Tuesday, July 1, 2014
In a widely anticipated judgment issued today by the Court of Justice of the European Union (the Court), the Swedish national renewable energy support scheme was upheld as compatible with both the Renewable Energy Directive 2009/28/EC (the Directive) and the principles of the Treaty of the Functioning of the European Union (the EU treaty) with respect to the free movement of goods.
Ålands Vindkraft AB v. Energimyndigheten (Swedish Energy Agency), Case C-573/12
The Court accepted that the renewable energy support scheme, which only awards tradable scheme certificates to producers of green electricity produced in Swedish territory, constitutes a restriction of the free movement of goods, insofar as it hinders imports of electricity from other Member States. However such restrictions were justified by the public interest objective of promoting the use of, and fostering investment in, renewable energy sources in order to protect the environment and combat climate change.
The Court held that the restrictions protect the health and life of humans, animals and plants, which are among the public interest grounds listed in Article 36 of the EU Treaty, in line with the Kyoto Protocol and other EU and international greenhouse gas emission reduction commitments. The Court stated that it was also important to ensure the proper functioning of national support schemes in order to maintain investor confidence and to enable a State to define effective national measures in order to achieve their mandatory national overall targets under the Directive.
The judgment is of interest following the preliminary opinion of Advocate General Bot, dated 28 January 2014, in which the Court was advised that article 3.3 of the Renewable Energy Directive, which permits Member States to discriminate in favour of domestic producers of renewable energy, is inconsistent with articles 34 of the EU Treaty. As the EU Court very often upholds the opinions of Advocate Generals, it had been anticipated that this judgment could have far reaching implications for the renewable energy sector in Europe. In particular, it would have reinvigorated the opportunities for exporting wind energy produced in Ireland (both onshore and offshore) to the UK.
The European Court has however resisted the opportunity to change the rules of the game, and the current territorial restrictions on accessing renewable energy supports will remain in place until such time as the law is changed to facilitate a more open and integrated European electricity market.
For further details please contact Alice Whittaker, Partner, Environment and Climate at Philip Lee