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EU court ruling could boost German utilities' legal battle for more carbon allowances

15 Feb 2012 18:21:35 | edcm


A court claim by a number of German emitters that they are entitled to more free carbon allowances might benefit from a new European Court of Justice (ECJ) ruling.

This week, the ECJ ruled against the German environment ministry's refusal to allow glass producer Flachglas Torgau access to internal memoranda, comments and emails relating to the company's Phase I allocation of free emissions allowances.

The ECJ said an environment ministry can only refuse access to environmental information on current legislative processes.

Legal precedent

Following the ECJ ruling, a great deal of such information is likely to become public.

This could provide industrial and energy companies - including RWE and E.ON, which hold two of the biggest shortfalls in the EU Emissions Trading System (EU ETS) - with more information to support claims that their free allocations should be larger.

The two utilities have already taken German emissions authority DEHSt, part of the environment ministry, to court to fight for more free allowances.

German emissions trading litigants are likely to find supporting arguments in this documentation, according to lawyer Stefan Altenschmidt, acting for Flachglas Torgau, as well as for RWE, E.ON and other emitters.

The glass producer took the case because it thought the German environment ministry had been unduly influenced by third-party lobbyists, he said.

The case will now return to the German court for a final decision, based on the ECJ's ruling.

Utilities vs government

RWE took DEHSt to Germany's Federal Administrative High Court after the authority scrapped a provision to give the utility 14 years of free EU allowances (EUAs) for any new plant built with the cleanest available technology. This provision was originally included in Germany's national allocation plan for Phase I of the EU ETS and its draft plan for Phase II, ending this year.

This is a test case for a number of pending court cases brought against DEHSt by the energy and industrial sectors, Altenschmidt said.

RWE initially lost the court case in 2008, and is now appealing. The appeal could last another two years because it is likely to go to the German constitutional court.

The flat glass sector has a surplus of free allowances in Phase II, mainly because of the economic downturn. But the sector is likely to become short before the end of Phase III (2013-2020), a spokesman for industry body Glass for Europe said. VF

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