Eligibility of Foreign Produced Renewable Electricity to National Support Scheme: Advocate General Deems a Provision of the Renewables Directive Invalid (Preliminary Ruling)
Advocate General Yves Bot delivered on 28 January 2014 his conclusions in case Ålands Vindkraft AC vs. Energimyndighten (Case C-573/12). The conclusions are clearly in favour of the removal of barriers to the eligibility of foreign produced electricity to national support scheme for renewables, as this is currently backed in Directive 2009/28/EC on the promotion of the use of energy from renewable sources (RES Directive).
Sweden has been running a national support scheme for renewable energy sources in the form of tradable green certificates since 2003, so-called elcertificates. Generators of new renewable energy receive green certificates free of charge from the state for eligible production. The certificates represent a proof that a certain amount of renewable electricity has been generated. Electricity suppliers are required to submit a certain number of green certificates each year, proportional to the share of their sales or use (quota obligation). If they do not possess enough certificates themselves, they can buy certificates from the eligible generators or from the market. By this means, the renewable electricity generators get extra revenues from the sale of the certificates that come in addition to the sale of electricity. This support scheme is in place in several European countries: Belgium, United Kingdom, Italy, Poland, Sweden and Norway. Sweden and Norway have been runnning a joint green certificates market since 1st January 2012.
The case refers to the refusal by the Swedish Energy Regulator (Energimyndigheten) to deliver a permit to receive green certificates (elcert) to a wind power plant named Oscar. The wind power plant is located on Finland's territory but so close to the Swedish territory that it is connected to the Swedish electricity distribution network.
When examining the complaint raised by Ålands Vindkraft AB, the Administrative Court in Linköping, Sweden, put forward a request for preliminary ruling before the Court of Justice of the European Union (CJEU) to clarify the intepretation of sevral EU law provisions.
Questions raised in the Preliminary Ruling
The Administrative Court referred 4 questions to the Court of Justice of the EU:
- Are Article 2(k) [definition of "support scheme"] and 3.3 [right to restrain access to national RES support scheme] of Directive 2009/28/EC to be interpreted as meaning that they permit a Member State to apply a national support scheme as [the one described] above, in which only producers situated in the territory of that country can participate and which has the result that those producers have an economic advantage over producers who cannot be issued with an electricity certificate?
- Can a system such as that described in question 1 - in the light of Article 34 TFEU - be regarded as constituting a quantitivate retriction on imports or a measure having equivalent effect?
- If the answer to question 2 is affirmative, can such a system be compatible with Article 34 TFEU as regards the objective of promoting the production of electricity from renewable energy sources?
- How is the consideration of the above questions affected by the fact that the restriction of the support scheme to include only national producers is not expressly governed in national law?
Advocate General's Conclusions
In his conclusions, A.G. Bot confirms that the provisions of Directive 2009/28/EC, which allows such discrimination, are contrary to Article 34 TFEU which prohibits unjustified restrictions on the free movement of goods. Article 34 TFEU relates to intra-EU imports and prohibits "quantitative restrictions and all measures having equivalent effect" between Member States. The discriminatory element of the scheme is that only electricity generated on the territory of the Member State in question can access the support scheme, and therefore benefit from an economic advantage that the foreign generators cannot have. The fact that such measures was contrary to primary EU law was common knowledge and was already recognised by the parties in the PreussenElektra decision (Case C-379/98). The novelty with Article 3.3 of Directive 2009/28/EC is that it is the directive itself which validates the adoption of national measures contrary to the provisions of the Treaty on the free movement of goods. The key questions was therefore to know how the contradictory provisions enshrined respectively in primary and secondary law were interacting and how this invalidity should be dealt with. The answer to these questions would have required a more detailed analysis from A.G. Bot. It is on this point and in the aprticular context of protective national RES policies that the Court will have to reach a final decision, i.e. the consequences of the invalidity of a secondary law provision. The consequences of the invalidity of Article 3.3 of Directive 2009/28/EC are of great importance for all national support schemes in favour of renewables in the EU.
A.G. Bot answered in the following way:
A green certificates scheme as the one in place in Sweden is a support scheme pursuant to Articles 2(k). 3.3 of Directive 2009/28/EC does allow Member State to allow discriminating against foreign produced renewable electricity by limiting access to their national support scheme to electricity generated on their territory. Such prohibition, backed by Article 3.3 of the RES Directive, is contrary to Article 34 TFEU. Consequently, A.G. Bot estimates that Article 3.3 must be deemed as invalid. Such invalidation must be terminated two years after the date of the final judgement. A.G. Bot argues in favour of the application of the exemption defined in Article 264, para. 2, and to not giving retroactive effect to the invalidation of Article 3.3 in order to protect legal certainty. Such retroactive invalidation would have tremendous negative effects in countries having defined a nationally restrictire support scheme for renewables, which means almost all EU and EEA Member States.
With two pending cases, the Court of Justice has now the unique opportunity to address the question of the conformity of nationally protective support scheme, based on the green light given in the RES Directive, with the principles of free movement of goods. It is testing the application of the core principles of the internal market and the interest of the EU as a whole towards the political conpromises to allow for national protectionism in RES policies.
The other relevant case relates to the regime of green certificates and guarantees of origin in Belgium, in the joint Cases C-204 to C-208/12 Essent Belgium (conclusions dated 3 May 2013), in relation to former Directive 2001/77/EC. A.G. Bot was in charge of both cases, which at least guaranteed that the link between the two cases was made. It gives now the Court the opportunity to deliver a coherent solution in both cases.
Catherine Banet, Tradable Green Certificates Schemes under EU Law - The Influence of EU Law on national support schemes for renewable electricity generation (UniPub, Oslo, 2012), 365 p.
An updated version of this book will be published in 2014 at Kluwer.