Alands Vindkraft (Judgment) [2014] EUECJ C-573/12 (01 July 2014)

BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just £1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!

(Reference for a preliminary ruling - National support scheme providing for the award of tradable green certificates for installations producing electricity from renewable energy sources - Obligation for electricity suppliers and certain users to surrender annually to the competent authority a certain number of green certificates - Refusal to award green certificates for electricity production installations located outside the Member State in question - Directive 2009/28/EC - Article 2, second paragraph, point (k), and Article 3(3) - Free movement of goods - Article 34 TFEU)

REQUEST for a preliminary ruling under Article 267 TFEU from the förvaltningsrätten i Linköping (Sweden), made by decision of 4 December 2012, received at the Court on 6 December 2012, in the proceedings

composed of V. Skouris, President, K. Lenaerts, Vice-President, A. Tizzano, L. Bay Larsen, T. von Danwitz, M. Safjan and C.G. Fernlund, Presidents of Chambers, E. Levits, A. Ó Caoimh, A. Arabadjiev, C. Toader, D. Šváby, M. Berger, A. Prechal (Rapporteur) and E. Jarašiūnas, Judges,

Advocate General's Opinion of the Advocate General's Opinion proposing that the Court should rule that Article 3(3) of Directive 2009/28 is invalid, and to the extent that the Court might accordingly be moved to give a ruling on the basis of reasoning relating to the invalidity of that provision rather than to its interpretation, a point that the interested persons have been unable to debate, it is appropriate to allow them to make submissions in that regard.

35 Under Article 83 of its Rules of Procedure, the Court may, after hearing the Advocate General's Opinion, the finding made by the Court in paragraph 78 of the judgment in PreussenElektra - that Directive 96/92/EC of the European Parliament and of the Council of 19 December 1996 concerning common rules for the internal market in electricity (OJ 1997 L 27, p. 20), then in force, merely marked a phase in the liberalisation of the electricity market and left in place some barriers to trade in electricity between Member States - no longer holds true.

86 It should be noted that the European Union subsequently adopted various legislative instruments whose purpose was gradually to dismantle those barriers so as to enable a fully operational internal market in electricity to be established, in which the cross-border trade in electricity within the European Union is intensified and all suppliers will be able to supply their goods and consumers will be free to choose their supplier. Particular examples of such instruments are: Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC (OJ 2003 L 176, p. 37) and its successor, Directive 2009/72/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in electricity and repealing Directive 2003/54 (OJ 2009 L 211, p. 55); and Regulation (EC) No 1228/2003 of the European Parliament and of the Council of 26 June 2003 on conditions for access to the network for cross-border exchanges in electricity (OJ 2003 L 176, p. 1) and its successor, Regulation (EC) No 714/2009 of the European Parliament and of the Council of 13 July 2009 on conditions for access to the network for cross-border exchanges in electricity and repealing Regulation No 1228/2003 (OJ 2009 L 211, p. 15).

87 On the other hand, the finding made by the Court in paragraph 79 of the judgment in PreussenElektra (EU:C:2001:160) - to the effect that the nature of electricity is such that, once it has been allowed into the transmission or distribution system, it is difficult to determine its origin and in particular the source of energy from which it was produced - remains valid.

88 The fact that, under Directive 2001/77 and its successor, Directive 2009/28, the origin of green electricity may be attested by guarantees of origin is not capable of calling that finding into question.

89 In the first place, as was pointed out in paragraph 52 above, the sole purpose of those guarantees of origin is to indicate to final customers the proportion of energy from renewable sources in an electricity supplier’s energy mix.

90 In the second place, it must be stated that, given the fungible nature of the electricity in the transmission and distribution systems, those guarantees cannot serve as confirmation that a certain volume of electricity supplied by those networks is precisely the electricity from renewable energy sources in respect of which those guarantees were given and, accordingly, the systematic identification of electricity as green electricity at the distribution and consumption stages remains difficult to put into practice.

91 In the light of those preliminary considerations, it is appropriate first to examine one of the aspects of the legislation at issue in the main proceedings, highlighted by the referring court in its questions and on the strength of which approval was refused to Ålands Vindkraft, namely, the fact that, under that legislation, electricity certificates are to be awarded solely in respect of green electricity produced in the national territory.

92 In that regard, it must be acknowledged that, as EU law currently stands, such a territorial limitation may in itself be regarded as necessary in order to attain the legitimate objective pursued in the circumstances, which is to promote increased use of renewable energy sources in the production of electricity.

93 It is admittedly true that, as Ålands Vindkraft, among others, has argued, it seems at first sight possible for the environmental protection objective underlying the increased production and consumption of green electricity - specifically, the objective of reducing greenhouse gas emissions - to be pursued within the European Union, together with the related objectives of protecting human, animal and plant life or health, regardless of whether that increase flows from installations located in the territory of a particular Member State.

94 However, since, in particular, EU law has not harmonised the national support schemes for green electricity, it is possible in principle for Member States to limit access to such schemes to green electricity production located in their territory.

95 First, the fact that a national support scheme is designed to favour directly the production of green electricity, rather than solely its consumption, can be explained, in particular, by the fact that the green nature of the electricity relates only to its method of production and that, accordingly, it is primarily at the production stage that the environmental objectives in terms of the reduction of greenhouse gases can actually be pursued.

96 By contrast, and as was pointed out in paragraphs 87 and 90 above, once the green electricity has been allowed into the transmission or distribution system, it is difficult to determine its specific origin and, accordingly, its systematic identification at the consumption stage as green electricity is difficult to put into practice.

97 It is also important to remember that, as is apparent from recitals 1 and 25 to Directive 2009/28 and Articles 3(1) and 5(1) and (3) thereof, and as was observed in relation to Question 1, in order to ensure the implementation of the international environmental commitments entered into by the European Union, the EU legislature has assigned the various Member States mandatory national targets formulated in terms of quotas for the production of green electricity.

98 Secondly, and in relation to the fact that the support scheme at issue in the main proceedings is designed to apply solely to green electricity production located in the national territory, it should be observed that, as was noted by the EU legislature in recital 15 to Directive 2009/28, the starting points, the renewable energy potential and the energy mix of each Member State vary, a fact which moved the EU legislature to consider it appropriate, taking into account those differences, to allocate among those States a fair and appropriate share of the effort required to satisfy the European Union’s international commitments.

99 Furthermore, as was also noted by the EU legislature in recital 25 to Directive 2009/28, it is essential, in order to ensure the proper functioning of the national support schemes, that Member States be able to ‘control the effect and costs of their national support schemes according to their different potentials’, while maintaining investor confidence.

100 It should be noted, moreover, that while preserving the national and, in principle, territorial nature of the existing support schemes, the EU legislature has none the less also established various mechanisms to enable Member States to cooperate, in so far as is possible, in order to achieve their mandatory targets under Directive 2009/28. One of those mechanisms is the establishment, provided for under Article 11 of the directive, of joint support schemes.

101 As was pointed out in paragraph 22 above, that option was exercised by the Kingdom of Sweden and the Kingdom of Norway, which took steps to merge the green certificate support schemes that they had each set up.

102 As regards Ålands Vindkraft’s contention that, according to certain indicators, the Kingdom of Sweden now has a green electricity production capacity enabling it to meet its mandatory national targets under Directive 2009/28, it must be held that, even supposing that to be the case, it cannot support the inference that the territorial limitation characterising the support scheme at issue in the main proceedings is no longer necessary.

103 In that regard, it need only be observed that a green energy support scheme, whose production costs seem - as the Swedish Government and the Commission, in particular, have maintained - to be still quite high as compared with the costs of electricity produced from non-renewable energy sources, is inherently designed to foster, from a long-term perspective, investment in new installations, by giving producers certain guarantees about the future marketing of their green electricity. Accordingly, the effectiveness of such a scheme requires by definition a measure of continuity sufficient, in particular, to ensure the fulfilment of the legitimate expectations of investors who have committed themselves to such projects, and the continued operation of those installations.

104 In the light of all the foregoing, it does not appear that, merely by reserving a support scheme using green certificates, such as that at issue in the main proceedings, exclusively to green electricity produced in the national territory, the Kingdom of Sweden has acted in breach of the principle of proportionality. As EU law currently stands, the Kingdom of Sweden was legitimately able to consider that such a territorial limitation does not go beyond what is necessary in order to attain the objective - pursued both by Directive 2009/28 and by the national scheme which falls within the scope of that directive - of increasing the production and, indirectly, the consumption of green electricity in the European Union.

105 Secondly, it is none the less important to examine whether, considered together with that territorial limitation, the other features of the legislation at issue in the main proceedings to which the referring court refers support the conclusion that, viewed as a whole, that legislation meets the requirements entailed by the principle of proportionality.

106 In that regard, it should be noted that, according to the order for reference, that legislation is characterised inter alia by an annual obligation for suppliers and certain users of electricity to hold and to surrender to the competent authority a certain number of electricity certificates, corresponding to a proportion of the total volume of electricity that they have supplied or consumed, failing which they must pay a specific fee.

107 It can also be seen from the order for reference that interested parties can obtain electricity certificates sold by producers on a specific market open to competition in which the price of the certificate is determined by the interplay of supply and demand, and that the legislation does not require, or prohibit, the purchase of both the electricity and the certificates from a single producer.

108 It therefore follows from the legislation at issue in the main proceedings that, in the case of imports to Sweden of green electricity produced by Ålands Vindkraft in Finland, the marketing or consumption of that electricity will require, in general, the suppliers or consumers concerned - including, as the case may be, Ålands Vindkraft in its capacity as a supplier - to purchase electricity certificates in proportion to the volume of electricity imported.

109 In those respects, it should be noted first that a national support scheme which, like the scheme at issue in the main proceedings, uses green certificates, is designed in particular to have the additional cost of producing green electricity borne directly by the market, that is to say, by the suppliers and users of electricity, who are required to meet the quota obligation, and, ultimately, by the consumers.

110 In choosing to do this, a Member State does not exceed the bounds of the discretion to which it remains entitled in the pursuit of the legitimate objective of increasing the production of green electricity.

111 Secondly, it must be noted that, unlike, for example, investment aid, the purpose of this type of scheme is to support the operation of installations producing green electricity once they become active. In that regard, the quota obligation is designed in particular to guarantee green electricity producers a demand for the certificates they have been awarded and in that way to facilitate the sale of the green energy that they produce at a price higher than the market price for conventional energy.

112 The effect of that scheme in terms of offering an incentive for electricity producers in general - including, in particular, for those who are both producers, on the one hand, and suppliers or consumers, on the other - to increase their production of green electricity does not appear to be open to doubt; nor, consequently, does it appear possible to call in question the ability of that scheme to attain the legitimate objective pursued in the circumstances of this case.

113 However, it should be noted, thirdly, that, by its very nature, such a scheme requires for its proper functioning market mechanisms that are capable of enabling traders - who are subject to the quota obligation and who do not yet possess the certificates required to discharge that obligation - to obtain certificates effectively and under fair terms.

114 It is therefore important that mechanisms be established which ensure the creation of a genuine market for certificates in which supply can match demand, reaching some kind of balance, so that it is actually possible for the relevant suppliers and users to obtain certificates under fair terms.

115 According to the findings of the referring court, the green certificates are actually sold, in the Member State concerned, on a market that is open to competition and, accordingly, the price of those certificates is determined by the interplay of supply and demand.

116 As regards the fact that, under the legislation at issue in the main proceedings, suppliers and users which do not meet their quota obligation must pay a specific fee, it is appropriate to state the following. While the imposition of such a fee may admittedly be considered necessary as an incentive, on the one hand, to producers to increase their production of green electricity, and on the other, to traders subject to a quota obligation to take steps to acquire the requisite certificates, it is none the less necessary that neither the method for determining that fee nor the amount of that fee go beyond what is necessary for the purposes of providing such an incentive; in particular, it is necessary in that connection that no excessive penalties be imposed on the traders concerned.

117 Fourthly, it should be noted that the referring court states that the legislation at issue in the main proceedings does not preclude suppliers and users under a quota obligation from obtaining both the electricity and the electricity certificates from domestic green electricity producers. Ålands Vindkraft submits that, as a result, domestic green electricity producers can, by coupling the sale of electricity and electricity certificates, promote the sale of the latter.

118 In that regard, it should be noted that, provided that there is a market for green certificates which meets the conditions set out in paragraphs 113 and 114 above and on which traders who have imported electricity from other Member States are genuinely able to obtain certificates under fair terms, the fact that the national legislation at issue in the main proceedings does not prohibit producers of green electricity from selling to traders under the quota obligation both the electricity and the certificates does not mean that the legislation goes beyond what is necessary to attain the objective of increasing the production of green electricity. The fact that such a possibility remains open appears to be an additional incentive for producers to increase their production of green electricity.

119 In the light of all the foregoing considerations, the answer to Questions 2 and 3 is that Article 34 TFEU must be interpreted as not precluding national legislation, such as that at issue in the main proceedings, which provides for the award of tradable certificates to green electricity producers solely in respect of green electricity produced in the territory of the Member State concerned and which places suppliers and certain electricity users under an obligation to surrender annually to the competent authority a certain number of those certificates, corresponding to a proportion of the total volume of electricity that they have supplied or used, failing which they must pay a specific fee.

120 By its fourth question, read in the light of the grounds stated in the order for reference, the referring court asks, in essence, whether, on the assumption that Article 34 TFEU must be interpreted as not precluding legislation such as that at issue in the main proceedings, in so far as that legislation reserves the support measures introduced to green electricity production in the territory of the Member State concerned, EU law - including, in particular, the principle of legal certainty enshrined therein - does, on the other hand, preclude a situation in which the restriction of the territorial scope is not expressly laid down in that legislation.

121 In that regard, it should be noted that the referring court finds that, under the legislation at issue in the main proceedings, the electricity certificate scheme is not open to green electricity production installations located outside Sweden. The referring court states that, although that restriction is not expressly laid down in that legislation, the legislation must be construed to that effect, particularly in view of the related travaux préparatoires.

122 The Commission argues in that connection that the restriction is laid down expressly in Article 5 of Chapter 1 of the Law of 2011 and that, accordingly, there is no need for the Court to answer the question.

123 It should be noted, however, that the question whether - and, if so, to what extent - the restriction of the territorial scope of the legislation at issue in the main proceedings is apparent from the wording of that legislation pertains to the interpretation of that legislation and accordingly falls under the exclusive jurisdiction of the national courts (see, to that effect, inter alia, ČEZ, C-115/08, EU:C:2009:660, paragraph 57 and the case-law cited).

124 As regards the question raised by the referring court, it should be noted first of all that, in keeping with the answer given by the Court to Question 1, the support scheme at issue in the main proceedings constitutes a support scheme within the meaning of point (k) of the second paragraph of Article 2 and Article 3(3) of Directive 2009/28, the purpose of which - as is apparent from the latter provision - is accordingly to help the Kingdom of Sweden meet its mandatory targets under the directive in relation to the production of green electricity in its territory.

125 It is settled case-law that where Member States adopt, in that way, measures by which they implement EU law, they are required to respect the general principles of that law, which include the principle of legal certainty (see, to that effect, inter alia, Plantanol, C-201/08, EU:C:2009:539, paragraph 43 and the case-law cited, and IBV & Cie, C-195/12, EU:C:2013:598, paragraph 49).

126 It is for the referring court to determine whether national legislation such as that at issue in the main proceedings is consistent with that principle, as the Court, when giving a preliminary ruling under Article 267 TFEU, has jurisdiction only to provide the national court with all the criteria for the interpretation of EU law which may enable it to determine the issue of compatibility (see, to that effect, inter alia, Plantanol, EU:C:2009:539, paragraph 45 and the case-law cited).

127 In that regard, it should be noted that, according to the Court’s established case-law, the principle of legal certainty requires, on the one hand, that rules of law be clear and precise and, on the other, that their application be foreseeable by those subject to them (see, inter alia, Plantanol, EU:C:2009:539, paragraph 46 and the case-law cited).

128 Specifically, in order to meet the requirements of that principle, legislation must enable those concerned to know precisely the extent of the obligations imposed on them, and those persons must be able to ascertain unequivocally their rights and obligations and take steps accordingly (see, inter alia, ArcelorMittal Luxembourg v Commission and Commission v ArcelorMittal Luxembourg and Others, C-201/09 P and C-216/09 P, EU:C:2011:190, paragraph 68 and the case-law cited).

129 As regards the territorial scope of the support scheme provided for under the national legislation at issue in the main proceedings, the referring court may, in order to determine whether the requirements of the principle of legal certainty are met, consider all relevant elements which emerge from the terms, objectives or general scheme of that legislation (see, by analogy, Mitsui & Co. Deutschland, C-256/07, EU:C:2009:167, paragraph 32).

130 That court may also take into account the fact that the context to which the national legislation belongs is the implementation of Directive 2009/28, to which the travaux préparatoires for the Law of 2011 expressly refer, to the extent that, in particular, as is apparent from the Court’s examination of Question 1, that directive expressly permits the establishment by Member States of similar support schemes subject to a territorial limitation, for the purposes, inter alia, of enabling those States to meet their mandatory targets under the directive with regard to the production of green energy in their territory.

131 In view of the foregoing and subject to final assessments which fall within the exclusive jurisdiction of the national court, it does not appear that the legislation at issue in the main proceedings is in breach of the principle of legal certainty.

132 In the light of all of the foregoing considerations, the answer to Question 4 is that it is for the national court to determine, taking into account all relevant factors - which may include the EU legislative context in which the legislation at issue in the main proceedings arises - whether, in terms of its territorial scope, that legislation meets the requirements of the principle of legal certainty.

133 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

1. Point (k) of the second paragraph of Article 2 and Article 3(3) of Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC must be interpreted as allowing a Member State to establish a support scheme, such as that at issue in the main proceedings, which provides for the award of tradable certificates to producers of green electricity solely in respect of green electricity produced in the territory of that State and which places suppliers and certain electricity users under an obligation to deliver annually to the competent authority a certain number of those certificates, corresponding to a proportion of the total volume of electricity that they have supplied or consumed.

2. Article 34 TFEU must be interpreted as not precluding national legislation, such as that at issue in the main proceedings, which provides for the award of tradable certificates to green electricity producers solely in respect of green electricity produced in the territory of the Member State concerned and which places suppliers and certain electricity users under an obligation to surrender annually to the competent authority a certain number of those certificates, corresponding to a proportion of the total volume of electricity that they have supplied or used, failing which they must pay a specific fee.

3. It is for the national court to determine, taking into account all relevant factors - which may include the EU legislative context in which the legislation at issue in the main proceedings arises - whether, in terms of its territorial scope, that legislation meets the requirements of the principle of legal certainty.

	[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]
	Court of Justice of the European Communities (including Court of First Instance Decisions)
You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Alands Vindkraft (Judgment) [2014] EUECJ C-573/12 (01 July 2014) URL: http://www.bailii.org/eu/cases/EUECJ/2014/C57312.html Cite as: EU:C:2014:2037, ECLI:EU:C:2014:2037, [2014] EUECJ C-573/12

Court of Justice of the European Communities (including Court of First Instance Decisions)