Essent Belgium Case: CJEU Rules in Favour of Flemish Green Energy Certificate Scheme

In a further important decision, the Court of Justice of the European Union (CJEU) declared a system of green certificates established in the Flemish Region of Belgium compatible with EU law. Under this system, electricity suppliers had to surrender to the regulatory authority each year a certain number of green certificates, failing which they had to pay a fine. CJEU did however set requirements for the market of green certificates and with regard to the fines payable in case of not surrendering green certificates.

Having been fined as green electricity certificates originating from other EU countries and Norway were not recognised under the scheme, Essent, a Belgium electricity supplier, brought a number of actions before the Belgian courts. The Court of First Instance in Brussels referred the matter to CJEU, asking whether the Flemish scheme was compatible with EU law.

CJEU held that Article 5 of Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity (meanwhile repealed by Directive 2009/28/EC) did not preclude the Flemish scheme of green certificates. The court argued that

  • in the directive guarantees of origin and national support schemes were covered by different rules and that there was no link between them;
  • the directive provided specifically that the guarantee of origin scheme did not automatically give rise to entitlement to benefit from the national support mechanisms;
  • the EU legislature did not intend to require Member States to extend that scheme to cover green electricity produced on the territory of another Member State;
  • national support mechanisms were to be used to help Member States meet their commitments of increases in national consumption of green electricity in their economies and must in principle lead to an increase in national production of green electricity.

In contrast, CJEU found the scheme to be capable of impeding imports of electricity, especially green electricity, from other Member States. It “constitutes a measure having equivalent effect to quantitative restrictions on imports, in principle incompatible with the obligations under EU law resulting from Article 28 EC”, the Court said.

However, the Court found the restriction justified by the public interests to protect the health and life of humans, animals and plants and also found it proportionate. In the latter context, the Court recognised (in line with its judgement in the Ålands Vindkraft case) that EU law had not harmonized the national support schemes for green electricity and

“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.”

The Court further argued that it followed from Directive 2001/77 that the EU legislature allowed the various Member States to fix national indicative targets on future consumption of electricity produced from renewable sources on the basis of national production of green electricity. Besides, one important means of achieving the aim of the directive was to guarantee the proper functioning of support mechanisms for renewable energy sources at national level, the Court said. CJEU, however, also pointed out that the restrictions arising from the support scheme may be justified only if if it is actually possible for electricity suppliers to obtain green certificates under fair terms in a genuine market for certificates. Similarly, no excessive penalties must be imposed on traders who have not fulfilled their green certificate quota obligation.

Like in the Ålands Vindkraft case, CJEU did again not follow the opinion delivered by Advocate General Ives Bot. Mr Bot was of the opinion that

“Article 5 of Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market must be interpreted as not precluding domestic rules for the support of renewable energy, such as those at issue in the main proceedings, which provide for the issuance of green certificates to producers of green electricity established in a particular region and require electricity suppliers to surrender each year a number of green certificates corresponding to a quota whilst not allowing guarantees of origin issued in another Member State of the European Union or of the European Economic Area to be taken into account. Article 28 EC and Article 11 of the Agreement on the European Economic Area of 2 May 1992 do, however, preclude such rules, which hinder in a discriminatory way trade between Member States of the European Union or of the European Economic Area without being justified by imperative requirements relating to environmental protection.”

Source: CJEU

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