The Court of Justice of the European Union (CJEU) today issued a judgment finding that the maximum annual amount of free allowances for greenhouse gas emissions, as determined by the European Commission for the period 2013-2020, is invalid. The CJEU’s judgment allows the EC more time—10 months—in which to establish a new amount.
As explained in today’s release [PDF 168 KB] from the CJEU, businesses and operations that emit greenhouse gases brought actions before courts in Italy, the Netherlands, and Austria against the national authorities that were entrusted with the allocation of greenhouse gas emission allowances. The entities challenged the validity of the national allocation decisions for the period 2013-2020 and, indirectly, the maximum annual amount of allowances (and the correction factor) as determined by the EC in two decisions in 2011 and 2013. The national courts then referred certain questions to the CJEU concerning the validity of the EC decisions.
In today’s judgment the CJEU found:
As the CJEU concluded, depending on the information to be provided by the EU Member States, the maximum annual amount of allowances could be higher or lower than that determined to date by the EC. To avoid “serious repercussions” concerning legal relations or agreements entered into in good faith, the CJEU stated that annulment of the correction factor was not to affect definitive allocations that have already taken place in the EU Member States on the basis of the rules being deemed to be valid. However, concerning subsequent periods, the CJEU’s judgment of an “invalidity” would give rise to a “temporary legal vacuum” that might interrupt the implementation of the allowance trading program and, consequently, the attainment of the objectives pursued by the directive. The CJEU therefore held that today’s judgment generally would not be effective for 10 months so as to give the EC time in which to adopt the necessary measures.
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