should not...