The landscape after the judgment – prognosis of legal effects and further scenarios
Friday, 02 October 2009 18:59


It seems unbelievable, that in the construction of the European Emission Trading Scheme occurred such a glaring and  - potentially burdened with severe consequences – error in law.

 

Let’s analyze possible future legal scenarios, that are evoked with the judgment of the Court of First Instance of 23 September 2009 in Case T‑183/07 the Republic of Poland against the European Commission.

 

The reaction of the Commission


From legal point of view the first reaction of the European Commission after the publication of the judgment of the Court of First Instance of 23 September 2009 in Case T‑183/07 the Republic of Poland against the European Commission (hereinafter referred to as “Judgment”) is disappointing.


In the statement of 24 September 2009 IP/09/1355 relating to the Judgment, Commissioner Stavros Dimas expressed the view, that:


„[...] the Commission has to take new NAP Decisions in respect of Poland and Estonia. The originally notified national allocation plans cannot therefore be deemed to be accepted as a result of today's judgements.

Consequentially and ahead of these decisions, those countries are not allowed to issue any additional allowances beyond those created in the EU ETS registry system.

In preparing new decisions the Commission would base itself on the best available data. In this context the importance of verified emissions for 2005 to 2008 should be noted. In the light of these data, it would appear unlikely that there would be any material difference concerning the total number of allowances consistent with the terms of the Directive. The actual 2008 emissions in Estonia and Poland correspond closely to those anticipated in the Commission Decisions on the Estonian and Polish NAPs [...].”


The above mentioned statement was probably issued in order to steady the market in emission allowances, where after the Judgment some “nervous” movements of prices were observed.


Some citations from the reasoning of the Court

Nevertheless, such an opinion of the Commissioner doesn’t explain same accusations, which were directed by the Court towards the Commission in the matter of the general procedure of approval of National Allocation Plan’s.


It seems, that the rank and the burden of considered accusations required a more analytical approach – taking particularly account of  basic principles of legal order.


Let’s mention some citations from the reasoning of the Judgment:


“[...] such a reasoning does not explain the reasons why the Commission set aside the said data used by the Republic of Poland”,


“[...] the Commission did not set out any justification in the contested decision to explain in what way the method of economic analysis used by the Republic of Poland was not reliable.”,


“The mere claim by the Commission that, as recital 8 of the contested decision shows, its own calculations lead to the most reliable results is not sufficient [...]”,


“Nor has the Commission in any way identified in the contested decision the data entered in the NAP which it regarded as ‘less reliable’.”,


“Since the Commission does not challenge either the fact that the data entered in the NAP had formed the subject of a report to the UNFCCC or the fact that, as the Republic of Poland states, it reviewed those data itself, the Court considers that it cannot a priori be excluded that those data have a certain degree of reliability. Consequently, it was for the Commission, at the very least, to explain in what way those data entered in the NAP by the Republic of Poland were not reliable and, therefore, could be rejected in accordance with Article 9(3) of the Directive.”,


“[...] the Commission has not explained in what way the data entered in the NAP were not reliable.”
,


“[...] the Commission has not provided anything in the contested decision capable of sufficiently explaining in what way the choice of the method of economic analysis and the data used by the Republic of Poland were contrary to Community law.”,


“[...] Commission exceeded the powers conferred upon it [...]”


The set of the above opinions affirms some concerns expressed sometimes by the member of the public in Poland, that EU ETS is introduced by the Commission in the way, that doesn’t take into account opinions and arguments presented by individual Member States.


One of  most important arguments presented in the judicial procedure by the Commission, was, that excessive number of allowances would risk a collapse of the greenhouse gas emissions trading market”.


Such an argument – resulting, as it seems, from a belief, that the right purpose justifies all means - met a decisive reaction from the Court, which stated:


“Even if that argument were well founded, it cannot justify maintaining the contested decision in force in a community governed by the rule of law such as the Community, since that act was adopted in breach of the distribution of powers between the Member States and the Commission, as defined in the Directive.”


We must admitt, that the Court appeared to be insensitive to arguments of economic nature, which in that case could, in the judicial opinion, pose a threat to the system of the rule of law.


It is however surprising, that the Commission had no legal arguments (or they were unconvincing) and it expected legal acceptation and protection for a “rendered facts”.


How should a new NAP to be drawn up and approved


Leaving however aside the said considerations ad casu, let’s try to analyze the reasons of the Court Judgment and discover some thesis and conclusions of a general nature, which can direct and guide us in a further procedure for a final approval of a NAP.


Importance of the Court assessments derives – inter alia - from the fact, that they were adopted by two – different - compositions of judges, in two different cases: of Poland and of Estonia (judgment relating to Estonia was delivered on 23 September 2009 in Case T-263/07).


First, it should be reminded, that the Court Judgment a
nnulled the Commission Decision C(2007) 1295 final of 26 March 2007 concerning the national allocation plan for the allocation of greenhouse gas emission allowances notified by Poland for the period from 2008 to 2012 in accordance with Directive 2003/87/EC, in which the Commission recognized the inconsistency of the Polish NAP with some of the criteria of the Annex III to the Directive and in an indirect manner reduced the total quantity to be allocated for the Community scheme by the sum of 76.132937 million tonnes CO2 equivalent of allowances per year (the formula of the judgment relating to Estonia is analogous).


So, by virtue of the Judgment the decision of the Commission is  eliminated from legal order.

Therefore, there is no doubt, that as a effect of a Judgment, Commission is obliged to adopt a new decision on the matter.


In the subsequent media releases it was envisaged, that the probable, future scenario may consist also in preparing by Poland and Estonia of a new NAP’s. Such a requirement in our opinion may be justified only by some of the reasons of the Judgment.



 

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