Advocate General Bot: EU Renewables Directive Breaches EU Free Movement of Goods Rules

Advocate General Bot in his opinion of 28 January in Ålands Vindkraft AB v. Energimyndigheten (Swedish Energy Agency) expressed the view that the Swedish national renewable energy support scheme complies with the Renewables Directive 2009/28/EC, but that Article 3(3) of the Directive is invalid because it is in breach of the Treaty principle of the free movement of goods to the extent that it permits a Member State to deny or restrict access to its national support regime to producers whose plants are situated in other Member States.

The advocate general’s opinion does not bind the Court of Justice of the European Union. The CJEU will give judgment on this issue at a later date.

Article 3(1) of the Renewables Directive 2009/28/EC provides that Member States must meet the minimum renewable energy targets set out in the Directive. Article 3(3) of the Directive deals with support schemes and energy from renewable sources produced in different Member States:

3. In order to reach the targets set in paragraphs 1 and 2 of this Article Member States may, inter alia, apply the following measures:
(a) support schemes;
(b) measures of cooperation between different Member States and with third countries for achieving their national overall targets in accordance with Articles 5 to 11.
Without prejudice to Articles 87 and 88 of the Treaty, Member States shall have the right to decide, in accordance with Articles 5 to 11 of this Directive, to which extent they support energy from renewable sources which is produced in a different Member State.

Swedish law provides for green certificates for nationally-generated renewable energy, in compliance with the Renewables Directive. Since 2011, Swedish green certificates have also been available for renewable energy generated in countries that have an agreement with Sweden. The only such agreement (and the only one in Europe) is the agreement with Norway. Under the Directive, renewable generation from other Member States that does not fall within a cooperation mechanism does not count towards the binding national target.

Ålands Vindkraft, which operates a wind farm in Finland, applied for Swedish green certificates, and was refused on the grounds that green certificates were available only for wind farms based in Sweden. Ålands Vindkraft appealed to the court, which referred a series of questions to the European Court. Inter alia, the Swedish Förvaltningsrätten i Linköping referred the case for a preliminary ruling to the CJEU, asking whether the Swedish system – in the light of Article 34 TFEU – can be regarded as constituting a quantitative restriction on imports or a measure having equivalent effect. If the answer to this question 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.

Advocate General Bot expressed the view that while the Renewables Directive permits national-only support mechanisms, Article 34 TFEU (which takes precedence over the Directive) prohibits national rules that exclude producers whose plants are situated in other Member States. In particular, he expressed the opinion that Article 3(3) of the Renewables Directive is invalid to the extent that it permits Member States to deny or restrict access to their support regimes to renewable energy from sources situated in other Member States.

Advocate General Bot also proposed that, if the European Court of Justice follows his Opinion in its judgment, it should defer the effects of its judgment for a period of two years, to permit Member States to make the necessary amendments to the Directive.

If the Court follows the Opinion, its judgment will potentially have far-reaching consequences for national renewables subsidy mechanisms in the EU. One important political question is whether Member States would be prepared to support the generation of renewable energy in other Member States.

Sources: Court of Justice of the European Union, case C-573/12 (text not yet available in English), Bird & Bird

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