This seminar is organised with the financial support of the European Union’s Justice Programme 2014-2020. Documentation LITIGATING EUROPEAN UNION LAW Trier, 26 -27 April 2017 417DT13
This seminar is organised with the financial support of the European Unionrsquos Justice Programme 2014-2020
Documentation
LITIGATING EUROPEAN
UNION LAW
Trier 26 -27 April 2017 417DT13
Table of contents
Composition organisation and competences of the Court of Justice of the
European Union The reform of the General Court
Milan Kristof
Overview of the proceedings before the Court of Justice of the European Union
Cormac Little The reference for a preliminary ruling practical advice for lawyers
Werner Berg Direct actions before the General Court
Nina Niejahr Case study on drafting an action
Werner Berg and Nina Niejahr
Directive 200387EC of the European Parliament and of the Council of 13
October 2003 establishing a scheme for greenhouse gas emission
allowance trading within the Community and amending Council Directive
9661EC
Commission Decision of 27 April 2011 determining transitional Union-wide
rules for harmonised free allocation of emission allowances pursuant to
Article 10a of Directive 200387EC of the European Parliament and of the
Council
Commission Decision of 5 September 2013 concerning national
implementation measures for the transitional free allocation of
greenhouse gas emission allowances in accordance with Article 11(3) of
Directive 200387EC of the European Parliament and of the Council
German ETS law (available only in German)
ERA ndash 2642017 Milan KRISTOF
reacutefeacuterendaire
Cabinet of First Advocate-General Wathelet
Court of Justice of the EU
This publication has been produced with the financial support of the European Unionrsquos Justice
Programme 2014-2020 The contents of this publication are the sole responsibility of the author and can
in no way be taken to reflect the views of the European Commission
bull Est 1952
bull Mission ensure that the law is observed in the
interpretation and application of the Treaties
bull CJUE
bull reviews the legality of the acts of EU institutions
bull ensures that the Member States comply with obligations
under the Treaties
bull interprets EU law at the request of the national courts
and tribunals
bull In cooperation with the courts and tribunals of the Member States it ensures the uniform application and interpretation of EU law
bull Seat Luxembourg
bull CJEU consists of 2 courts bull Court of Justice
bullGeneral Court (created in 1988)
bull Civil Service Tribunal established in 2004 ceased to operate on 1 September 2016 after its jurisdiction was transferred to the General Court in the context of the reform of EUrsquos judicial structure
bull As each Member State has its own language and specific legal system CJEU is a multilingual institution
bull Its language arrangements have no equivalent in any other court in the world since each of EUrsquos official languages can be the language of a case
bull It is required to observe the principle of multilingualism in full because bull need to communicate with the parties in the language of the proceedings
bull to ensure that its case-law is disseminated throughout the Member States
bull 1 December 2009 Lisbon Treaty
bull Community competences =gt Union (EU legal
personality)
bull From its establishment 28 000 judgments 3 (2)
courts combined
bull Members of the Court are
bull 28 Judges CJ has 1 Judge per Member State - all
the national legal systems are represented (this is
different for the General Court)
bull 11 Advocates General
bull They are appointed by common accord of the
governments of the MSs after consultation of a
panel responsible for giving an opinion on
prospective candidates suitability to perform the
duties concerned (255 Committee) (Lisbon)
bull Term of 6 years renewable (different for AGs)
bull Individuals whose independence is beyond doubt and who possess the qualifications required for appointment in their respective countries to the highest judicial offices or who are of recognisedcompetence
bull Judges of the Court elect from amongst themselves a President and a V-P for a renewable term of 3 years
bull President directs the work of the Court and presides at hearings and deliberations of the full Court or the Grand Chamber
bull Vice-President assists the President in the exercise of
his duties and takes his place when necessary
bull Advocates General assist the Court They are
responsible for presenting with complete impartiality
and independence an lsquoopinion in the cases assigned
to them
bull Permanent FR DE IT PL ES and EN
bull Registrar is the institutions secretary general and
manages its departments
bull CJ may sit as a full court in a Grand Chamber (15) or in
Chambers of 5 (5 Ch in total) or 3 judges (4)
bull Full court
bull In the particular cases prescribed by the Statute of the Court
(including proceedings to dismiss the European Ombudsman or a
Member of the Commission who has failed to fulfil his or her
obligations) and where the Court considers that a case is of
exceptional importance
bull Grand Chamber when a Member State or an institution
which is a party to the proceedings so requests and in
particularly complex or important cases
bull CJ must always consist of an uneven number of Judges
(now 28 Judges)
bull Presidents of the Chambers of 5 Judges are elected
for 3 years and those of the Chambers of 3 Judges
for 1 year
bull Current President Koen Lenaerts (BE)
bull Vice-President Antonio Tizzano (IT)
bull 1st Advocate General Melchior Wathelet (BE)
bull Working language = FR (but AGs may lsquoin principlersquo
draft in their own language)
bull Deliberations are secret
bull Is made up of at least 1 judge from each Member
State (44 judges in office as at the moment) (more on
reform laterhellip)
bull Appointment and 255 Committeehellip
bull Term of office is 6 years renewable
bull Judges appoint their President and V-P (for 3 years)
from amongst themselves (Registrar for 6 years)
bull No permanent AGs but may exceptionally be carried
out by a judge
bull Current President Marc Jaeger (LU)
bull Vice-President Marc van der Woude (NL)
bull Cases are heard by Chambers of 3 or 5 Judges or in
some cases as a single Judge
bull GC may also sit as a Grand Chamber (15 Judges)
when this is justified by the legal complexity or
importance of the case
bull Presidents of Chambers of 5 elected for 3 years
bull GC has its own Registry but uses the administrative
and linguistic services of the institution for its other
requirements
bull On 1612 2015 the EU legislature adopted a
regulation reforming the judicial structure of the CJUE
bull Purpose to respond to the immediate needs of the
GC - which had 28 judges in 2015 - and to enhance
on a lasting basis the efficiency of the European
judicial system as a whole
bull 3 stages
bull Initial increase of 12 judges at GC achieved in part in April 2016
bull In September 2016 (at the next partial renewal of the membership of the GC) the number of judges was increased by 7 when the Civil Service Tribunal was incorporated within the GC (CJUE now composed of only 2 courts)
bull In the autumn of 2019 (the following renewal of the membership of the GC) the number of judges will finally be increased by 9 bringing the total number of judges to 56 the GC will then have 2 judges per Member State
bull For now 44 judges (3 still in the process of being appointed)
bull By virtue of the number of judges being doubled in a 3-stage process extending until 2019 GC will be in a position to cope with the increase in litigation and to fulfil its task in the interests of EU litigants
bull hellip while meeting the objectives of quality efficiency and rapidity of justice
bull The reform was accompanied by the drafting of new Rules of Procedure of the GC (entry into force on 17 2015) which will strengthen its capacity to deal with cases within a reasonable period and in compliance with the requirements of a fair hearing
bull From September 2016 9 chambers of 5 judges
bull hellip each Chamber being able to sit in 2 formations of 3 Judges presided over by the President of the Chamber of 5 Judges
bull Being sufficiently streamlined it will preserve the coherence of the system through the retention of the 3-Judge formation as the ordinary formation of the Court
bull Will facilitate the referral of cases to 5-Judge formations
bull Will facilitate the replacement from within the same Chamber of any Judge who is prevented from acting
bull Will give the Presidents of Chambers an enhanced role in respect of the coordination and consistency of the case-law
bull Finally GC shall deal with all civil service cases
transferred from the Civil Service Tribunal to the GC
as it found them on 1 September 2016
bull hellip they will be subject to a right of appeal to CJ
bull Sufficient legal remediesprocedures exist before
Union courts and the national courts to enforce EU law
rights and to ensure judicial review of Union acts
bull There exist direct and indirect paths by which to
enforce rights based on EU law and to review the
legality of Union acts
bull National courts are lsquonormalrsquo or lsquoordinaryrsquo Union courts
bull lsquoWhile it is true that the Court has no jurisdiction to rule on direct actions between individuals in the field of patents since that jurisdiction is held by the courts of the Member States nonetheless the Member States cannot confer the jurisdiction to resolve such disputes on a court created by an international agreement which would deprive those courts of their task as lsquoordinaryrsquo courts within the European Union legal order to implement European Union law and thereby of the power provided for in Article 267 TFEU or as the case may be the obligation to refer questions for a preliminary ruling in the field concernedrsquo (Opinion of CJ 109 lsquoUnified Patent Litigation Systemrsquo para 80)
bull By contrast the organic Union courts at EU level (CJ and GC) are bound by the principle of conferral whereby they exercise only the jurisdiction conferred upon them under the Treaties
bull Union courts do not have inherent jurisdiction just because matters of EU law are involved in a given case
bull Everything falling outside of what the Treaties confer upon the Union courts (CJEU) falls within the residual competences of the national courtsbull Cases between natural and legal persons
bull Cases between natural and legal persons and national authorities
bull Private party may bring a case before CJEU only against a Union defendant (institution office etc)
bull Hence the importance of the preliminary ruling procedure
bull As Lenaerts et al (EU Procedural Law) aptly put it Union law acts as a
bull 1) sword for safeguarding the rights deriving from the law and hence this implicates certain types of actions and procedures which ensure that the Member States comply with their obligations under the Treaties
bull 2) shield Union judicature secures the enforcement of written and unwritten superior rules of Union law and affords protection against any act or failure to act of institutions and other bodies of the Union in breach of those rules
williamfrycom
Overview of the proceedings before the Court of Justice and the General Court of the European Union
Cormac Little Head of Competition amp Regulation
and Partner William Fry Dublin Ireland
Litigating European Union Law
ERA Seminar ndash 417DT13 - 26 April 2017
This publication has been produced with the financial support of the European Unionrsquos European Unionrsquos
Justice Programme 2014-2020 The contents of this publication are the sole responsibility of the author and
can in no way be taken to reflect the views of the European Commission
2
- References from national courtstribunals for preliminary rulings ndash Court of JusticeCJEU
- Actions for annulment ndash General Court (mainly)
- Actions for failure to fulfil obligations
Infringement proceedings - CJEU
- Actions for failure to act ndash General Court
- Actions for non-contractual damages ndash General Court
NB ndash There will be specific sessions later today on Preliminary
Ruling proceedings and 3 of the 4 Direct Actions (ie actions for annul-
ment actions for failure to act and actions for non-contractual damages)
Overview ndash Preliminary references and Direct actions
3
Year 2014 2015 2016
Actions for annulment 423 332 298
Actions for failure to act 12 5 6
Actions for damages 39 30 19
Miscellaneous 438 464 651
Overall Total 912 831 974
Context ndash Completed Cases ndash CJEU and General Court
Year 2014 2015 2016
References for preliminary ruling 476 404 453
Direct actions 76 70 49
Appeals 157 127 182
Miscellaneous 10 15 20
Overall Total 719 616 704
bull Part Six Title 1 - Articles 251 ndash 281
bull Organisation of CJEUGeneral Court
(Articles 251-255)
bull Jurisdiction of General Court (Article 256)
bull Failure to fulfil obligation (Articles 258
and 259)
bull Penalties for non-compliance with above
(Article 260)
bull Action for annulment (Article 263)
bull Action for failure to act (Article 265
read together with Article 263)
bull Preliminary references (Article 267)
bull Compensation for non-contractual
damage (Article 268)
bull Defence of illegality (Article 277 read
together with Article 263)
bull Actions will not have suspensory effect
(Article 278)
bull Interim measures may be prescribed
(Article 279)
bull Enforceability of judgments (Article 280)
bull Statute of the CJEU (Article 281)
4
Key Provisions of the Treaty on the Functioning of the EU or TFEU
williamfrycom
1 Preliminary ruling proceedings
Article 267 TFEU
6
The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings
concerning
(a) the interpretation of the Treaties
(b) the validity and interpretation of acts of the institutions bodies offices or agencies of the Union
Where such a question is raised before any court or tribunal of a Member State that court
or tribunal may if it considers that a decision on the question is necessary to enable it to give
judgment request the Court to give a ruling thereon
Where any such question is raised in a case pending before a court or tribunal of a Member
State against whose decisions there is no judicial remedy under national law that court
or tribunal shall bring the matter before the Court
If such a question is raised in a case pending before a court or tribunal of a Member State
with regard to a person in custody the Court of Justice of the European Union shall act with
the minimum of delay
Article 267 TFEU
7
bull Article 19(1) of the Treaty on European Union - The CJEU shall ensure that in the interpretation and
application of the Treaties the law is observed
bull Cornerstone of EUrsquos legal order
bull Central to the EUrsquos development ndash Seminal cases ndash Case 664 Costa v Enel
bull National court or tribunal asks the question ndash Obligation to follow EU law
bull The CJEU responds
bull Bi-lateral relationship of co-operation
bull Not an appeals system
bull Indirect challenges to national measures based on EU law
Key Features
8
Preliminary ruling ndash Key Purposes
Facilitates the uniform interpretation of EU law
throughout the EU
Provides the possibility of indirectly challenging the validity of EU acts
Ensures that only the CJEU may declare an
EU act invalid National Courts may not do so (Case C-31485 Foto-
Frost)
Encourages dialogue and co-operation
between national courts and the CJEU
9
Article 267 first paragraph TFEU
The Court of Justice of the European Union shall have jurisdiction to give preliminary rulings
concerning
(a) the interpretation of the Treaties
(b) the validity and interpretation of acts of the institutions bodies offices or agencies of the
Union
- Declaration of invalidity is binding across the entire EU
- National courts may rely on prior judgments of the EU Courts
- National authorities have an obligation to ensure EU law is followed
Preliminary ruling ndash What questions may be referred
10
Article 267 second and third paragraphs TFEU
Where such a question is raised before any court or tribunal of a Member State that court or
tribunal may if it considers that a decision on the question is necessary to enable it to give
judgment request the Court to give a ruling thereon
Where any such question is raised in a case pending before a court or tribunal of a Member
State against whose decisions there is no judicial remedy under national law that court or
tribunal shall bring the matter before the Court
Article 344 TFEU
Member States undertake not to submit a dispute concerning the interpretation or application
of the Treaties to any method of settlement other than those provided for therein
Preliminary ruling ndash What courts are entitledrequired to make a reference
11
bull Definition is a matter of EU Law
- Allows for uniformity and prevents abuse by Member States
bull Formalised essential criteria in Case C-5496 Dorsch Consult
- Established by law
- Permanent
- Jurisdiction is compulsory (binding decision parties canrsquot choose a different body)
- Procedure is inter partes
- Applies rules of law
- Decisions of a judicial nature
- Independent
Preliminary ruling ndash ldquoCourt or tribunalrdquo
12
bull Lower courts ndash absolute discretion to refer
bull This discretion is wide Lower courts may make references that contradict higher courts if
they believe a higher court is infringing EU law
bull Prioritise references over domestic legal orders ndash ensure uniform interpretation and
application of EU law
bull CJEU has the exclusive jurisdiction to strike down EU law
bull Courts of final instance ndash Mandatory duty
bull Court whose decisions can only be appealed if the lsquotop courtrsquo declares it admissible is not a
court against whose decision there is no judicial remedy Case C-9900 Lyckeskog
National courts
13
A national court of last instance is under no obligation to refer where
bull reference is not necessary to decide the case ndash some discretion
bull acte eacuteclaireacute an identical question has already been decided by the CJEU ndash binding
precedent
bull acte clair the correct application of EU law is so obvious as to leave no scope for any
reasonable doubt as to the manner in which the question raised is to be resolved Three
part test
1 Answer must be obvious to CJEU
2 Answer must be equally obvious to other national courts
3 Answer must take into account the unique characteristics of EU law
(Case C-28381 CILFIT)
Preliminary ruling ndash Exemptions from obligation to refer
14
bull What remedies exist if a courttribunal covered by Article 267(3) TFEU fails to meet its
obligations to make a reference
bull The Commission may bring enforcement proceedings against the Member State
- Case 975 Meyer-Burckhart v Commission
bull It may also render the State liable in damages
- Case C-22401 Koumlbler v Austria ndash manifest infringement of EU law
- Case C-16014 Ferreira da Silva ndash breach of duty to make reference
Preliminary ruling ndash Failure to meet obligation to make a reference
15
bull Case C-21006 Cartesio
bull Four grounds to decline
bull Questions not relevant to whatrsquos in dispute
bull Hypothetical matter ndash Must be an actual dispute
bull Not enough factual or legal information
bull Same question already answered
Declining to answer
16
Article 23a of the Statute of the CJEU
The Rules of Procedure may provide for an expedited or accelerated procedure and for
references for a preliminary ruling related to the area of freedom security and justice an
urgent procedure
Article 105 of the Statute of the CJEU
At the request of the referring court or tribunal or exceptionally of his own motion the
President of the Court may where the nature of the case requireshellip
Preliminary ruling ndash Expedited procedure
17
Article 107 of the Statute of the CJEU
1 A reference for a preliminary ruling which raises one or more questions in the areas
covered by Title V of Part Three of the [TFEU] may at the request of the referring court or
tribunal or exceptionally of the Courtrsquos own motion be dealt with under an urgent procedure
derogating from the provisions of these Rules
2 The referring court or tribunal shall set out the matters of fact and law which establish the
urgency and justify the application of that exceptional procedure and shall in so far as
possible indicate the answer that it proposes to the questions referred
Preliminary ruling ndash Urgent preliminary reference procedure
williamfrycom
2 Actions for annulment
Article 263 TFEU
19
The Court of Justice of the European Union shall review the legality of legislative acts of acts of the Council of the Commission and
of the European Central Bank other than recommendations and opinions and of acts of the European Parliament and of the
European Council intended to produce legal effects vis-agrave-vis third parties It shall also review the legality of acts of bodies offices or
agencies of the Union intended to produce legal effects vis-agrave-vis third parties
It shall for this purpose have jurisdiction in actions brought by a Member State the European Parliament the Council or the
Commission on grounds of lack of competence infringement of an essential procedural requirement infringement of the
Treaties or of any rule of law relating to their application or misuse of powers
The Court shall have jurisdiction under the same conditions in actions brought by the Court of Auditors by the European Central
Bank and by the Committee of the Regions for the purpose of protecting their prerogatives
Any natural or legal person may under the conditions laid down in the first and second paragraphs institute proceedings against an
act addressed to that person or which is of direct and individual concern to them and against a regulatory act which is of direct
concern to them and does not entail implementing measures
Acts setting up bodies offices and agencies of the Union may lay down specific conditions and arrangements concerning actions
brought by natural or legal persons against acts of these bodies offices or agencies intended to produce legal effects in relation to
them
The proceedings provided for in this Article shall be instituted within two months of the publication of the measure or of its
notification to the plaintiff or in the absence thereof of the day on which it came to the knowledge of the latter as the case may be
Article 263 TFEU
20
bull Question - Which bodies may be challenged
bull Answer ndash Council Commission European Central BankECB Parliament European
Council Bodies offices or agencies of the EU
bull Question ndash What can be challenged
bull Answer ndash Legislative measures and other acts intending to produce binding legal effects
bull Question ndash Who has locus standi
bull Answer - Privileged quasi-privileged and other applicants (direct and individual concern)
bull Question ndash On what grounds may the applicant seek review of the relevant measure
bull Answer ndash Lack of competence breach of an essential procedural requirement (institutional
proceduresprocedural rights) infringement of the TreatiesEU law and misuse of powers
Judicial ReviewReview of Legality
21
Article 263 paragraph 1 TFEU
The Court of Justice of the European Union shall review the legality of legislative acts of
acts of the Council of the Commission and of the European Central Bank other than
recommendations and opinions and of acts of the European Parliament and of the European
Council intended to produce legal effects vis-agrave-vis third parties It shall also review the
legality of acts of bodies offices or agencies of the Union intended to produce legal effects
vis-agrave-vis third parties
Actions for annulment ndash Which acts can be reviewed
22
Article 263 paragraph 2 TFEU
It shall for this purpose have jurisdiction in actions broughthellip on grounds of lack of
competence infringement of an essential procedural requirement infringement of the
Treaties or of any rule of law relating to their application or misuse of powers
Actions for annulment ndash The grounds for review
23
Article 263 paragraphs 2 and 3 TFEU ndash Member States and European Institutions
(privileged applicants)
It shall for this purpose have jurisdiction in actions brought by a Member State the European
Parliament the Council or the Commission
The Court shall have jurisdiction under the same conditions in actions brought by the Court
of Auditors by the European Central Bank and by the Committee of the Regions for the
purpose of protecting their prerogativeshellip[ quasi-privileged applicants]
Actions for annulment ndash Who may bring an action
24
Article 263 paragraphs 4 and 5 TFEU ndash Natural or legal person (non-privileged
applicants)
Any natural or legal person may under the conditions laid down in the first and second
paragraphs institute proceedings against an act addressed to that person or which is of
direct and individual concern to them and against a regulatory act which is of direct concern
to them and does not entail implementing measures
Acts setting up bodies offices and agencies of the Union may lay down specific conditions
and arrangements concerning actions brought by natural or legal persons against acts of
these bodies offices or agencies intended to produce legal effects in relation to them
Lower threshold for regulatory acts ndash Case C-58311 P Inuit Tapirit Kanatami and Others v
Parliament and Council ndash Regulatory acts are all acts of general application other than
legislative acts
Actions for annulment ndash Who may bring an action (contrsquod)
25
bull Direct concern
Does the Act effect their legal position
Easy to Satisfy
- Case 22283 Municipality of Differdange v Commission
bull Individual concern
Must be differentiated from all other persons amp singled out by the lsquoactrsquo at issue a very strict test
- Case 1562 Plaumann v Commission
bull Regulatory Acts
Where a regulatory act is of direct concern and does not entail any implementing measures ndash there is no need to prove individual concern
Actions for annulment ndash Direct concernindividual concern
26
Article 263 paragraph 6 TFEU
The proceedings provided for in this Article shall be instituted within two months of the
publication of the measure or of its notification to the plaintiff or in the absence thereof of
the day on which it came to the knowledge of the latter as the case may be
Actions for annulment ndash Time-limit
27
Article 256 TFEU and Article 51 Statute of the Court
The General Court has jurisdiction to hear and determine at first instance with the exception
of certain actions brought by Member States or institutions that are reserved to the Court of
Justice
Actions for annulment ndash Which court has jurisdiction
28
Article 264 TFEU
If the action is well founded the Court of Justice of the European Union shall declare the act
concerned to be void
However the Court shall if it considers this necessary state which of the effects of the act
which it has declared void shall be considered as definitive
bull As a general rule an invalid act is annulled with retroactive effect
bull However the Court may declare that the effects of an annulled act are to remain in force
until eg the entry into force of a new act
Actions for annulment ndash The effects of a judgment
williamfrycom
3 Infringement proceedings
Articles 258-260 TFEU
30
Article 258 TFEU
If the Commission considers that a Member State has failed to fulfil an obligation under the
Treaties it shall deliver a reasoned opinion on the matter after giving the State concerned the
opportunity to submit observations
If the State concerned does not comply with the opinion within the period laid down by the
Commission the latter may bring the matter before the Court of Justice of the European
Union
Infringement proceedings - The first phase establishing an infringement
31
Article 260 paragraphs 1 and 2 TFEU
1 If the Court of Justice of the European Union finds that a Member State has failed to fulfil
an obligation under the Treaties the State shall be required to take the necessary measures
to comply with the judgment of the Court
2 If the Commission considers that the Member State concerned has not taken the
necessary measures to comply with the judgment of the Court it may bring the case before
the Court after giving that State the opportunity to submit its observations It shall specify the
amount of the lump sum or penalty payment to be paid by the Member State concerned
which it considers appropriate in the circumstances
If the Court finds that the Member State concerned has not complied with its judgment it may
impose a lump sum or penalty payment on it
Infringement proceedings ndash The second phase establishing non-compliance with the judgment
32
Case T-19199 Petrie and others para 68
[T]he Member States are entitled to expect the Commission to guarantee confidentiality
during investigations which might lead to an infringement procedure This requirement of
confidentiality remains even after the matter has been brought before the Court of Justice on
the ground that it cannot be ruled out that the discussions between the Commission and the
Member State in question regarding the latterrsquos voluntary compliance with the Treaty
requirements may continue during the court proceedings and up to the delivery of the
judgment of the Court of Justice The preservation of that objective namely an amicable
resolution of the dispute between the Commission and the Member State concerned before
the Court of Justice has delivered judgment justifies refusal of access to the letters of formal
notice and reasoned opinions drawn up in connection with the Article [258 TFEU]
proceedingshellip
Infringement proceedings ndash Objective amp Nature
33
bull Any individual can complain to the Commission where they believe a Member State is not
complying with EU law
bull Commission v [Insert Member State]
bull Two step enforcement procedure
ndashDeclaration (Articles 258 -259 TFEU)
ndashLump sums andor penalty where Articles 258-259 judgment not complied with (Article 260 TFEU)
Infringement proceedings ndash The role of the individual
34
bull Procedure
- Write a letter to relevant Directorate-General of the Commission with details or complete form
bull Advantage
- Cost effective
bull Disadvantage
- Complainant has no procedural rights
- Will not achieve individual justice
Infringement proceedings - Individual Complaint
williamfrycom
4 Actions for failure to act
Article 265 TFEU
36
Should the European Parliament the European Council the Council the Commission or the
European Central Bank in infringement of the Treaties fail to act the Member States and
the other institutions of the Union may bring an action before the Court of Justice of the
European Union to have the infringement established This Article shall apply under the
same conditions to bodies offices and agencies of the Union which fail to act
The action shall be admissible only if the institution body office or agency concerned has
first been called upon to act If within two months of being so called upon the institution
body office or agency concerned has not defined its position the action may be brought
within a further period of two months
Any natural or legal person may under the conditions laid down in the preceding paragraphs
complain to the Court that an institution body office or agency of the Union has failed to
address to that person any act other than a recommendation or an opinion
Article 265 TFEU
37
bull Article 266 paragraph (1) TFEU
ldquoThe institution whose act has been declared void or whose failure to act has been declared
contrary to the Treaties shall be required to take the necessary measures to comply with the
judgment of the Court of Justice of the European Unionrdquo
bull Obligation is without prejudice to any that may arise to pay damages under Article 340
paragraph (2) TFEU
Actions for failure to act - consequences
38
The main difference is that under Article 265 TFEU an action is admissible only if the
institution body office or agency concerned has first been called upon to act
Case T-52114 Sweden v Commission
Case C-63715P VSM Geneesmiddelen v Commission
Actions for failure to act ndash almost a mirror image of Article 263 TFEU
williamfrycom
5 Actions for non-contractual damages
Articles 268 and 340 TFEU
40
Article 268 TFEU
The Court of Justice of the European Union shall have jurisdiction in disputes relating to
compensation for damage provided for in the second and third paragraphs of Article 340
Article 340 paragraph 2 TFEU
In the case of non-contractual liability the Union shall in accordance with the general
principles common to the laws of the Member States make good any damage caused by its
institutions or by its servants in the performance of their duties
Articles 268 and 340 TFEU
41
Case C-469 Luumltticke v Commission para 10
ldquoThe liability of the [Union] presupposes the existence of a set of circumstances comprising
actual damage a causal link between the damage claimed and the conduct alleged against
the institution and the illegality of such conductrdquo
Therefore for the EU to incur liability the following conditions must be met
- The Defendant institution must have breached a rule of law intended for the protections of
individuals
- The breach must be serious
- There must be damage
- There must be a direct causal link between the breach of the obligation resting on the
Defendant institution and the damages sustained by the injured parties
Actions for damages ndash Elements of liability
42
Joined cases C-63 to 6972 Werhahn and others v Council para 7
ldquoUnder the [Union] legal system on the other hand it is in the interests of a good
administration of justice that where [Union] liability is involved by reason of the act of one of
its institutions it should be represented before the Court by the institution or institutions
against which the matter giving rise to liability is allegedrdquo
Actions for damages ndash Against which institution should the action be brought
43
Article 46 Statute of the Court
Proceedings against the Union in matters arising from non-contractual liability shall be barred
after a period of five years from the occurrence of the event giving rise thereto[hellip]
Actions for damages ndash Time-limits
44
Case T-57714 Gascogne Sack Deutschland GmbH and Gascogne v the European Union
Case T-47941 Kendrion NV v the European Union and Case T-4015 Plaacutesticos Espantildeoles
SA and Armando Aacutelvarez SA v the European Union
bull General Court ordered the EU to pay damages due to the excessive length of its previous
adjudication of a challenge to a European Commission decision finding a cartel in the
industrial bags sector
bull Unlawful conduct
bull Actual damage ndash Excess of 20 months
bull Link to European Convention on Human Rights ndash Article 6(1)
bull However the damages awarded were more symbolic than substantive
Actions for damages ndash 2017 cases
williamfrycom
6 Conclusion
45
bull Remember plea of illegality in Article 277
bull This allows private persons to claim that
an act of general application is illegal and
thus invalid
bull Overcomes direct and individual concern
hurdle
bull May be pleaded as a defence before EU
court or in national court proceedings
which are referred to the CJEU
bull Preliminary references
bull Key channel through which EU law has
developed
bull Relevant national court
bull Litigation tactics
bull Action for annulment
bull Measure and grounds
bull Standing
Conclusion ndash Actions for Annulment and Preliminary Rulings
williamfrycom
Cormac LittlePartner and Head of Competition amp Regulation
CormacLittlewilliamfrycom
T +353 1 639 5114
WF-19018996v2
Litigating European Union Law
Preliminary ruling proceedings
Werner Berg 26 April 2017
This publication has been produced with the financial support of the European Unionrsquos European Unionrsquos Justice Programme 2014-2020 The contents of this publication are the sole responsibility of the author and can in no way be taken to reflect the views of the European Commission
Essentials of the preliminary rulings procedure
1 Importance and scope of the procedure 3-5
2 Requirements for a referral 6-9
3 The role of the parties 10-11
4Content of a reference for a preliminary
ruling12-13
5 The expedited procedure 14-16
6 The urgent procedure 17-18
7 How to draft written observations 19-21
8 The Luxembourg venture ndash oral hearing 22-24
9 Decision and costs 25-28
10 Further procedure 29-30
1 Importance and scope of the procedure
copy 2017 Baker amp McKenzie CVBASCRL
The importance of the preliminary rulings procedure
4
6792506
2428
101173
Nature of Proceedings (new cases in 2016)
References for preliminaryruling
Direct actions
Appeals
Appeals concerning interimmeasures or interventions
Special forms of procedure
copy 2017 Baker amp McKenzie CVBASCRL
The scope of the preliminary rulings procedure
5
Art 267 TFEU Art 23 Statute Art 93 RoP
Enables national courts to ask the CJ on the interpretation or validity of EU law
Offers a means to guarantee legal certainty by uniform application of EU law throughout the EU
Two general types of references
On the validity of secondary law
On the interpretation of primary law or secondary law
2 Requirements for a referral
copy 2017 Baker amp McKenzie CVBASCRL
Who can refer
7
Only courts or tribunals as defined by CJ can refer
Criteria determined by the CJ
permanent Joined cases C-11098-14798 Gabalfrisa para 34
established by law C-5496 Dorsch Consult para 25
having compulsory jurisdiction C-6165 Vaassen p273 Joined cases C-11098-14798 Gabalfrisa para 35
independent C- 51699 Schmid paras 35-43 C-5303 Syfait paras 30-34
applying rule of law C- 51699 Schmid para 24 Joined cases C-11098-14798 Gabalfrisa para 38 C-39392 Amelo para 52 et seq
delivers judicial decision rejected for purely administrative decisions C-49708 Anniraike Berlin or 44098 RAI for Court of Auditors
procedure does not need to be inter partes C-21006 Cartesio para 56
copy 2017 Baker amp McKenzie CVBASCRL
Option to refer and relevance of EU law
8
Every national courttribunal which is of the opinion that the interpretation or validity of EU law is decisive for the outcome of the case at hand can refer questions to the CJ
Presumption of relevance in principle the CJ does not doubt the national courtlsquostribunallsquos finding on the necessity of the reference
CJ declines to rule on a reference bdquohellipwhere it is quite obvious that the interpretation of [EU] law that is sought is unrelated to the actual facts of the main action or to its purpose where the problem is hypothetical or where the Court does not have before it the factual or legal material necessary to give a useful answer hellipldquo (C-21006 Cartesio para 67)
copy 2017 Baker amp McKenzie CVBASCRL
Obligation to refer
9
A national courttribunal against whose decision there is no remedy under national law is obliged to refer the case
Exemptions from that obligation are
acte eacuteclaireacute ndash provision in question has already been interpreted
acte clair ndash correct application is so obvious as to leave no reasonable doubt
(28381 CILFIT)
NB If a national courttribunal intends to disregard a provision of EU law because it considers it to be invalid it is under any circumstance obliged to make a referral (power to invalidate EU law is exclusive on the CJ) even if a similar act was already found invalid by the CJ (C-31485 Foto-Frost C-46103 Gaston Schul)
3The role of the parties or how to convince a national judge to make a preliminary reference to the CJ
copy 2017 Baker amp McKenzie CVBASCRL
The role of the parties
11
In national procedures
Parties can suggest referral to the CJ
Right to referral in Art 267 III TFEU situations
Illustration of impact of EU law and of uncertainty re interpretation
Guidance for referral in the written submissions
In procedure before the CJ
Written observations
Right to request oral hearing
Right to plead in oral hearing
4 Content of a reference for a preliminary ruling
copy 2017 Baker amp McKenzie CVBASCRL
Content of a reference for a preliminary ruling
13
The question(s) referred by the national courttribunal should be formulated in an abstract manner
In addition the request for a preliminary ruling shall contain
A summary of the subject-matter of the dispute
The relevant findings of fact as determined by the referring court or tribunal
The tenor of any national provisions applicable in the case
Where appropriate the relevant national case-law
A statement of reasons for the referral
Explanation of the relationship between those provisions and the national legislation applicable in the main proceedings
(See Art 94 of the RoP)
5 The expedited procedure
copy 2017 Baker amp McKenzie CVBASCRL
Statistics
0
50
100
150
200
250
300
350
400
450
500
References for preliminary ruling in 2016
Total 470
Under expeditedprocedures -granted 2
Under expeditedprocedures - notgranted 13
For urgentpreliminary ruling -granted 8
For urgentpreliminary ruling -not granted 2
15
copy 2017 Baker amp McKenzie CVBASCRL
Expedited procedure (Arts 105 and 106 RoP)
16
At the request of the referring court or exceptionally the President of his own motion where the nature of the case requires it (Art 105 RoP) (not at the request of the parties not ex officio by the Chamber)
After proposal by the Judge-Rapporteur and after hearing the Advocate General decision whether to apply the expedited procedure
The date for the hearing may be fixed immediately
Matters adressed in the written observations can be restricted to the essential points of law by the President
The time limit for written observations can be shortened to 15 days
Advocate General does not provide an opinion but will be present at the hearing The CJ will only rule after having heard hisher view
6 The urgent procedure
copy 2017 Baker amp McKenzie CVBASCRL
Urgent procedure (Arts 107-114 RoP)
18
Only applies to Title V of Part Three of the TFEU (border checks asylum migration judicial cooperation in civil and criminal matters and police cooperation)
At the request of the referring court or of the Courtlsquos own motion (President)
Participants limited to the parties to the main proceedings the Member State of the referring courttribunal the Commission and the institution which adopted the act in dispute (no need to await translation)
Referred to a Chamber specifically designated for that purpose
Preferably communication via e-Curia
Decisions of the CJ as to whether or not to initiate the urgent procedure do not include a statement of reasons
Chamber can decide to omit the written observations (Art 111 RoP)
rarr oral hearing is decisive
7 How to draft written observations
copy 2017 Baker amp McKenzie CVBASCRL
How to draft written observations
20
All written observations must be submitted within 2 months after the service of the request for a preliminary ruling (expedited not less than 15 days urgent not less than 10 days)
On account of distance extended by a single period of 10 days
It is not necessary to repeat the factual and legal background unless it requires further comment
Written observations should not exceed 20 pages (can be further reduced in urgent preliminary proceedings)
Use clear concise language avoid specific national legal terms
Use short sentences
Use accurate citation of specific texts or pieces of legislation
copy 2017 Baker amp McKenzie CVBASCRL
How to draft written observations II
21
Suggest the answers which the CJ should give to the referred questions and set out the reasoning for that succinctly but completely
All legal arguments must appear in the written observation
Only documents referred to in written observations may be submitted as annexes
Provide a schedule of annexes with sequential numbering short descriptions of the document and reference to where the document is cited in the written observations
8 The Luxembourg venture ndash oral hearing
copy 2017 Baker amp McKenzie CVBASCRL
The oral hearing
23
Is arranged by the CJ whenever it is likely to contribute to a better understanding of the case and the issues raised by it
The oral hearing consists of
1) Oral submissions in the following order
Parties before the referring court
Member State of the courttribunal which referred
Other Member States in alphabetical order
EU institutions
2) Questions from the bench (on law and facts)
3) Opportunity to reply (max 5 minutes) to any of the issues raised in the course of the hearing (can be dispensed by the Party)
copy 2017 Baker amp McKenzie CVBASCRL
The oral hearing II
24
Pleadings should be confined to points that need clarification after the written procedure andor which are of particular importance
Lay out structure of the pleadings before going into any detail
Avoid repeating points that have already been put forward at the same hearing
Speak freely as much as possible
Avoid national jargon
Use short sentences
Seek eye contact with the judges notably the reporting judge
Strictly observe the time limit
9 Decision and costs
copy 2017 Baker amp McKenzie CVBASCRL
Decision
26
After the oral hearing the Advocate General delivers hisher opinion
In case of an acte claire or acte eacuteclaireacute the CJ issues a reasoned order (Art 99 of the RoP)
In all other cases the CJ delivers a judgment
copy 2017 Baker amp McKenzie CVBASCRL
Judgment
27
The CJ either
rules on the validity of acts of the institutions bodies offices or agencies of the Union
or provides guidance on how to interpret the relevant provision(s)
The judgment applies ex tunc unless the CJ imposes temporary restrictions
C-4375 Defrenne II p484
C-3890 Lomas p1821
copy 2017 Baker amp McKenzie CVBASCRL
Costs and legal aid
28
Free of court fees (like all other procedures before the CJEU)
Referring courttribunal will render decision re partieslsquo costs of legal representation (Art 102 RoP) (exemption from Art 38 Statute)
Legal aid can be granted by the referring national courttribunal or subsidiarily the CJ (Art 115 RoP)
10 Further procedure
copy 2017 Baker amp McKenzie CVBASCRL
Further procedure
Orders and judgments are published on the website of the CJEU and in the Official Journal of the European Union
National courttribunal decides in the matter at hand taking into account the ruling of the CJ
The decision is binding not only on the national court on whose initiative the preliminary ruling was delivered but also on all national courts of the Member States
30
copy 2017 Baker amp McKenzie CVBASCRL
Abbreviations
31
CJ Court of Justice
CJEU Court of Justice of the European Union (Court of Justice + General Court)
RoP Rules of Procedure of the CJ
Statute Protocol (No 3) on the Statute of the Court of Justice of the European Union
TFEU Treaty on the Functioning of the European Union
Baker amp McKenzie CVBASCRL is a member firm of Baker amp McKenzie International a Swiss Verein with member law
firms around the world In accordance with the common terminology used in professional service organisations
reference to a partner means a person who is a partner or equivalent in such a law firm Similarly reference to an
office means an office of any such law firm This may qualify as ldquoAttorney Advertisingrdquo requiring notice in some
jurisdictions Prior results do not guarantee a similar outcome
copy 2017 Baker amp McKenzie CVBASCRL
wwwbakermckenziecom
Litigating European Union Law
Direct actions before the General Court
Nina Niejahr 26 April 2017
This publication has been produced with the financial support of the European Unionrsquos European Unionrsquos Justice Programme 2014-2020 The contents of this publication are the sole responsibility of the author and can in no way be taken to reflect the views of the European Commission
In 45rsquo ldquoen directrdquoto the General Court
1ldquoWhat you wantrdquo determines the
direct action to bring3
2Basics amp practicalities
How to bring an action11
3Written Procedure ndash
Avoiding the pitfalls19
4What to expect in Luxembourg ndash
The oral hearing
24
5 Judgment amp costs (appeal) 28
1 ldquoWhat you wantrdquo determines thedirect action to bring
copy 2017 Baker amp McKenzie CVBASCRL
What do you want
4
1 EU-level act to be found illegalDecision of an EU institution body or agency (EUIPO CPVO etc)
rarr Annulment action Art 263 TFEU
2 Illegality of inaction by EU institution or body to be confirmed
rarr Action for failure to act Art 265 TFEU
3 Damages for illegal EU-level actactioninaction
rarr Action for non-contractual damages Art 268 340(2) (3) TFEU
4 Urgent relief
rarr Interim measures 278 279 TFEU
rarr Expedited procedure 23a Statute
5 Support an applicant or defendant in a pending case
rarr Intervention Art 40 Statute
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
1 Annulment action (Art 263 TFEU)
5
bull Challengeable act Action intended to create legal effects regardless of its nature and form
bull Standing of non-privileged applicants
bull Addressees (personal interest to bring action vested and present)
bull Non-addressees
bull Plaumann formula for direct amp individual concern(Plaumann 2562 Infront T-3301 confirmed on appeal C-12506 P)
bull Regulatory act of direct concern and does not entail implementing measures(Telefonica C-27412 P Inuit T-1810 confirmed on appeal C-58311 P Tate amp Lyle T-27911 confirmed on appeal C-45613 P)
bull Deadline ndash careful2 months plus 10 days from notification if addressee (if not publication in the OJEU calculation starts 14 days from publication if not knowledge)
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
2 Action for failure to act (Art 265 TFEU)
6
bull Inaction
Failure to address to the applicant any act other than a recommendation or an opinion (Parliament v Council 1383)
bull Standing
ldquoWould berdquo-addressee or direct and individual concerned (ENU C-10791)
bull Request for action
Call upon the institutionagencyetc to act and within 2 months of being so called upon (ldquodeadline to actrdquo) addressee has not defined its position
bull Deadline
2 months from the expiry of deadline to act plus 10 days
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
3 Action for non-contractual damages
7
bull Art 268 340(2) (3) TFEU
Non-contractual liability of the EU for damage caused by its institutions or servants in the performance of their duties
bull Conditions (Bergaderm C-35298 P)
1 Sufficiently serious breach of a rule of EU law intended to confer rights on individuals
2 Existence of damage
3 Causal link between breach of law (conduct of the institution or servant) and damage
bull Deadline
5 years from the event giving rise to the damage (Art 46 Statute)
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
4 Urgent procedures (Art 278 279 TFEU 23a Statute)
8
bull Accessory to main action
bull Expedited procedure Art 151 RoP
bull Bring at the same time as main action
bull Demonstrate urgency
bull For simple cases few please no complex facts or legal questions
rarr Priority treatment amp shorter deadlines one round of pleadings
bull Suspension or other interim measures Art 156 RoP
bull Bring at the same time or after the main action
bull Must show
1 Prima facie case
2 Urgency (where most applications fail)
3 Balance of interest in favour of measure
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
5 Intervention (Art 40 Statute Art 142 et seq RoP)
9
bull Short deadline6 weeks plus 10 days from publication of the application in the OJEU
bull Non-privileged intervenersMust support one of the main parties amp show interest in the outcome of the case in request for leave to intervene (application to intervene)
bull Statement in intervention (max 20 pages)
bull Intervener receives non-confidential versions of the partiesrsquo submissions can add new additional other arguments
bull Other parties have right to submit observations (max 15 pages)
bull Right to address the Court at the oral hearing
bull On appeal party to the appeal proceedings (ne intervener)
bull No need to intervene in the appeal
bull Automatically invited to present observations (like successful party)
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
Additionalspecial procedures hellip
10
bull Additional direct actions and procedures
bull Staff cases Art 270 TFEU
bull Arbitration clauses contained in agreements concluded by or on behalf of the EU Art 272 TFEU
bull Intellectual property cases Art 171 et seq RoP
bull Special forms of procedure (pt 16 Practice Rules)
bull Rectification or interpretation
bull Application for the Court to remedy a failure to adjudicate
bull Revision
bull Applications for the Court to set aside judgments by default or initiating third-party proceedings
bull Taxation of costs
bull Legal aid
Direct actions
2 Basics amp practicalities
copy 2017 Baker amp McKenzie CVBASCRL
Sui generis system of legal recourse
12
bull ne national systems of the EU Member States
bull Note
bull Language of the case (one of 24) amp language of the court (French)
bull Composition of chambers
bull Own strict rules of procedure including on evidence
bull Highly formalised
bull Essentially written procedure
bull Oral hearing relatively short but can be decisive
bull Duration to judgment at first instance varies2016 on average 187 months(longest competition 382 shortest intellectual property 151 months)
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
httpcuriaeuropaeujcmsjcmsJo2_7040en
13
Direct actions
Texts governing the procedure notices in the OJEU other useful information
A word of caution ALWAYS check amp confirm guidance against current versions of
legal documents They change frequently
copy 2017 Baker amp McKenzie CVBASCRL
Practicalities need to know basics
14
bull Deadlines
bull Calculate carefully (Art 58-62 RoP)
bull Only some may be extended on reasoned written request
bull Obligation to be represented (Art 19 Statute Art 51 RoP)
bull Method of service e-Curia (Art 57 RoP pts 74-85 Practice Rules)
bull Advantages quick no need for paper copiessignatures ease of access in all languages (all named lawyers can submit and receive procedural documents files must be pdf and uploaded separately)
bull Disadvantages need to register in good time familiarize yourself with the system amp train assistants (who can also receive but not lodge) deemed service seven days from e-mail notification
bull Alternatives fax email and post (original amp certified copies wn 10 days)
bull Note regardless of method same diligence is required
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
httpscuriaeuropaeue-Curialoginfaces
15
Direct actions
e-Curia user login screen
copy 2017 Baker amp McKenzie CVBASCRL
e-Curia home screen view amp functionalities
16
Direct actions
Documents served on you are awaiting
acceptance To consult them click here
bull Lodge a documentprepare document(s) for lodging
bull Documents ready to be lodged awaiting validation
bull Accept service
bull Consult the history of documents lodged
bull Consult the history of documents accepted
copy 2017 Baker amp McKenzie CVBASCRL
Role of the registry
17
bull Organizes written amp prepares oral procedure
bull Effects service of procedural documents
bull Ensures compliance with the very formalistic procedural requirements
bull For instance page limitations formatting schedules and annexes summary of pleas PoA register excerpts etc
bull Generally failure to comply may hold up service but can be remedied (pts 104-113 Practice Rules)
bull Persistent failure to comply may lead to refusal of acceptance or inadmissibility (see Art 21 Statute Art 78(3) RoP pt 110 111 and Annex 1 amp 2 Practice Rules)
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
Basic procedural steps
18
1 Written procedure (Art 76-105 RoP)
Application defence (max 50 pages)
Reply rejoinder (max 25 pages)unless not necessary but applicant can submit reasoned request
Possibly also measures of inquiry and questions
Report for the hearing
2 Oral procedure (Art 106-115 RoP)on the Courtrsquos motion on reasoned request or not at all (Art 106 RoP)
Applicant defendant (15 minutes)
Questions amp answers
Closing statements (2-5 minutes)
3 JudgmentOperative part delivered full version online same day (amp e-Curia)
4 Appeal to the European Court of JusticeLimited to points of law no suspensive effect deadline 2 months
Direct actions
3 Written procedure ndash avoiding the pitfalls
copy 2017 Baker amp McKenzie CVBASCRL
General tips ndash before you get started
20
bull Carefully calculate deadline
bull Plan timeline backwards from deadline allow for slippage particularly in the run-up to submission
bull Review procedural rules in detail
bull RoP Practice Rules consult guidance (aides meacutemoires etc) as well
bull Note all formal requirements and allocate responsibilities
bull Request from the client
bull Mandatory documentation (PoA proof of existence in law)
bull Any supporting evidence
bull Remember Majority of your judges
bull Will not share your legal background
bull Will read the French version of your submissions
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
Application (Art 76-78 RoP pts 123-135 Practice Rules)
21
bull Cover page (applicantrsquos amp representativersquos information defendant subject matter)
bull Table of contents
bull Introduction summary
bull Facts
bull Admissibility
bull Grounds of appeal (pleas in law and arguments)(include all evidence offers and requests for measures of organisation)
bull Form of order sought
bull Date signature (e-Curia proof of lodgement suffices)
bull Annexes and schedule (challenged act = A1 in language of the case)
bull Submit at the same time but separately from the application
bull Mandatory procedural documents (PoA practicing certificate etc)
bull Summary of pleas
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
Legal grounds and arguments
22
1 Infringement of the EU-Treaties or of any rule of law relating to their application
2 Lack of competence
3 Misuse of power
4 Violation of essential procedural requirements
bull Institutional procedures
bull Procedural rights
Note ex officio the Court may raise
bull Lack of competence and
bull Violation of essential procedural requirements
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
Additional tips
23
bull Be complete include relevant context
bull all legal pleas consider alternative pleas as well
bull all available evidence
bull Be concise clear compelling and structured
bull no arguments in footnotes (may be overlooked) or annexes (will be ignored note annexes are not translated)
bull avoid complex sentences legal jargon figures of speech humourget to the point quickly and make it simple
bull Consider the form of order you are seeking (include costs)
bull Keep separate files from the start (procedural amp precedent files)
bull Avoid repetition address defence arguments in required detail
bull Remember the defendant has the last word
Direct actions
4 What to expect in Luxembourg -The oral hearing
copy 2017 Baker amp McKenzie CVBASCRL
Preparation
25
bull Reserve hotel rooms early communicate with registry
bull Agree timeline with client
bull Re-read substantive submissions and identify ldquolose-endsrdquo
bull Review report for the hearing identify any incompleteness and inaccuracy (minutes of the hearing ne transcript of the French simultaneous interpretation)
bull Re-read key precedents again
bull Update yourself on new legal developments (procedural amp substantive) and review guidance for hearings e-Curia
bull Identify and focus on key argumentsissues
bull Prepare for tricky questions and closing statement
bull Map out presentation and practice (keep to time speak freely)
bull Bring your gown amp ldquomobile officeldquo to Luxembourg
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
On the day
26
bull Get to the Court early (clear security register find room)
bull Settle in the court room (applicant sits on the right put on gown adjust earpieces amp stand organize materials etc greet registrar and interpreter)
bull Greet judges behind closed doors(judges may have questions to be addressed or other instructions)
bull Wait for the Court to be announced rise to receive the Court
bull President opens oral hearing delivery of judgments and opinions if any then applicant is called upon
bull Applicant delivers opening arguments (followed by interveners) then defendant (followed by intervener)
bull Questions from the bench amp partiesrsquo answerscomments
bull President invites closing statements (order = opening arguments)
bull President closes hearing
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
Remember hellip
27
1 Get there in good time
2 Calm down address court (make amp keep eye contact)
3 ldquoJudges are human toordquo Make it as interesting as possible
4 Speak slowly (simultaneous interpretation) and only when you have the word (microphone) ndash do not interrupt signal
5 Keep to time limits (you may be cut off) avoid repetition
6 Judges ask questions to inform their deliberation and your judgment
7 Respond always confer with colleaguesclient if necessary be brief and to the point amp respectful of other parties views
8 Judges go to into deliberation straight after the hearing
Direct actions
5 Judgment amp costs (appeal)
copy 2017 Baker amp McKenzie CVBASCRL
JudgmentOrder (Art 264(2) 266 TFEU)
29
bull Judgment delivered in open Court binding from date of delivery (Art 117 118 121(1) RoP)
bull Order binding from date of service (Art 119 120 121(2) RoP)
See Art 126-132
bull Actions and issues determined by order Art 126-132 RoP
bull Effect is declaratory can be partial ex tunc and erga omnes(exceptionally the Court may limit temporal effect)
bull The institution whose act has been declared void (or whose failure to act has been declared to violate EU law) is required to take the necessary measures to comply with the judgment if any
bull Can be appealed to the European Court of Justice (Art 56 57 Statute)
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
Costs (Art 133-141 RoP)
30
bull General principle no procedural costs parties pay their costs unless a request has been made for the Court to decide on costs
bull Where costs have been applied for by the successful party the losing party pays own costs and bears the cost of the litigation necessarily incurred by the successful party (Art 134 140(b) RoP)
bull But the Court can allocate costs particularly if there is more than one unsuccessful party or if parties have won on some and lost on other heads of claim (note no appeal lies on costs only)
bull Costs of interveners (partly-)privileged interveners pay their own costs others may be required to bear their own costs
bull Note only notional cost recovery from the institutions See the very restrictive taxation precedents of the EU Courts (T-XXXYY DEP and C-XXXYY DEP)
Direct actions
copy 2017 Baker amp McKenzie CVBASCRL
Appeal (Art 56-61 Statute)
31
bull To the European Court of Justice
bull By any (partly-)unsuccessful party ndash including interveners
bull No suspensive effect
bull On legal grounds only (no factual review)lack of competence breach of procedure infringement of EU law
bull Deadline 2 months
bull Only one round of written submissions
bull Hearing at the discretion of the Court (less intense)
bull Advocate General
bull Some 2016 statistics
bull 26 of GC judgments went on appeal
bull Average duration of appeals 129 months
Direct actions
Baker amp McKenzie CVBASCRL is a member firm of Baker amp McKenzie International a Swiss Verein with member law
firms around the world In accordance with the common terminology used in professional service organisations
reference to a partner means a person who is a partner or equivalent in such a law firm Similarly reference to an
office means an office of any such law firm This may qualify as ldquoAttorney Advertisingrdquo requiring notice in some
jurisdictions Prior results do not guarantee a similar outcome
copy 2017 Baker amp McKenzie CVBASCRL
wwwbakermckenziecom
Thank you
Litigating European Union Law
Workshop on drafting an action
Werner Berg amp Nina Niejahr 26 April 2017
This publication has been produced with the financial support of the European Unionrsquos European Unionrsquos Justice Programme 2014-2020 The contents of this publication are the sole responsibility of the author and can in no way be taken to reflect the views of the European Commission
Agenda
1 Introduction to the case 10rsquo
2 Background reading 15rsquo
3 Key issues amp questions to consider 5rsquo
4 Discussion in groups 30rsquo
5 Outline arguments in groups 15rsquo
6 Present arguments amp discussion 45rsquo
copy 2017 Baker amp McKenzie CVBASCRL
Introduction to the case
3
10rsquo
copy 2017 Baker amp McKenzie CVBASCRL
EU Directive 200387 (ETS Directive)
4
bull The ETS Directive EU Directive 200387 on Greenhouse Gas Emmission Allowance Trading (as amended by EU Directive 200929) provides for a linear reduction in the total quantity of greenhouse gas emission allowances issued each year throughout the EU
bull Articles 10 10a and 10c contain rules for the distribution of the total quantity of allowances issued each year throughout the EU
bull A proportion of the allowances is auctioned by the Member States and another (decreasing) proportion is allocated free of charge
bull The free allocation of allowances to installations should be provided for through harmonised EU-wide rules (ex-ante benchmarks) in order to minimise distortions of competition within the EU
bull Articles 11(1) and 11(3) require Member States to publish and submit to the EU Commission the list of installations covered in their territories and any free allocation of allowances to these installations Member States may not issue allowances free of charge to installations whose inscription in the list has been rejected by the EU Commission
copy 2017 Baker amp McKenzie CVBASCRL
Commission Decision 2011278 (ETS Decision)
5
bull The ETS Decision based on Article 10a of the ETS Directive establishes fully harmonised EU-rules for the free allocation of emission allowances (see recital 12 and Art 11 ETS Directive)
bull Sets product benchmarks per ton (eg coke hot metal aluminium lime float glass glass bottles and jars cartonboard)
bull Where deriving a product benchmark was not feasible a hierarchy of three fallback approaches applies
(i) heat benchmark
(ii) fuel benchmark
(iii) historical emissions benchmark (for process emissions)
copy 2017 Baker amp McKenzie CVBASCRL
German ETS law
6
bull Treibhausgas-Emissionshandelsgesetz (ldquoTEHGrdquo German ETS law) implements the ETS Decision in Germany
bull Article 9(5) contains a ldquohardship clauserdquo
ldquo[i]f the allocation of allowanceshellipentails undue hardship for the operator of the installation and for a connected undertaking which for reasons relating to commercial law and company law is liable for the economic risks of that operator the competent authority shall allocate at the request of the operator supplementary allowances in the amount required for fair compensation provided the European Commission does not reject that allocation on the basis of Article 11(3) of [the ETS Directive]rdquo
copy 2017 Baker amp McKenzie CVBASCRL
The case
7
bull Emitfuture applied to the German authorities for free allocation of allowances for its installations on the basis of the hardship clause in Article 9(5) of the German ETS law
bull Germany sent the EU Commission the list of installations covered by the ETS Directive including any free allocation to listed installations
bull For Emitfuturersquos installations the German authorities calculated the preliminary number of free emission allowances inter alia on the basis of the German ETS lawrsquos hardship clause
bull By Commission Decision 2013448 the Rejection Decision the EU Commission rejected the preliminary total preliminary number of free emission allowances allocated to Emitfuturersquos installations
copy 2017 Baker amp McKenzie CVBASCRL
Background reading
8
15rsquo
copy 2017 Baker amp McKenzie CVBASCRL
Key issues amp questions to consider
9
5rsquo
copy 2017 Baker amp McKenzie CVBASCRL
Key issues amp questions
10
Admissibility Substance Strategic Aspects
Which act can be
challenged
What grounds for
annulment would you
consider
What parties would you
turn to to increase
support for your
action
Which Court is
competent to hear the
case
What forms of order
would you seek
Would expedited
proceedings be an
option
Does Emitfuture have
standing to challenge
the act
What is the deadline to
challenge the act
copy 2017 Baker amp McKenzie CVBASCRL
Discussion in groups
11
30rsquo
copy 2017 Baker amp McKenzie CVBASCRL
Outline arguments in groups
12
15rsquo
copy 2017 Baker amp McKenzie CVBASCRL
All present arguments amp discussion
13
20rsquo 25rsquoamp
Baker amp McKenzie CVBASCRL is a member firm of Baker amp McKenzie International a Swiss Verein with member law
firms around the world In accordance with the common terminology used in professional service organisations
reference to a partner means a person who is a partner or equivalent in such a law firm Similarly reference to an
office means an office of any such law firm This may qualify as ldquoAttorney Advertisingrdquo requiring notice in some
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Thank you
This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents
B DIRECTIVE 200387EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL
of 13 October 2003
establishing a scheme for greenhouse gas emission allowance trading within the Community andamending Council Directive 9661EC
(Text with EEA relevance)
(OJ L 275 25102003 p 32)
Amended by
Official Journal
No page date
M1 Directive 2004101EC of the European Parliament and of the Councilof 27 October 2004
L 338 18 13112004
M2 Directive 2008101EC of the European Parliament and of the Councilof 19 November 2008
L 8 3 1312009
M3 Regulation (EC) No 2192009 of the European Parliament and of theCouncil of 11 March 2009
L 87 109 3132009
M4 Directive 200929EC of the European Parliament and of the Council of23 April 2009
L 140 63 562009
2003L0087mdash ENmdash 25062009 mdash 004001mdash 1
ETS Directive as amended
B
DIRECTIVE 200387EC OF THE EUROPEAN PARLIAMENTAND OF THE COUNCIL
of 13 October 2003
establishing a scheme for greenhouse gas emission allowancetrading within the Community and amending Council Directive
9661EC
(Text with EEA relevance)
THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THEEUROPEAN UNION
Having regard to the Treaty establishing the European Community andin particular Article 175(1) thereof
Having regard to the proposal from the Commission (1)
Having regard to the opinion of the European Economic and SocialCommittee (2)
Having regard to the opinion of the Committee of the Regions (3)
Acting in accordance with the procedure laid down in Article 251 of theTreaty (4)
Whereas
(1) The Green Paper on greenhouse gas emissions trading within theEuropean Union launched a debate across Europe on the suit-ability and possible functioning of greenhouse gas emissionstrading within the European Union The European ClimateChange Programme has considered Community policies andmeasures through a multi-stakeholder process including ascheme for greenhouse gas emission allowance trading withinthe Community (the Community scheme) based on the GreenPaper In its Conclusions of 8 March 2001 the Councilrecognised the particular importance of the European ClimateChange Programme and of work based on the Green Paperand underlined the urgent need for concrete action atCommunity level
(2) The Sixth Community Environment Action Programme estab-lished by Decision No 16002002EC of the European Parliamentand of the Council (5) identifies climate change as a priority foraction and provides for the establishment of a Community-wideemissions trading scheme by 2005 That Programme recognisesthat the Community is committed to achieving an 8 reductionin emissions of greenhouse gases by 2008 to 2012 compared to1990 levels and that in the longer-term global emissions ofgreenhouse gases will need to be reduced by approximately70 compared to 1990 levels
(3) The ultimate objective of the United Nations FrameworkConvention on Climate Change which was approved byCouncil Decision 9469EC of 15 December 1993 concerningthe conclusion of the United Nations Framework Conventionon Climate Change (6) is to achieve stabilisation of greenhousegas concentrations in the atmosphere at a level which preventsdangerous anthropogenic interference with the climate system
2003L0087mdash ENmdash 25062009 mdash 004001mdash 2
(1) OJ C 75 E 2632002 p 33(2) OJ C 221 1792002 p 27(3) OJ C 192 1282002 p 59(4) Opinion of the European Parliament of 10 October 2002 (not yet published in
the Official Journal) Council Common Position of 18 March 2003 (OJ C 125E 2752003 p 72) Decision of the European Parliament of 2 July 2003 (notyet published in the Official Journal) and Council Decision of 22 July 2003
(5) OJ L 242 1092002 p 1(6) OJ L 33 721994 p 11
ETS Directive as amended
B
(4) Once it enters into force the Kyoto Protocol which wasapproved by Council Decision 2002358EC of 25 April 2002concerning the approval on behalf of the EuropeanCommunity of the Kyoto Protocol to the United NationsFramework Convention on Climate Change and the jointfulfilment of commitments thereunder (1) will commit theCommunity and its Member States to reducing their aggregateanthropogenic emissions of greenhouse gases listed in Annex Ato the Protocol by 8 compared to 1990 levels in the period2008 to 2012
(5) The Community and its Member States have agreed to fulfil theircommitments to reduce anthropogenic greenhouse gas emissionsunder the Kyoto Protocol jointly in accordance with Decision2002358EC This Directive aims to contribute to fulfilling thecommitments of the European Community and its Member Statesmore effectively through an efficient European market ingreenhouse gas emission allowances with the least possiblediminution of economic development and employment
(6) Council Decision 93389EEC of 24 June 1993 for a monitoringmechanism of Community CO2 and other greenhouse gasemissions (2) established a mechanism for monitoring greenhousegas emissions and evaluating progress towards meetingcommitments in respect of these emissions This mechanismwill assist Member States in determining the total quantity ofallowances to allocate
(7) Community provisions relating to allocation of allowances by theMember States are necessary to contribute to preserving theintegrity of the internal market and to avoid distortions of compe-tition
(8) Member States should have regard when allocating allowances tothe potential for industrial process activities to reduce emissions
(9) Member States may provide that they only issue allowances validfor a five-year period beginning in 2008 to persons in respect ofallowances cancelled corresponding to emission reductions madeby those persons on their national territory during a three-yearperiod beginning in 2005
(10) Starting with the said five-year period transfers of allowances toanother Member State will involve corresponding adjustments ofassigned amount units under the Kyoto Protocol
(11) Member States should ensure that the operators of certainspecified activities hold a greenhouse gas emissions permit andthat they monitor and report their emissions of greenhouse gasesspecified in relation to those activities
(12) Member States should lay down rules on penalties applicable toinfringements of this Directive and ensure that they are imple-mented Those penalties must be effective proportionate anddissuasive
(13) In order to ensure transparency the public should have access toinformation relating to the allocation of allowances and to theresults of monitoring of emissions subject only to restrictionsprovided for in Directive 20034EC of the European Parliamentand of the Council of 28 January 2003 on public access toenvironmental information (3)
(14) Member States should submit a report on the implementation ofthis Directive drawn up on the basis of Council Directive
2003L0087mdash ENmdash 25062009 mdash 004001mdash 3
(1) OJ L 130 1552002 p 1(2) OJ L 167 971993 p 31 Decision as amended by Decision 1999296EC
(OJ L 117 551999 p 35)(3) OJ L 41 1422003 p 26
ETS Directive as amended
B
91692EEC of 23 December 1991 standardising and rationalisingreports on the implementation of certain Directives relating to theenvironment (1)
(15) The inclusion of additional installations in the Communityscheme should be in accordance with the provisions laid downin this Directive and the coverage of the Community schememay thereby be extended to emissions of greenhouse gasesother than carbon dioxide inter alia from aluminium andchemicals activities
(16) This Directive should not prevent any Member State from main-taining or establishing national trading schemes regulatingemissions of greenhouse gases from activities other than thoselisted in Annex I or included in the Community scheme or frominstallations temporarily excluded from the Community scheme
(17) Member States may participate in international emissions tradingas Parties to the Kyoto Protocol with any other Party included inAnnex B thereto
(18) Linking the Community scheme to greenhouse gas emissiontrading schemes in third countries will increase the cost-effec-tiveness of achieving the Community emission reductions targetas laid down in Decision 2002358EC on the joint fulfilment ofcommitments
(19) Project-based mechanisms including Joint Implementation (JI)and the Clean Development Mechanism (CDM) are importantto achieve the goals of both reducing global greenhouse gasemissions and increasing the cost-effective functioning of theCommunity scheme In accordance with the relevant provisionsof the Kyoto Protocol and Marrakech Accords the use of themechanisms should be supplemental to domestic action anddomestic action will thus constitute a significant element of theeffort made
(20) This Directive will encourage the use of more energy-efficienttechnologies including combined heat and power technologyproducing less emissions per unit of output while the futuredirective of the European Parliament and of the Council on thepromotion of cogeneration based on useful heat demand in theinternal energy market will specifically promote combined heatand power technology
(21) Council Directive 9661EC of 24 September 1996 concerningintegrated pollution prevention and control (2) establishes ageneral framework for pollution prevention and control throughwhich greenhouse gas emissions permits may be issued Directive9661EC should be amended to ensure that emission limit valuesare not set for direct emissions of greenhouse gases from aninstallation subject to this Directive and that Member Statesmay choose not to impose requirements relating to energy effi-ciency in respect of combustion units or other units emittingcarbon dioxide on the site without prejudice to any otherrequirements pursuant to Directive 9661EC
(22) This Directive is compatible with the United Nations FrameworkConvention on Climate Change and the Kyoto Protocol It shouldbe reviewed in the light of developments in that context and totake into account experience in its implementation and progressachieved in monitoring of emissions of greenhouse gases
(23) Emission allowance trading should form part of a comprehensiveand coherent package of policies and measures implemented atMember State and Community level Without prejudice to theapplication of Articles 87 and 88 of the Treaty where activities
2003L0087mdash ENmdash 25062009 mdash 004001mdash 4
(1) OJ L 377 31121991 p 48(2) OJ L 257 10101996 p 26
ETS Directive as amended
B
are covered by the Community scheme Member States mayconsider the implications of regulatory fiscal or other policiesthat pursue the same objectives The review of the Directiveshould consider the extent to which these objectives have beenattained
(24) The instrument of taxation can be a national policy to limitemissions from installations temporarily excluded
(25) Policies and measures should be implemented at Member Stateand Community level across all sectors of the European Unioneconomy and not only within the industry and energy sectors inorder to generate substantial emissions reductions TheCommission should in particular consider policies andmeasures at Community level in order that the transport sectormakes a substantial contribution to the Community and itsMember States meeting their climate change obligations underthe Kyoto Protocol
(26) Notwithstanding the multifaceted potential of market-basedmechanisms the European Union strategy for climate changemitigation should be built on a balance between theCommunity scheme and other types of Community domesticand international action
(27) This Directive respects the fundamental rights and observes theprinciples recognised in particular by the Charter of FundamentalRights of the European Union
(28) The measures necessary for the implementation of this Directiveshould be adopted in accordance with Council Decision1999468EC of 28 June 1999 laying down the procedures forthe exercise of implementing powers conferred on theCommission (1)
(29) As the criteria (1) (5) and (7) of Annex III cannot be amendedthrough comitology amendments in respect of periods after 2012should only be made through codecision
(30) Since the objective of the proposed action the establishment of aCommunity scheme cannot be sufficiently achieved by theMember States acting individually and can therefore by reasonof the scale and effects of the proposed action be better achievedat Community level the Community may adopt measures inaccordance with the principle of subsidiarity as set out inArticle 5 of the Treaty In accordance with the principle ofproportionality as set out in that Article this Directive doesnot go beyond what is necessary in order to achieve thatobjective
HAVE ADOPTED THIS DIRECTIVE
M2CHAPTER I
GENERAL PROVISIONS
B
Article 1
Subject matter
This Directive establishes a scheme for greenhouse gas emissionallowance trading within the Community (hereinafter referred to as
2003L0087mdash ENmdash 25062009 mdash 004001mdash 5
(1) OJ L 184 1771999 p 23
ETS Directive as amended
B
the lsquoCommunity schemersquo) in order to promote reductions of greenhousegas emissions in a cost-effective and economically efficient manner
M4This Directive also provides for the reductions of greenhouse gasemissions to be increased so as to contribute to the levels of reductionsthat are considered scientifically necessary to avoid dangerous climatechange
This Directive also lays down provisions for assessing and imple-menting a stricter Community reduction commitment exceeding 20 to be applied upon the approval by the Community of an internationalagreement on climate change leading to greenhouse gas emissionreductions exceeding those required in Article 9 as reflected in the30 commitment endorsed by the European Council of March 2007
B
Article 2
Scope
1 This Directive shall apply to emissions from the activities listed inAnnex I and greenhouse gases listed in Annex II
2 This Directive shall apply without prejudice to any requirementspursuant to Directive 9661EC
M23 The application of this Directive to the airport of Gibraltar isunderstood to be without prejudice to the respective legal positions ofthe Kingdom of Spain and the United Kingdom with regard to thedispute over sovereignty over the territory in which the airport issituated
B
Article 3
Definitions
For the purposes of this Directive the following definitions shall apply
(a) lsquoallowancersquo means an allowance to emit one tonne of carbondioxide equivalent during a specified period which shall be validonly for the purposes of meeting the requirements of this Directiveand shall be transferable in accordance with the provisions of thisDirective
M2(b) lsquoemissionsrsquo means the release of greenhouse gases into the atmo-
sphere from sources in an installation or the release from an aircraftperforming an aviation activity listed in Annex I of the gasesspecified in respect of that activity
M4(c) lsquogreenhouse gasesrsquo means the gases listed in Annex II and other
gaseous constituents of the atmosphere both natural and anthro-pogenic that absorb and re-emit infrared radiation
B(d) lsquogreenhouse gas emissions permitrsquo means the permit issued in
accordance with Articles 5 and 6
(e) lsquoinstallationrsquo means a stationary technical unit where one or moreactivities listed in Annex I are carried out and any other directlyassociated activities which have a technical connection with theactivities carried out on that site and which could have an effecton emissions and pollution
(f) lsquooperatorrsquo means any person who operates or controls an instal-lation or where this is provided for in national legislation to whom
2003L0087mdash ENmdash 25062009 mdash 004001mdash 6
ETS Directive as amended
B
decisive economic power over the technical functioning of theinstallation has been delegated
(g) lsquopersonrsquo means any natural or legal person
M4(h) lsquonew entrantrsquo means
mdash any installation carrying out one or more of the activitiesindicated in Annex I which has obtained a greenhouse gasemissions permit for the first time after 30 June 2011
mdash any installation carrying out an activity which is included in theCommunity scheme pursuant to Article 24(1) or (2) for the firsttime or
mdash any installation carrying out one or more of the activitiesindicated in Annex I or an activity which is included in theCommunity scheme pursuant to Article 24(1) or (2) which hashad a significant extension after 30 June 2011 only in so far asthis extension is concerned
B(i) lsquothe publicrsquo means one or more persons and in accordance with
national legislation or practice associations organisations orgroups of persons
(j) lsquotonne of carbon dioxide equivalentrsquo means one metric tonne ofcarbon dioxide (CO2) or an amount of any other greenhouse gaslisted in Annex II with an equivalent global-warming potential
M1(k) lsquoAnnex I Partyrsquo means a Party listed in Annex I to the United
Nations Framework Convention on Climate Change (UNFCCC)that has ratified the Kyoto Protocol as specified in Article 1(7)of the Kyoto Protocol
(l) lsquoproject activityrsquo means a project activity approved by one or moreAnnex I Parties in accordance with Article 6 or Article 12 of theKyoto Protocol and the decisions adopted pursuant to the UNFCCCor the Kyoto Protocol
(m) lsquoemission reduction unitrsquo or lsquoERUrsquo means a unit issued pursuant toArticle 6 of the Kyoto Protocol and the decisions adopted pursuantto the UNFCCC or the Kyoto Protocol
(n) lsquocertified emission reductionrsquo or lsquoCERrsquo means a unit issuedpursuant to Article 12 of the Kyoto Protocol and the decisionsadopted pursuant to the UNFCCC or the Kyoto Protocol
M2(o) lsquoaircraft operatorrsquo means the person who operates an aircraft at the
time it performs an aviation activity listed in Annex I or where thatperson is not known or is not identified by the owner of theaircraft the owner of the aircraft
(p) lsquocommercial air transport operatorrsquo means an operator that forremuneration provides scheduled or non-scheduled air transportservices to the public for the carriage of passengers freight or mail
(q) lsquoadministering Member Statersquo means the Member State responsiblefor administering the Community scheme in respect of an aircraftoperator in accordance with Article 18a
(r) lsquoattributed aviation emissionsrsquo means emissions from all flightsfalling within the aviation activities listed in Annex I whichdepart from an aerodrome situated in the territory of a MemberState and those which arrive in such an aerodrome from a thirdcountry
2003L0087mdash ENmdash 25062009 mdash 004001mdash 7
ETS Directive as amended
M2
(s) lsquohistorical aviation emissionsrsquo means the mean average of theannual emissions in the calendar years 2004 2005 and 2006from aircraft performing an aviation activity listed in Annex I
M4(t) lsquocombustionrsquo means any oxidation of fuels regardless of the way
in which the heat electrical or mechanical energy produced by thisprocess is used and any other directly associated activitiesincluding waste gas scrubbing
(u) lsquoelectricity generatorrsquo means an installation that on or after1 January 2005 has produced electricity for sale to third partiesand in which no activity listed in Annex I is carried out other thanthe lsquocombustion of fuelsrsquo
M2
CHAPTER II
AVIATION
Article 3a
Scope
The provisions of this Chapter shall apply to the allocation and issue ofallowances in respect of aviation activities listed in Annex I
Article 3b
Aviation activities
By 2 August 2009 the Commission shall in accordance with the regu-latory procedure referred to in Article 23(2) develop guidelines on thedetailed interpretation of the aviation activities listed in Annex I
Article 3c
Total quantity of allowances for aviation
1 For the period from 1 January 2012 to 31 December 2012 thetotal quantity of allowances to be allocated to aircraft operators shall beequivalent to 97 of the historical aviation emissions
2 For the period referred to in M4 Article 13(1) beginning on1 January 2013 and in the absence of any amendments following thereview referred to in Article 30(4) for each subsequent period the totalquantity of allowances to be allocated to aircraft operators shall beequivalent to 95 of the historical aviation emissions multiplied bythe number of years in the period
This percentage may be reviewed as part of the general review of thisDirective
3 The Commission shall review the total quantity of allowances tobe allocated to aircraft operators in accordance with Article 30(4)
4 By 2 August 2009 the Commission shall decide on the historicalaviation emissions based on best available data including estimatesbased on actual traffic information That decision shall be consideredwithin the Committee referred to in Article 23(1)
Article 3d
Method of allocation of allowances for aviation through auctioning
1 In the period referred to in Article 3c(1) 15 of allowances shallbe auctioned
2003L0087mdash ENmdash 25062009 mdash 004001mdash 8
ETS Directive as amended
M2
2 From 1 January 2013 15 of allowances shall be auctioned Thispercentage may be increased as part of the general review of thisDirective
3 A Regulation shall be adopted containing detailed provisions forthe auctioning by Member States of allowances not required to beissued free of charge in accordance with paragraphs 1 and 2 of thisArticle or Article 3f(8) The number of allowances to be auctioned ineach period by each Member State shall be proportionate to its share ofthe total attributed aviation emissions for all Member States for thereference year reported pursuant to Article 14(3) and verified pursuantto Article 15 For the period referred to in Article 3c(1) the referenceyear shall be 2010 and for each subsequent period referred to inArticle 3c the reference year shall be the calendar year ending24 months before the start of the period to which the auction relates
That Regulation designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
4 It shall be for Member States to determine the use to be made ofrevenues generated from the auctioning of allowances Those revenuesshould be used to tackle climate change in the EU and third countriesinter alia to reduce greenhouse gas emissions to adapt to the impactsof climate change in the EU and third countries especially developingcountries to fund research and development for mitigation and adap-tation including in particular in the fields of aeronautics and airtransport to reduce emissions through low-emission transport and tocover the cost of administering the Community scheme The proceedsof auctioning should also be used to fund contributions to the GlobalEnergy Efficiency and Renewable Energy Fund and measures to avoiddeforestation
Member States shall inform the Commission of actions taken pursuantto this paragraph
5 Information provided to the Commission pursuant to this Directivedoes not free Member States from the notification obligation laid downin Article 88(3) of the Treaty
Article 3e
Allocation and issue of allowances to aircraft operators
1 For each period referred to in Article 3c each aircraft operatormay apply for an allocation of allowances that are to be allocated free ofcharge An application may be made by submitting to the competentauthority in the administering Member State verified tonne-kilometredata for the aviation activities listed in Annex I performed by thataircraft operator for the monitoring year For the purposes of thisArticle the monitoring year shall be the calendar year ending24 months before the start of the period to which it relates in accordancewith Annexes IV and V or in relation to the period referred to inArticle 3c(1) 2010 Any application shall be made at least 21 monthsbefore the start of the period to which it relates or in relation to theperiod referred to in Article 3c(1) by 31 March 2011
2 At least 18 months before the start of the period to which theapplication relates or in relation to the period referred to in Article 3c(1) by 30 June 2011 Member States shall submit applications receivedunder paragraph 1 to the Commission
3 At least 15 months before the start of each period referred to inArticle 3c(2) or in relation to the period referred to in Article 3c(1) by30 September 2011 the Commission shall calculate and adopt adecision setting out
(a) the total quantity of allowances to be allocated for that period inaccordance with Article 3c
2003L0087mdash ENmdash 25062009 mdash 004001mdash 9
ETS Directive as amended
M2
(b) the number of allowances to be auctioned in that period inaccordance with Article 3d
(c) the number of allowances in the special reserve for aircraft operatorsin that period in accordance with Article 3f(1)
(d) the number of allowances to be allocated free of charge in thatperiod by subtracting the number of allowances referred to inpoints (b) and (c) from the total quantity of allowances decidedupon under point (a) and
(e) the benchmark to be used to allocate allowances free of charge toaircraft operators whose applications were submitted to theCommission in accordance with paragraph 2
The benchmark referred to in point (e) expressed as allowances pertonne-kilometre shall be calculated by dividing the number ofallowances referred to in point (d) by the sum of the tonne-kilometredata included in applications submitted to the Commission inaccordance with paragraph 2
4 Within three months from the date on which the Commissionadopts a decision under paragraph 3 each administering MemberState shall calculate and publish
(a) the total allocation of allowances for the period to each aircraftoperator whose application it submitted to the Commission inaccordance with paragraph 2 calculated by multiplying the tonne-kilometre data included in the application by the benchmark referredto in paragraph 3(e) and
(b) the allocation of allowances to each aircraft operator for each yearwhich shall be determined by dividing its total allocation ofallowances for the period calculated under point (a) by thenumber of years in the period for which that aircraft operator isperforming an aviation activity listed in Annex I
5 By 28 February 2012 and by 28 February of each subsequent yearthe competent authority of the administering Member State shall issue toeach aircraft operator the number of allowances allocated to that aircraftoperator for that year under this Article or Article 3f
Article 3f
Special reserve for certain aircraft operators
1 In each period referred to in Article 3c(2) 3 of the totalquantity of allowances to be allocated shall be set aside in a specialreserve for aircraft operators
(a) who start performing an aviation activity falling within Annex Iafter the monitoring year for which tonne-kilometre data wassubmitted under Article 3e(1) in respect of a period referred to inArticle 3c(2) or
(b) whose tonne-kilometre data increases by an average of more than18 annually between the monitoring year for which tonne-kilometre data was submitted under Article 3e(1) in respect of aperiod referred to in Article 3c(2) and the second calendar year ofthat period
and whose activity under point (a) or additional activity under point (b)is not in whole or in part a continuation of an aviation activitypreviously performed by another aircraft operator
2 An aircraft operator who is eligible under paragraph 1 may applyfor a free allocation of allowances from the special reserve by makingan application to the competent authority of its administering MemberState Any application shall be made by 30 June in the third year of theperiod referred to in Article 3c(2) to which it relates
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 10
ETS Directive as amended
M2
An allocation to an aircraft operator under paragraph 1(b) shall notexceed 1 000 000 allowances
3 An application under paragraph 2 shall
(a) include verified tonne-kilometre data in accordance with AnnexesIV and V for the aviation activities listed in Annex I performed bythe aircraft operator in the second calendar year of the periodreferred to in Article 3c(2) to which the application relates
(b) provide evidence that the criteria for eligibility under paragraph 1are fulfilled and
(c) in the case of aircraft operators falling within paragraph 1(b) state
(i) the percentage increase in tonne-kilometres performed by thataircraft operator between the monitoring year for which tonne-kilometre data was submitted under Article 3e(1) in respect ofa period referred to in Article 3c(2) and the second calendaryear of that period
(ii) the absolute growth in tonne-kilometres performed by thataircraft operator between the monitoring year for whichtonne-kilometre data was submitted under Article 3e(1) inrespect of a period referred to in Article 3c(2) andthe second calendar year of that period and
(iii) the absolute growth in tonne-kilometres performed by thataircraft operator between the monitoring year for whichtonne-kilometre data was submitted under Article 3e(1) inrespect of a period referred to in Article 3c(2) andthe second calendar year of that period which exceeds thepercentage specified in paragraph 1(b)
4 No later than six months from the deadline for making an appli-cation under paragraph 2 Member States shall submit applicationsreceived under that paragraph to the Commission
5 No later than 12 months from the deadline for making an appli-cation under paragraph 2 the Commission shall decide on thebenchmark to be used to allocate allowances free of charge to aircraftoperators whose applications were submitted to the Commission inaccordance with paragraph 4
Subject to paragraph 6 the benchmark shall be calculated by dividingthe number of the allowances in the special reserve by the sum of
(a) the tonne-kilometre data for aircraft operators falling withinparagraph 1(a) included in applications submitted to theCommission in accordance with paragraphs 3(a) and 4 and
(b) the absolute growth in tonne-kilometres exceeding the percentagespecified in paragraph 1(b) for aircraft operators falling withinparagraph 1(b) included in applications submitted to theCommission in accordance with paragraphs 3(c)(iii) and 4
6 The benchmark referred to in paragraph 5 shall not result in anannual allocation per tonne-kilometre greater than the annual allocationper tonne-kilometre to aircraft operators under Article 3e(4)
7 Within three months from the date on which the Commissionadopts a decision under paragraph 5 each administering MemberState shall calculate and publish
(a) the allocation of allowances from the special reserve to each aircraftoperator whose application it submitted to the Commission inaccordance with paragraph 4 This allocation shall be calculatedby multiplying the benchmark referred to in paragraph 5 by
(i) in the case of an aircraft operator falling within paragraph 1(a)the tonne-kilometre data included in the application submittedto the Commission under paragraphs 3(a) and 4
2003L0087 mdash ENmdash 25062009 mdash 004001 mdash 11
ETS Directive as amended
M2
(ii) in the case of an aircraft operator falling within paragraph 1(b)the absolute growth in tonne-kilometres exceeding thepercentage specified in paragraph 1(b) included in the appli-cation submitted to the Commission under paragraphs 3(c)(iii)and 4 and
(b) the allocation of allowances to each aircraft operator for each yearwhich shall be determined by dividing its allocation of allowancesunder point (a) by the number of full calendar years remaining inthe period referred to in Article 3c(2) to which the allocation relates
8 Any unallocated allowances in the special reserve shall beauctioned by Member States
9 The Commission may establish detailed rules on the operation ofthe special reserve under this Article including the assessment ofcompliance with eligibility criteria under paragraph 1 Thosemeasures designed to amend non-essential elements of this Directiveby supplementing it shall be adopted in accordance with the regulatoryprocedure with scrutiny referred to in Article 23(3)
Article 3g
Monitoring and reporting plans
The administering Member State shall ensure that each aircraft operatorsubmits to the competent authority in that Member State a monitoringplan setting out measures to monitor and report emissions and tonne-kilometre data for the purpose of an application under Article 3e andthat such plans are approved by the competent authority in accordancewith M4 the regulation referred to in Article 14
CHAPTER III
STATIONARY INSTALLATIONS
Article 3h
Scope
The provisions of this Chapter shall apply to greenhouse gas emissionspermits and the allocation and issue of allowances in respect ofactivities listed in Annex I other than aviation activities
M4
Article 4
Greenhouse gas emissions permits
Member States shall ensure that from 1 January 2005 no installationcarries out any activity listed in Annex I resulting in emissions specifiedin relation to that activity unless its operator holds a permit issued by acompetent authority in accordance with Articles 5 and 6 or the instal-lation is excluded from the Community scheme pursuant toArticle 27 This shall also apply to installations opted in underArticle 24
B
Article 5
Applications for greenhouse gas emissions permits
An application to the competent authority for a greenhouse gasemissions permit shall include a description of
(a) the installation and its activities including the technology used
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 12
ETS Directive as amended
B
(b) the raw and auxiliary materials the use of which is likely to lead toemissions of gases listed in Annex I
(c) the sources of emissions of gases listed in Annex I from the instal-lation and
M4(d) the measures planned to monitor and report emissions in accordance
with the regulation referred to in Article 14
BThe application shall also include a non-technical summary of thedetails referred to in the first subparagraph
Article 6
Conditions for and contents of the greenhouse gas emissions permit
1 The competent authority shall issue a greenhouse gas emissionspermit granting authorisation to emit greenhouse gases from all or partof an installation if it is satisfied that the operator is capable of moni-toring and reporting emissions
A greenhouse gas emissions permit may cover one or more installationson the same site operated by the same operator
M4The competent authority shall at least every five years review thegreenhouse gas emissions permit and make any amendments as areappropriate
B2 Greenhouse gas emissions permits shall contain the following
(a) the name and address of the operator
(b) a description of the activities and emissions from the installation
M4(c) a monitoring plan that fulfils the requirements under the regulation
referred to in Article 14 Member States may allow operators toupdate monitoring plans without changing the permit Operatorsshall submit any updated monitoring plans to the competentauthority for approval
B(d) reporting requirements and
M2(e) an obligation to surrender allowances other than allowances issued
under Chapter II equal to the total emissions of the installation ineach calendar year as verified in accordance with Article 15 withinfour months following the end of that year
M4
Article 7
Changes relating to installations
The operator shall inform the competent authority of any plannedchanges to the nature or functioning of the installation or anyextension or significant reduction of its capacity which may requireupdating the greenhouse gas emissions permit Where appropriate thecompetent authority shall update the permit Where there is a change inthe identity of the installationrsquos operator the competent authority shallupdate the permit to include the name and address of the new operator
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 13
ETS Directive as amended
B
Article 8
Coordination with Directive 9661EC
Member States shall take the necessary measures to ensure that whereinstallations carry out activities that are included in Annex I to Directive9661EC the conditions of and procedure for the issue of agreenhouse gas emissions permit are coordinated with those for thepermit provided for in that Directive The requirements of Articles 56 and 7 of this Directive may be integrated into the procedures providedfor in Directive 9661EC
M4
Article 9
Community-wide quantity of allowances
The Community-wide quantity of allowances issued each year startingin 2013 shall decrease in a linear manner beginning from the mid-pointof the period from 2008 to 2012 The quantity shall decrease by a linearfactor of 174 compared to the average annual total quantity ofallowances issued by Member States in accordance with theCommission Decisions on their national allocation plans for theperiod from 2008 to 2012
The Commission shall by 30 June 2010 publish the absoluteCommunity-wide quantity of allowances for 2013 based on the totalquantities of allowances issued or to be issued by the Member States inaccordance with the Commission Decisions on their national allocationplans for the period from 2008 to 2012
The Commission shall review the linear factor and submit a proposalwhere appropriate to the European Parliament and to the Council asfrom 2020 with a view to the adoption of a decision by 2025
Article 9a
Adjustment of the Community-wide quantity of allowances
1 In respect of installations that were included in the Communityscheme during the period from 2008 to 2012 pursuant to Article 24(1)the quantity of allowances to be issued from 1 January 2013 shall beadjusted to reflect the average annual quantity of allowances issued inrespect of those installations during the period of their inclusionadjusted by the linear factor referred to in Article 9
2 In respect of installations carrying out activities listed in Annex Iwhich are only included in the Community scheme from 2013 onwardsMember States shall ensure that the operators of such installationssubmit to the relevant competent authority duly substantiated and inde-pendently verified emissions data in order for them to be taken intoaccount for the adjustment of the Community-wide quantity ofallowances to be issued
Any such data shall be submitted by 30 April 2010 to the relevantcompetent authority in accordance with the provisions adopted pursuantto Article 14 (1)
If the data submitted are duly substantiated the competent authorityshall notify the Commission thereof by 30 June 2010 and thequantity of allowances to be issued adjusted by the linear factorreferred to in Article 9 shall be adjusted accordingly In the case ofinstallations emitting greenhouse gases other than CO2 the competentauthority may notify a lower amount of emissions according to theemission reduction potential of those installations
3 The Commission shall publish the adjusted quantities referred to inparagraphs 1 and 2 by 30 September 2010
4 In respect of installations which are excluded from the Communityscheme in accordance with Article 27 the Community-wide quantity of
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allowances to be issued from 1 January 2013 shall be adjusteddownwards to reflect the average annual verified emissions of thoseinstallations in the period from 2008 to 2010 adjusted by the linearfactor referred to in Article 9
Article 10
Auctioning of allowances
1 From 2013 onwards Member States shall auction all allowanceswhich are not allocated free of charge in accordance with Article 10aand 10c By 31 December 2010 the Commission shall determine andpublish the estimated amount of allowances to be auctioned
2 The total quantity of allowances to be auctioned by each MemberState shall be composed as follows
(a) 88 of the total quantity of allowances to be auctioned beingdistributed amongst Member States in shares that are identical tothe share of verified emissions under the Community scheme for2005 or the average of the period from 2005 to 2007 whicheverone is the highest of the Member State concerned
(b) 10 of the total quantity of allowances to be auctioned beingdistributed amongst certain Member States for the purpose of soli-darity and growth within the Community thereby increasing theamount of allowances that those Member States auction underpoint (a) by the percentages specified in Annex IIa and
(c) 2 of the total quantity of allowances to be auctioned beingdistributed amongst Member States the greenhouse gas emissionsof which were in 2005 at least 20 below their emissions in thebase year applicable to them under the Kyoto Protocol The distri-bution of this percentage amongst the Member States concerned isset out in Annex IIb
For the purposes of point (a) in respect of Member States which did notparticipate in the Community scheme in 2005 their share shall becalculated using their verified emissions under the Community schemein 2007
If necessary the percentages referred to in points (b) and (c) shall beadapted in a proportional manner to ensure that the distribution is 10 and 2 respectively
3 Member States shall determine the use of revenues generated fromthe auctioning of allowances At least 50 of the revenues generatedfrom the auctioning of allowances referred to in paragraph 2 includingall revenues from the auctioning referred to in paragraph 2 points (b)and (c) or the equivalent in financial value of these revenues should beused for one or more of the following
(a) to reduce greenhouse gas emissions including by contributing to theGlobal Energy Efficiency and Renewable Energy Fund and to theAdaptation Fund as made operational by the Poznan Conference onClimate Change (COP 14 and COPMOP 4) to adapt to the impactsof climate change and to fund research and development as well asdemonstration projects for reducing emissions and for adaptation toclimate change including participation in initiatives within theframework of the European Strategic Energy Technology Plan andthe European Technology Platforms
(b) to develop renewable energies to meet the commitment of theCommunity to using 20 renewable energies by 2020 as wellas to develop other technologies contributing to the transition to asafe and sustainable low-carbon economy and to help meet thecommitment of the Community to increase energy efficiency by20 by 2020
(c) measures to avoid deforestation and increase afforestation and refor-estation in developing countries that have ratified the international
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agreement on climate change to transfer technologies and tofacilitate adaptation to the adverse effects of climate change inthese countries
(d) forestry sequestration in the Community
(e) the environmentally safe capture and geological storage of CO2 inparticular from solid fossil fuel power stations and a range ofindustrial sectors and subsectors including in third countries
(f) to encourage a shift to low-emission and public forms of transport
(g) to finance research and development in energy efficiency and cleantechnologies in the sectors covered by this Directive
(h) measures intended to increase energy efficiency and insulation or toprovide financial support in order to address social aspects in lowerand middle income households
(i) to cover administrative expenses of the management of theCommunity scheme
Member States shall be deemed to have fulfilled the provisions of thisparagraph if they have in place and implement fiscal or financialsupport policies including in particular in developing countries ordomestic regulatory policies which leverage financial support estab-lished for the purposes set out in the first subparagraph and whichhave a value equivalent to at least 50 of the revenues generatedfrom the auctioning of allowances referred to in paragraph 2including all revenues from the auctioning referred to in paragraph 2points (b) and (c)
Member States shall inform the Commission as to the use of revenuesand the actions taken pursuant to this paragraph in their reportssubmitted under Decision No 2802004EC
4 By 30 June 2010 the Commission shall adopt a regulation ontiming administration and other aspects of auctioning to ensure that itis conducted in an open transparent harmonised and non-discriminatorymanner To this end the process should be predictable in particular asregards the timing and sequencing of auctions and the estimatedvolumes of allowances to be made available
Auctions shall be designed to ensure that
(a) operators and in particular any SMEs covered by the Communityscheme have full fair and equitable access
(b) all participants have access to the same information at the same timeand that participants do not undermine the operation of the auction
(c) the organisation and participation in auctions is cost-efficient andundue administrative costs are avoided and
(d) access to allowances is granted for small emitters
That measure designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
Member States shall report on the proper implementation of theauctioning rules for each auction in particular with respect to fair andopen access transparency price formation and technical and operationalaspects These reports shall be submitted within one month of theauction concerned and shall be published on the Commissionrsquos website
5 The Commission shall monitor the functioning of the Europeancarbon market Each year it shall submit a report to the EuropeanParliament and to the Council on the functioning of the carbonmarket including the implementation of the auctions liquidity and thevolumes traded If necessary Member States shall ensure that any
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relevant information is submitted to the Commission at least twomonths before the Commission adopts the report
Article 10a
Transitional Community-wide rules for harmonised free allocation
1 By 31 December 2010 the Commission shall adopt Community-wide and fully-harmonised implementing measures for the allocation ofthe allowances referred to in paragraphs 4 5 7 and 12 including anynecessary provisions for a harmonised application of paragraph 19
Those measures designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
The measures referred to in the first subparagraph shall to the extentfeasible determine Community-wide ex-ante benchmarks so as toensure that allocation takes place in a manner that provides incentivesfor reductions in greenhouse gas emissions and energy efficient tech-niques by taking account of the most efficient techniques substitutesalternative production processes high efficiency cogeneration efficientenergy recovery of waste gases use of biomass and capture and storageof CO2 where such facilities are available and shall not provideincentives to increase emissions No free allocation shall be made inrespect of any electricity production except for cases falling withinArticle 10c and electricity produced from waste gases
For each sector and subsector in principle the benchmark shall becalculated for products rather than for inputs in order to maximisegreenhouse gas emissions reductions and energy efficiency savingsthroughout each production process of the sector or the subsectorconcerned
In defining the principles for setting ex-ante benchmarks in individualsectors and subsectors the Commission shall consult the relevant stake-holders including the sectors and subsectors concerned
The Commission shall upon the approval by the Community of aninternational agreement on climate change leading to mandatoryreductions of greenhouse gas emissions comparable to those of theCommunity review those measures to provide that free allocation isonly to take place where this is fully justified in the light of thatagreement
2 In defining the principles for setting ex-ante benchmarks in indi-vidual sectors or subsectors the starting point shall be the averageperformance of the 10 most efficient installations in a sector orsubsector in the Community in the years 2007-2008 The Commissionshall consult the relevant stakeholders including the sectors andsubsectors concerned
The regulations pursuant to Articles 14 and 15 shall provide forharmonised rules on monitoring reporting and verification ofproduction-related greenhouse gas emissions with a view to determiningthe ex-ante benchmarks
3 Subject to paragraphs 4 and 8 and notwithstanding Article 10c nofree allocation shall be given to electricity generators to installations forthe capture of CO2 to pipelines for transport of CO2 or to CO2 storagesites
4 Free allocation shall be given to district heating as well as to highefficiency cogeneration as defined by Directive 20048EC foreconomically justifiable demand in respect of the production ofheating or cooling In each year subsequent to 2013 the total allocationto such installations in respect of the production of that heat shall beadjusted by the linear factor referred to in Article 9
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5 The maximum annual amount of allowances that is the basis forcalculating allocations to installations which are not covered byparagraph 3 and are not new entrants shall not exceed the sum of
(a) the annual Community-wide total quantity as determined pursuantto Article 9 multiplied by the share of emissions from installationsnot covered by paragraph 3 in the total average verified emissionsin the period from 2005 to 2007 from installations covered by theCommunity scheme in the period from 2008 to 2012 and
(b) the total average annual verified emissions from installations in theperiod from 2005 to 2007 which are only included in theCommunity scheme from 2013 onwards and are not covered byparagraph 3 adjusted by the linear factor as referred to in Article 9
A uniform cross-sectoral correction factor shall be applied if necessary
6 Member States may also adopt financial measures in favour ofsectors or subsectors determined to be exposed to a significant risk ofcarbon leakage due to costs relating to greenhouse gas emissions passedon in electricity prices in order to compensate for those costs and wheresuch financial measures are in accordance with state aid rules applicableand to be adopted in this area
Those measures shall be based on ex-ante benchmarks of the indirectemissions of CO2 per unit of production The ex-ante benchmarks shallbe calculated for a given sector or subsector as the product of theelectricity consumption per unit of production corresponding to themost efficient available technologies and of the CO2 emissions of therelevant European electricity production mix
7 Five percent of the Community-wide quantity of allowancesdetermined in accordance with Articles 9 and 9a over the period from2013 to 2020 shall be set aside for new entrants as the maximum thatmay be allocated to new entrants in accordance with the rules adoptedpursuant to paragraph 1 of this Article Allowances in this Community-wide reserve that are neither allocated to new entrants nor used pursuantto paragraph 8 9 or 10 of this Article over the period from 2013to 2020 shall be auctioned by the Member States taking into accountthe level to which installations in Member States have benefited fromthis reserve in accordance with Article 10(2) and for detailedarrangements and timing Article 10(4) and the relevant implementingprovisions
Allocations shall be adjusted by the linear factor referred to in Article 9
No free allocation shall be made in respect of any electricity productionby new entrants
By 31 December 2010 the Commission shall adopt harmonised rulesfor the application of the definition of lsquonew entrantrsquo in particular inrelation to the definition of lsquosignificant extensionsrsquo
Those measures designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
8 Up to 300 million allowances in the new entrantsrsquo reserve shall beavailable until 31 December 2015 to help stimulate the construction andoperation of up to 12 commercial demonstration projects that aim at theenvironmentally safe capture and geological storage (CCS) of CO2 aswell as demonstration projects of innovative renewable energy tech-nologies in the territory of the Union
The allowances shall be made available for support for demonstrationprojects that provide for the development in geographically balancedlocations of a wide range of CCS and innovative renewable energytechnologies that are not yet commercially viable Their award shallbe dependent upon the verified avoidance of CO2 emissions
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Projects shall be selected on the basis of objective and transparentcriteria that include requirements for knowledge-sharing Those criteriaand the measures shall be adopted in accordance with the regulatoryprocedure with scrutiny referred to in Article 23(3) and shall be madeavailable to the public
Allowances shall be set aside for the projects that meet the criteriareferred to in the third subparagraph Support for these projects shallbe given via Member States and shall be complementary to substantialco-financing by the operator of the installation They could also be co-financed by the Member State concerned as well as by otherinstruments No project shall receive support via the mechanism underthis paragraph that exceeds 15 of the total number of allowancesavailable for this purpose These allowances shall be taken into accountunder paragraph 7
9 Lithuania which pursuant to Article 1 of Protocol No 4 on theIgnalina nuclear power plant in Lithuania annexed to the 2003 Act ofAccession has committed to the closure of unit 2 of the IgnalinaNuclear Power Plant by 31 December 2009 may if the total verifiedemissions of Lithuania in the period from 2013 to 2015 within theCommunity scheme exceed the sum of the free allowances issued toinstallations in Lithuania for electricity production emissions in thatperiod and three-eighths of the allowances to be auctioned byLithuania for the period from 2013 to 2020 claim allowances fromthe new entrants reserve for auctioning in accordance with the regu-lation referred to in Article 10(4) The maximum amount of suchallowances shall be equivalent to the excess emissions in that periodto the extent that this excess is due to increased emissions from elec-tricity generation minus any quantity by which allocations in thatMember State in the period from 2008 to 2012 exceeded verifiedemissions within the Community scheme in Lithuania during thatperiod Any such allowances shall be taken into account underparagraph 7
10 Any Member State with an electricity network which is intercon-nected with Lithuania and which in 2007 imported more than 15 ofits domestic electricity consumption from Lithuania for its ownconsumption and where emissions have increased due to investmentin new electricity generation may apply paragraph 9 mutatis mutandisunder the conditions set out in that paragraph
11 Subject to Article 10b the amount of allowances allocated free ofcharge under paragraphs 4 to 7 of this Article in 2013 shall be 80 ofthe quantity determined in accordance with the measures referred to inparagraph 1 Thereafter the free allocation shall decrease each year byequal amounts resulting in 30 free allocation in 2020 with a view toreaching no free allocation in 2027
12 Subject to Article 10b in 2013 and in each subsequent year upto 2020 installations in sectors or subsectors which are exposed to asignificant risk of carbon leakage shall be allocated pursuant toparagraph 1 allowances free of charge at 100 of the quantitydetermined in accordance with the measures referred to in paragraph 1
13 By 31 December 2009 and every five years thereafter afterdiscussion in the European Council the Commission shall determinea list of the sectors or subsectors referred to in paragraph 12 on thebasis of the criteria referred to in paragraphs 14 to 17
Every year the Commission may at its own initiative or at the requestof a Member State add a sector or subsector to the list referred to in thefirst subparagraph if it can be demonstrated in an analytical report thatthis sector or subsector satisfies the criteria in paragraphs 14 to 17following a change that has a substantial impact on the sectorrsquos orsubsectorrsquos activities
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For the purpose of implementing this Article the Commission shallconsult the Member States the sectors or subsectors concerned andother relevant stakeholders
Those measures designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
14 In order to determine the sectors or subsectors referred to inparagraph 12 the Commission shall assess at Community level theextent to which it is possible for the sector or subsector concerned atthe relevant level of disaggregation to pass on the direct cost of therequired allowances and the indirect costs from higher electricity pricesresulting from the implementation of this Directive into product priceswithout significant loss of market share to less carbon efficient instal-lations outside the Community These assessments shall be based on anaverage carbon price according to the Commissionrsquos impact assessmentaccompanying the package of implementation measures for the EUrsquosobjectives on climate change and renewable energy for 2020 and ifavailable trade production and value added data from the three mostrecent years for each sector or subsector
15 A sector or subsector shall be deemed to be exposed to asignificant risk of carbon leakage if
(a) the sum of direct and indirect additional costs induced by the imple-mentation of this Directive would lead to a substantial increase ofproduction costs calculated as a proportion of the gross valueadded of at least 5 and
(b) the intensity of trade with third countries defined as the ratiobetween the total value of exports to third countries plus thevalue of imports from third countries and the total market size forthe Community (annual turnover plus total imports from thirdcountries) is above 10
16 Notwithstanding paragraph 15 a sector or subsector is alsodeemed to be exposed to a significant risk of carbon leakage if
(a) the sum of direct and indirect additional costs induced by the imple-mentation of this Directive would lead to a particularly highincrease of production costs calculated as a proportion of thegross value added of at least 30 or
(b) the intensity of trade with third countries defined as the ratiobetween the total value of exports to third countries plus thevalue of imports from third countries and the total market size forthe Community (annual turnover plus total imports from thirdcountries) is above 30
17 The list referred to in paragraph 13 may be supplemented aftercompletion of a qualitative assessment taking into account where therelevant data are available the following criteria
(a) the extent to which it is possible for individual installations in thesector or subsector concerned to reduce emission levels or electricityconsumption including as appropriate the increase in productioncosts that the related investment may entail for instance on thebasis of the most efficient techniques
(b) current and projected market characteristics including when tradeexposure or direct and indirect cost increase rates are close to one ofthe thresholds mentioned in paragraph 16
(c) profit margins as a potential indicator of long-run investment orrelocation decisions
18 The list referred to in paragraph 13 shall be determined aftertaking into account where the relevant data are available the following
(a) the extent to which third countries representing a decisive share ofglobal production of products in sectors or subsectors deemed to be
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at risk of carbon leakage firmly commit to reducing greenhouse gasemissions in the relevant sectors or subsectors to an extentcomparable to that of the Community and within the same time-frame and
(b) the extent to which the carbon efficiency of installations located inthese countries is comparable to that of the Community
19 No free allocation shall be given to an installation that has ceasedits operations unless the operator demonstrates to the competentauthority that this installation will resume production within aspecified and reasonable time Installations for which the greenhousegas emissions permit has expired or has been withdrawn and instal-lations for which the operation or resumption of operation is technicallyimpossible shall be considered to have ceased operations
20 The Commission shall as part of the measures adopted underparagraph 1 include measures for defining installations that partiallycease to operate or significantly reduce their capacity and measuresfor adapting as appropriate the level of free allocations given tothem accordingly
Article 10b
Measures to support certain energy-intensive industries in the eventof carbon leakage
1 By 30 June 2010 the Commission shall in the light of theoutcome of the international negotiations and the extent to whichthese lead to global greenhouse gas emission reductions and afterconsulting with all relevant social partners submit to the EuropeanParliament and to the Council an analytical report assessing thesituation with regard to energy-intensive sectors or subsectors thathave been determined to be exposed to significant risks of carbonleakage This shall be accompanied by any appropriate proposalswhich may include
(a) adjustment of the proportion of allowances received free of chargeby those sectors or subsectors under Article 10a
(b) inclusion in the Community scheme of importers of products whichare produced by the sectors or subsectors determined in accordancewith Article 10a
(c) assessment of the impact of carbon leakage on Member Statesrsquoenergy security in particular where the electricity connectionswith the rest of the Union are insufficient and where there areelectricity connections with third countries and appropriatemeasures in this regard
Any binding sectoral agreements which lead to global greenhouse gasemissions reductions of the magnitude required to effectively addressclimate change and which are monitorable verifiable and subject tomandatory enforcement arrangements shall also be taken into accountwhen considering what measures are appropriate
2 The Commission shall assess by 31 March 2011 whether thedecisions made regarding the proportion of allowances received freeof charge by sectors or subsectors in accordance with paragraph 1including the effect of setting ex-ante benchmarks in accordance withArticle 10a(2) are likely to significantly affect the quantity ofallowances to be auctioned by Member States in accordance withArticle 10(2)(b) compared to a scenario with full auctioning for allsectors in 2020 It shall if appropriate submit adequate proposals tothe European Parliament and to the Council taking into account thepossible distributional effects of such proposals
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Article 10c
Option for transitional free allocation for the modernisation ofelectricity generation
1 By derogation from Article 10a(1) to (5) Member States may givea transitional free allocation to installations for electricity production inoperation by 31 December 2008 or to installations for electricityproduction for which the investment process was physically initiatedby the same date provided that one of the following conditions is met
(a) in 2007 the national electricity network was not directly orindirectly connected to the network interconnected systemoperated by the Union for the Coordination of Transmission ofElectricity (UCTE)
(b) in 2007 the national electricity network was only directly orindirectly connected to the network operated by UCTE through asingle line with a capacity of less than 400 MW or
(c) in 2006 more than 30 of electricity was produced from a singlefossil fuel and the GDP per capita at market price did not exceed50 of the average GDP per capita at market price of theCommunity
The Member State concerned shall submit to the Commission a nationalplan that provides for investments in retrofitting and upgrading of theinfrastructure and clean technologies The national plan shall alsoprovide for the diversification of their energy mix and sources ofsupply for an amount equivalent to the extent possible to the marketvalue of the free allocation with respect to the intended investmentswhile taking into account the need to limit as far as possible directlylinked price increases The Member State concerned shall submit to theCommission every year a report on investments made in upgradinginfrastructure and clean technologies Investment undertaken from25 June 2009 may be counted for this purpose
2 Transitional free allocations shall be deducted from the quantity ofallowances that the respective Member State would otherwise auctionpursuant to Article 10(2) In 2013 the total transitional free allocationshall not exceed 70 of the annual average verified emissions in 2005-2007 from such electricity generators for the amount corresponding tothe gross final national consumption of the Member State concerned andshall gradually decrease resulting in no free allocation in 2020 Forthose Member States which did not participate in the Communityscheme in 2005 the relevant emissions shall be calculated using theirverified Community scheme emissions under the Community scheme in2007
The Member State concerned may determine that the allowancesallocated pursuant to this Article may only be used by the operator ofthe installation concerned for surrendering allowances pursuant toArticle 12(3) with respect to emissions of the same installation duringthe year for which the allowances are allocated
3 Allocations to operators shall be based on the allocation under theverified emissions in 2005-2007 or an ex-ante efficiency benchmarkbased on the weighted average of emission levels of most greenhousegas efficient electricity production covered by the Community schemefor installations using different fuels The weighting may reflect theshares of the different fuels in electricity production in the MemberState concerned The Commission shall in accordance with the regu-latory procedure referred to in Article 23(2) provide guidance to ensurethat the allocation methodology avoids undue distortions of competitionand minimises negative impacts on the incentives to reduce emissions
4 Any Member State applying this Article shall require benefitingelectricity generators and network operators to report every 12 monthson the implementation of their investments referred to in the national
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plan Member States shall report on this to the Commission and shallmake such reports public
5 Any Member State that intends to allocate allowances on the basisof this Article shall by 30 September 2011 submit to the Commissionan application containing the proposed allocation methodology and indi-vidual allocations An application shall contain
(a) evidence that the Member State meets at least one of the conditionsset out in paragraph 1
(b) a list of the installations covered by the application and the amountof allowances to be allocated to each installation in accordance withparagraph 3 and the Commission guidance
(c) the national plan referred to in the second subparagraph ofparagraph 1
(d) monitoring and enforcement provisions with respect to the intendedinvestments pursuant to the national plan
(e) information showing that the allocations do not create unduedistortions of competition
6 The Commission shall assess the application taking into accountthe elements set out in paragraph 5 and may reject the application orany aspect thereof within six months of receiving the relevant infor-mation
7 Two years before the end of the period during which a MemberState may give transitional free allocation to installations for electricityproduction in operation by 31 December 2008 the Commission shallassess the progress made in the implementation of the national plan Ifthe Commission considers on request of the Member State concernedthat there is a need for a possible extension of that period it may submitto the European Parliament and to the Council appropriate proposalsincluding the conditions that would have to be met in the case of anextension of that period
Article 11
National implementation measures
1 Each Member State shall publish and submit to the Commissionby 30 September 2011 the list of installations covered by this Directivein its territory and any free allocation to each installation in its territorycalculated in accordance with the rules referred to in Article 10a(1) andArticle 10c
2 By 28 February of each year the competent authorities shall issuethe quantity of allowances that are to be allocated for that yearcalculated in accordance with Articles 10 10a and 10c
3 Member States may not issue allowances free of charge underparagraph 2 to installations whose inscription in the list referred to inparagraph 1 has been rejected by the Commission
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CHAPTER IV
PROVISIONS APPLYING TO AVIATION AND STATIONARY INSTAL-LATIONS
M4
Article 11a
Use of CERs and ERUs from project activities in the Communityscheme before the entry into force of an international agreement on
climate change
1 Without prejudice to the application of Article 28(3) and (4) para-graphs 2 to 7 of this Article shall apply
2 To the extent that the levels of CER and ERU use allowed tooperators or aircraft operators by Member States for the period from2008 to 2012 have not been used up or an entitlement to use credits isgranted under paragraph 8 operators may request the competentauthority to issue allowances to them valid from 2013 onwards inexchange for CERs and ERUs issued in respect of emission reductionsup until 2012 from project types which were eligible for use in theCommunity scheme during the period from 2008 to 2012
Until 31 March 2015 the competent authority shall make such anexchange on request
3 To the extent that the levels of CER and ERU use allowed tooperators or aircraft operators by Member States for the period from2008 to 2012 have not been used up or an entitlement to use credits isgranted under paragraph 8 competent authorities shall allow operatorsto exchange CERs and ERUs from projects that were registered before2013 issued in respect of emission reductions from 2013 onwards forallowances valid from 2013 onwards
The first subparagraph shall apply to CERs and ERUs for all projecttypes which were eligible for use in the Community scheme during theperiod from 2008 to 2012
4 To the extent that the levels of CER and ERU use allowed tooperators or aircraft operators by Member States for the period from2008 to 2012 have not been used up or an entitlement to use credits isgranted under paragraph 8 competent authorities shall allow operatorsto exchange CERs issued in respect of emission reductions from 2013onwards for allowances from new projects started from 2013 onwards inLDCs
The first subparagraph shall apply to CERs for all project types whichwere eligible for use in the Community scheme during the period from2008 to 2012 until those countries have ratified a relevant agreementwith the Community or until 2020 whichever is the earlier
5 To the extent that the levels of CER and ERU use allowed tooperators or aircraft operators by Member States for the period from2008 to 2012 have not been used up or an entitlement to use credits isgranted under paragraph 8 and in the event that the negotiations on aninternational agreement on climate change are not concluded by31 December 2009 credits from projects or other emission reducingactivities may be used in the Community scheme in accordance withagreements concluded with third countries specifying levels of use Inaccordance with such agreements operators shall be able to use creditsfrom project activities in those third countries to comply with theirobligations under the Community scheme
6 Any agreements referred to in paragraph 5 shall provide for theuse of credits in the Community scheme from project types which wereeligible for use in the Community scheme during the period from 2008to 2012 including renewable energy or energy efficiency technologieswhich promote technological transfer and sustainable development Anysuch agreement may also provide for the use of credits from projects
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 24
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where the baseline used is below the level of free allocation under themeasures referred to in Article 10a or below the levels required byCommunity legislation
7 Once an international agreement on climate change has beenreached only credits from projects from third countries which haveratified that agreement shall be accepted in the Community schemefrom 1 January 2013
8 All existing operators shall be allowed to use credits during theperiod from 2008 to 2020 up to either the amount allowed to themduring the period from 2008 to 2012 or to an amount correspondingto a percentage which shall not be set below 11 of their allocationduring the period from 2008 to 2012 whichever is the highest
Operators shall be able to use credits beyond the 11 provided for inthe first subparagraph up to an amount which results in their combinedfree allocation in the period from 2008 to 2012 and overall projectcredits entitlement equal to a certain percentage of their verifiedemissions in the period from 2005 to 2007
New entrants including new entrants in the period from 2008 to 2012which received neither free allocation nor an entitlement to use CERsand ERUs in the period from 2008-2012 and new sectors shall be ableto use credits up to an amount corresponding to a percentage whichshall not be set below 45 of their verified emissions during theperiod from 2013 to 2020 Aircraft operators shall be able to usecredits up to an amount corresponding to a percentage which shallnot be set below 15 of their verified emissions during the periodfrom 2013 to 2020
Measures shall be adopted to specify the exact percentages which shallapply under the first second and third subparagraphs At least one-thirdof the additional amount which is to be distributed to existing operatorsbeyond the first percentage referred to in the first subparagraph shall bedistributed to the operators which had the lowest level of combinedaverage free allocation and project credit use in the period from 2008to 2012
Those measures shall ensure that the overall use of credits allowed doesnot exceed 50 of the Community-wide reductions below the 2005levels of the existing sectors under the Community scheme over theperiod from 2008 to 2020 and 50 of the Community-wide reductionsbelow the 2005 levels of new sectors and aviation over the period fromthe date of their inclusion in the Community scheme to 2020
Those measures designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
9 From 1 January 2013 measures may be applied to restrict the useof specific credits from project types
Those measures shall also set the date from which the use of creditsunder paragraphs 1 to 4 shall be in accordance with these measuresThat date shall be at the earliest six months from the adoption of themeasures or at the latest three years from their adoption
Those measures designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)The Commission shall consider submitting to the Committee a draftof the measures to be taken where a Member State so requests
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Article 11b
Project activities
1 Member States shall take all necessary measures to ensure thatbaselines for project activities as defined by subsequent decisionsadopted under the UNFCCC or the Kyoto Protocol undertaken incountries having signed a Treaty of Accession with the Union fullycomply with the acquis communautaire including the temporary dero-gations set out in that Treaty of Accession
M4The Community and its Member States shall only authorise projectactivities where all project participants have headquarters either in acountry that has concluded the international agreement relating tosuch projects or in a country or sub-federal or regional entity whichis linked to the Community scheme pursuant to Article 25
M12 Except as provided for in paragraphs 3 and 4 Member Stateshosting project activities shall ensure that no ERUs or CERs areissued for reductions or limitations of greenhouse gas emissions fromM2 activities falling within the scope of this Directive
3 Until 31 December 2012 for JI and CDM project activities whichreduce or limit directly the emissions of an installation falling within thescope of this Directive ERUs and CERs may be issued only if an equalnumber of allowances is cancelled by the operator of that installation
4 Until 31 December 2012 for JI and CDM project activities whichreduce or limit indirectly the emission level of installations fallingwithin the scope of this Directive ERUs and CERs may be issuedonly if an equal number of allowances is cancelled from the nationalregistry of the Member State of the ERUsrsquo or CERsrsquo origin
5 A Member State that authorises private or public entities to parti-cipate in project activities shall remain responsible for the fulfilment ofits obligations under the UNFCCC and the Kyoto Protocol and shallensure that such participation is consistent with the relevant guidelinesmodalities and procedures adopted pursuant to the UNFCCC or theKyoto Protocol
6 In the case of hydroelectric power production project activitieswith a generating capacity exceeding 20 MW Member States shallwhen approving such project activities ensure that relevant internationalcriteria and guidelines including those contained in the WorldCommission on Dams November 2000 Report lsquoDams and Developmentmdash A New Framework for Decision-Makingrsquo will be respected duringthe development of such project activities
M37 Provisions for the implementation of paragraphs 3 and 4 parti-cularly in respect of the avoidance of double counting shall be adoptedby the Commission in accordance with the regulatory procedure referredto in Article 23(2) The Commission shall adopt provisions for theimplementation of paragraph 5 of this Article where the host partymeets all eligibility requirements for JI project activities Thosemeasures designed to amend non-essential elements of this Directiveby supplementing it shall be adopted in accordance with the regulatoryprocedure with scrutiny referred to in Article 23(3)
B
Article 12
Transfer surrender and cancellation of allowances
1 Member States shall ensure that allowances can be transferredbetween
(a) persons within the Community
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 26
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B
(b) persons within the Community and persons in third countries wheresuch allowances are recognised in accordance with the procedurereferred to in Article 25 without restrictions other than thosecontained in or adopted pursuant to this Directive
M41a The Commission shall by 31 December 2010 examine whetherthe market for emissions allowances is sufficiently protected frominsider dealing or market manipulation and if appropriate shall bringforward proposals to ensure such protection The relevant provisions ofDirective 20036EC of the European Parliament and of the Council of28 January 2003 on insider dealing and market manipulation (marketabuse) (1) may be used with any appropriate adjustments needed toapply them to trade in commodities
B2 Member States shall ensure that allowances issued by a competentauthority of another Member State are recognised for the purposeM2 of meeting an aircraft operatorrsquos obligations under paragraph2a or of meeting an operators obligations under paragraph 3
M22a Administering Member States shall ensure that by 30 April eachyear each aircraft operator surrenders a number of allowances equal tothe total emissions during the preceding calendar year from aviationactivities listed in Annex I for which it is the aircraft operator asverified in accordance with Article 15 Member States shall ensurethat allowances surrendered in accordance with this paragraph aresubsequently cancelled
3 Member States shall ensure that by 30 April each year theoperator of each installation surrenders a number of allowances otherthan allowances issued under Chapter II equal to the total emissionsfrom that installation during the preceding calendar year as verified inaccordance with Article 15 and that these are subsequently cancelled
M43a An obligation to surrender allowances shall not arise in respect ofemissions verified as captured and transported for permanent storage toa facility for which a permit is in force in accordance with Directive200931EC of the European Parliament and of the Council of 23 April2009 on the geological storage of carbon dioxide (2)
B4 Member States shall take the necessary steps to ensure thatallowances will be cancelled at any time at the request of the personholding them
M45 Paragraphs 1 and 2 apply without prejudice to Article 10c
Article 13
Validity of allowances
1 Allowances issued from 1 January 2013 onwards shall be valid foremissions during periods of eight years beginning on 1 January 2013
2 Four months after the beginning of each period referred to inparagraph 1 allowances which are no longer valid and have not beensurrendered and cancelled in accordance with Article 12 shall becancelled by the competent authority
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 27
(1) OJ L 96 1242003 p 16(2) OJ L 140 562009 p 114
ETS Directive as amended
M4
Member States shall issue allowances to persons for the current periodto replace any allowances held by them which are cancelled inaccordance with the first subparagraph
Article 14
Monitoring and reporting of emissions
1 By 31 December 2011 the Commission shall adopt a regulationfor the monitoring and reporting of emissions and where relevantactivity data from the activities listed in Annex I for the monitoringand reporting of tonne-kilometre data for the purpose of an applicationunder Articles 3e or 3f which shall be based on the principles formonitoring and reporting set out in Annex IV and shall specify theglobal warming potential of each greenhouse gas in the requirementsfor monitoring and reporting emissions for that gas
That measure designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
2 The regulation referred to in paragraph 1 shall take into accountthe most accurate and up-to-date scientific evidence available inparticular from the IPCC and may also specify requirements foroperators to report on emissions associated with the production ofgoods produced by energy intensive industries which may be subjectto international competition That regulation may also specifyrequirements for this information to be verified independently
Those requirements may include reporting on levels of emissions fromelectricity generation covered by the Community scheme associatedwith the production of such goods
3 Member States shall ensure that each operator of an installation oran aircraft operator monitors and reports the emissions from that instal-lation during each calendar year or from 1 January 2010 the aircraftwhich it operates to the competent authority after the end of that year inaccordance with the regulation referred to in paragraph 1
4 The regulation referred to in paragraph 1 may includerequirements on the use of automated systems and data exchangeformats to harmonise communication on the monitoring plan theannual emission report and the verification activities between theoperator the verifier and competent authorities
M2
Article 15
M4 Verification and accreditation
Member States shall ensure that the reports submitted by operators andaircraft operators pursuant to Article 14(3) are verified in accordancewith the criteria set out in Annex V and any detailed provisions adoptedby the Commission in accordance with this Article and that thecompetent authority is informed thereof
Member States shall ensure that an operator or aircraft operator whosereport has not been verified as satisfactory in accordance with thecriteria set out in Annex V and any detailed provisions adopted bythe Commission in accordance with this Article by 31 March eachyear for emissions during the preceding year cannot make furthertransfers of allowances until a report from that operator or aircraftoperator has been verified as satisfactory
The Commission may adopt detailed provisions for the verification ofreports submitted by aircraft operators pursuant to Article 14(3) andapplications under Articles 3e and 3f including the verificationprocedures to be used by verifiers in accordance with the regulatoryprocedure referred to in Article 23(2)
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M4
By 31 December 2011 the Commission shall adopt a regulation for theverification of emission reports based on the principles set out inAnnex V and for the accreditation and supervision of verifiers Itshall specify conditions for the accreditation and withdrawal of accred-itation for mutual recognition and peer evaluation of accreditationbodies as appropriate
That measure designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
Article 15a
Disclosure of information and professional secrecy
Member States and the Commission shall ensure that all decisions andreports relating to the quantity and allocation of allowances and to themonitoring reporting and verification of emissions are immediatelydisclosed in an orderly manner ensuring non-discriminatory access
Information covered by professional secrecy may not be disclosed toany other person or authority except by virtue of the applicable lawsregulations or administrative provisions
B
Article 16
Penalties
1 Member States shall lay down the rules on penalties applicable toinfringements of the national provisions adopted pursuant to thisDirective and shall take all measures necessary to ensure that suchrules are implemented The penalties provided for must be effectiveproportionate and dissuasive Member States shall notify theseprovisions to the Commission M2 __________ and shall notifyit without delay of any subsequent amendment affecting them
M22 Member States shall ensure publication of the names of operatorsand aircraft operators who are in breach of requirements to surrendersufficient allowances under this Directive
3 Member States shall ensure that any operator or aircraft operatorwho does not surrender sufficient allowances by 30 April of each yearto cover its emissions during the preceding year shall be held liable forthe payment of an excess emissions penalty The excess emissionspenalty shall be EUR 100 for each tonne of carbon dioxide equivalentemitted for which the operator or aircraft operator has not surrenderedallowances Payment of the excess emissions penalty shall not releasethe operator or aircraft operator from the obligation to surrender anamount of allowances equal to those excess emissions when surren-dering allowances in relation to the following calendar year
M44 The excess emissions penalty relating to allowances issued from1 January 2013 onwards shall increase in accordance with the Europeanindex of consumer prices
M25 In the event that an aircraft operator fails to comply with therequirements of this Directive and where other enforcement measureshave failed to ensure compliance its administering Member State mayrequest the Commission to decide on the imposition of an operating banon the aircraft operator concerned
6 Any request by an administering Member State under paragraph 5shall include
(a) evidence that the aircraft operator has not complied with its obli-gations under this Directive
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M2
(b) details of the enforcement action which has been taken by thatMember State
(c) a justification for the imposition of an operating ban at Communitylevel and
(d) a recommendation for the scope of an operating ban at Communitylevel and any conditions that should be applied
7 When requests such as those referred to in paragraph 5 areaddressed to the Commission the Commission shall inform the otherMember States through their representatives on the Committee referredto in Article 23(1) in accordance with the Committeersquos Rules ofProcedure
8 The adoption of a decision following a request pursuant toparagraph 5 shall be preceded when appropriate and practicable byconsultations with the authorities responsible for regulatory oversightof the aircraft operator concerned Whenever possible consultationsshall be held jointly by the Commission and the Member States
9 When the Commission is considering whether to adopt a decisionfollowing a request pursuant to paragraph 5 it shall disclose to theaircraft operator concerned the essential facts and considerationswhich form the basis for such decision The aircraft operatorconcerned shall be given an opportunity to submit written commentsto the Commission within 10 working days from the date of disclosure
10 At the request of a Member State the Commission may inaccordance with the regulatory procedure referred to in Article 23(2)adopt a decision to impose an operating ban on the aircraft operatorconcerned
11 Each Member State shall enforce within its territory anydecisions adopted under paragraph 10 It shall inform the Commissionof any measures taken to implement such decisions
12 Where appropriate detailed rules shall be established in respectof the procedures referred to in this Article Those measures designedto amend non-essential elements of this Directive by supplementing itshall be adopted in accordance with the regulatory procedure withscrutiny referred to in Article 23(3)
M1
Article 17
Access to information
Decisions relating to the allocation of allowances information onproject activities in which a Member State participates or authorisesprivate or public entities to participate and the reports of emissionsrequired under the greenhouse gas emissions permit and held by thecompetent authority shall be made available to the public in accordancewith Directive 20034EC
B
Article 18
Competent authority
Member States shall make the appropriate administrative arrangementsincluding the designation of the appropriate competent authority orauthorities for the implementation of the rules of this DirectiveWhere more than one competent authority is designated the work ofthese authorities undertaken pursuant to this Directive must be coor-dinated
M1Member States shall in particular ensure coordination between theirdesignated focal point for approving project activities pursuant to
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 30
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M1
Article 6 (1)(a) of the Kyoto Protocol and their designated nationalauthority for the implementation of Article 12 of the Kyoto Protocolrespectively designated in accordance with subsequent decisionsadopted under the UNFCCC or the Kyoto Protocol
M2
Article 18a
Administering Member State
1 The administering Member State in respect of an aircraft operatorshall be
(a) in the case of an aircraft operator with a valid operating licencegranted by a Member State in accordance with the provisions ofCouncil Regulation (EEC) No 240792 of 23 July 1992 on licensingof air carriers (1) the Member State which granted the operatinglicence in respect of that aircraft operator and
(b) in all other cases the Member State with the greatest estimatedattributed aviation emissions from flights performed by thataircraft operator in the base year
2 Where in the first two years of any period referred to in Article 3cnone of the attributed aviation emissions from flights performed by anaircraft operator falling within paragraph 1(b) of this Article areattributed to its administering Member State the aircraft operator shallbe transferred to another administering Member State in respect of thenext period The new administering Member State shall be the MemberState with the greatest estimated attributed aviation emissions fromflights performed by that aircraft operator during the first two yearsof the previous period
3 Based on the best available information the Commission shall
(a) before 1 February 2009 publish a list of aircraft operators whichperformed an aviation activity listed in Annex I on or after1 January 2006 specifying the administering Member State foreach aircraft operator in accordance with paragraph 1 and
(b) before 1 February of each subsequent year update the list to includeaircraft operators which have subsequently performed an aviationactivity listed in Annex I
4 The Commission may in accordance with the regulatoryprocedure referred to in Article 23(2) develop guidelines relating tothe administration of aircraft operators under this Directive by admin-istering Member States
5 For the purposes of paragraph 1 lsquobase yearrsquo means in relation toan aircraft operator which started operating in the Community after1 January 2006 the first calendar year of operation and in all othercases the calendar year starting on 1 January 2006
Article 18b
Assistance from Eurocontrol
For the purposes of carrying out its obligations under Articles 3c(4) and18a the Commission may request the assistance of Eurocontrol oranother relevant organisation and may conclude to that effect any appro-priate agreements with those organisations
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Article 19
Registries
M41 Allowances issued from 1 January 2012 onwards shall be held inthe Community registry for the execution of processes pertaining to themaintenance of the holding accounts opened in the Member State andthe allocation surrender and cancellation of allowances under theCommission Regulation referred to in paragraph 3
Each Member State shall be able to fulfil the execution of authorisedoperations under the UNFCCC or the Kyoto Protocol
B2 Any person may hold allowances The registry shall be accessibleto the public and shall contain separate accounts to record theallowances held by each person to whom and from whom allowancesare issued or transferred
M33 In order to implement this Directive the Commission shall adopt aRegulation for a standardised and secured system of registries in theform of standardised electronic databases containing common dataelements to track the issue holding transfer and cancellation ofallowances to provide for public access and confidentiality as appro-priate and to ensure that there are no transfers which are incompatiblewith the obligations resulting from the Kyoto Protocol That Regulationshall also include provisions concerning the use and identification ofCERs and ERUs in the Community scheme and the monitoring of thelevel of such use That measure designed to amend non-essentialelements of this Directive by supplementing it shall be adopted inaccordance with the regulatory procedure with scrutiny referred to inArticle 23(3)
M44 The Regulation referred to in paragraph 3 shall contain appropriatemodalities for the Community registry to undertake transactions andother operations to implement arrangements referred to inArticle 25(1b) That Regulation shall also include processes for thechange and incident management for the Community registry withregard to issues in paragraph 1 of this Article It shall contain appro-priate modalities for the Community registry to ensure that initiatives ofthe Member States pertaining to efficiency improvement administrativecost management and quality control measures are possible
B
Article 20
Central Administrator
1 The Commission shall designate a Central Administrator tomaintain an independent transaction log recording the issue transferand cancellation of allowances
2 The Central Administrator shall conduct an automated check oneach transaction in registries through the independent transaction log toensure there are no irregularities in the issue transfer and cancellation ofallowances
3 If irregularities are identified through the automated check theCentral Administrator shall inform the Member State or MemberStates concerned who shall not register the transactions in question orany further transactions relating to the allowances concerned until theirregularities have been resolved
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Article 21
Reporting by Member States
1 Each year the Member States shall submit to the Commission areport on the application of this Directive M4 That report shall payparticular attention to the arrangements for the allocation of allowancesthe operation of registries the application of the implementing measureson monitoring and reporting verification and accreditation and issuesrelating to compliance with this Directive and on the fiscal treatment ofallowances if any The first report shall be sent to the Commissionby 30 June 2005 The report shall be drawn up on the basis of aquestionnaire or outline drafted by the Commission in accordancewith the procedure laid down in Article 6 of Directive 91692EECThe questionnaire or outline shall be sent to Member States at leastsix months before the deadline for the submission of the first report
2 On the basis of the reports referred to in paragraph 1 theCommission shall publish a report on the application of this Directivewithin three months of receiving the reports from the Member States
M43 The Commission shall organise an exchange of informationbetween the competent authorities of the Member States concerningdevelopments relating to issues of allocation the use of ERUs andCERs in the Community scheme the operation of registries monitoringreporting verification accreditation information technology andcompliance with this Directive
M1
Article 21a
Support of capacity-building activities
In accordance with the UNFCCC the Kyoto Protocol and anysubsequent decision adopted for their implementation the Commissionand the Member States shall endeavour to support capacity-buildingactivities in developing countries and countries with economies in tran-sition in order to help them take full advantage of JI and the CDM in amanner that supports their sustainable development strategies and tofacilitate the engagement of entities in JI and CDM project developmentand implementation
M4
Article 22
Amendments to the Annexes
The Annexes to this Directive with the exception of Annexes I IIa andIIb may be amended in the light of the reports provided for inArticle 21 and of the experience of the application of this DirectiveAnnexes IV and V may be amended in order to improve the monitoringreporting and verification of emissions
Those measures designed to amend non-essential elements of thisDirective inter alia by supplementing it shall be adopted in accordancewith the regulatory procedure with scrutiny referred to in Article 23(3)
B
Article 23
Committee
1 The Commission shall be assisted by the committee instituted byArticle 8 of Decision 93389EEC
2 Where reference is made to this paragraph Articles 5 and 7 ofDecision 1999468EC shall apply having regard to the provisions ofArticle 8 thereof
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B
The period laid down in Article 5(6) of Decision 1999468EC shall beset at three months
M33 Where reference is made to this paragraph Article 5a(1) to (4) andArticle 7 of Decision 1999468EC shall apply having regard to theprovisions of Article 8 thereof
M44 Where reference is made to this paragraph Article 4 and 7 ofDecision 1999468EC shall apply having regard to the provisions ofArticle 8 thereof
Article 24
Procedures for unilateral inclusion of additional activities and gases
1 From 2008 Member States may apply emission allowance tradingin accordance with this Directive to activities and to greenhouse gaseswhich are not listed in Annex I taking into account all relevant criteriain particular the effects on the internal market potential distortions ofcompetition the environmental integrity of the Community scheme andthe reliability of the planned monitoring and reporting system providedthat inclusion of such activities and greenhouse gases is approved by theCommission
(a) in accordance with the regulatory procedure referred to inArticle 23(2) if the inclusion refers to installations which are notcovered by Annex I or
(b) in accordance with the regulatory procedure with scrutiny referredto in Article 23(3) if the inclusion refers to activities andgreenhouse gases which are not listed in Annex I Thosemeasures are designed to amend non-essential elements of thisDirective by supplementing it
2 When the inclusion of additional activities and gases is approvedthe Commission may at the same time authorise the issue of additionalallowances and may authorise other Member States to include suchadditional activities and gases
3 On the initiative of the Commission or at the request of a MemberState a regulation may be adopted on the monitoring of and reportingon emissions concerning activities installations and greenhouse gaseswhich are not listed as a combination in Annex I if that monitoring andreporting can be carried out with sufficient accuracy
That measure designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
Article 24a
Harmonised rules for projects that reduce emissions
1 In addition to the inclusions provided for in Article 24 imple-menting measures for issuing allowances or credits in respect ofprojects administered by Member States that reduce greenhouse gasemissions not covered by the Community scheme may be adopted
Those measures designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
Any such measures shall not result in the double-counting of emissionreductions nor impede the undertaking of other policy measures toreduce emissions not covered by the Community scheme Measuresshall only be adopted where inclusion is not possible in accordancewith Article 24 and the next review of the Community scheme shallconsider harmonising the coverage of those emissions across theCommunity
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 34
ETS Directive as amended
M4
2 Implementing measures that set out the details for crediting inrespect of Community-level projects referred to in paragraph 1 maybe adopted
Those measures designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
3 A Member State can refuse to issue allowances or credits inrespect of certain types of projects that reduce greenhouse gasemissions on its own territory
Such projects will be executed on the basis of the agreement of theMember State in which the project takes place
B
Article 25
Links with other greenhouse gas emissions trading schemes
1 Agreements should be concluded with third countries listed inAnnex B to the Kyoto Protocol which have ratified the Protocol toprovide for the mutual recognition of allowances between theCommunity scheme and other greenhouse gas emissions tradingschemes in accordance with the rules set out in Article 300 of theTreaty
M41a Agreements may be made to provide for the recognition ofallowances between the Community scheme and compatiblemandatory greenhouse gas emissions trading systems with absoluteemissions caps established in any other country or in sub-federal orregional entities
1b Non-binding arrangements may be made with third countries orwith sub-federal or regional entities to provide for administrative andtechnical coordination in relation to allowances in the Communityscheme or other mandatory greenhouse gas emissions trading systemswith absolute emissions caps
M32 Where an agreement referred to in paragraph 1 has beenconcluded the Commission shall adopt any necessary provisionsrelating to the mutual recognition of allowances under that agreementThose measures designed to amend non-essential elements of thisDirective by supplementing it shall be adopted in accordance withthe regulatory procedure with scrutiny referred to in Article 23(3)
M2
Article 25a
Third country measures to reduce the climate change impact ofaviation
1 Where a third country adopts measures for reducing the climatechange impact of flights departing from that country which land in theCommunity the Commission after consulting with that third countryand with Member States within the Committee referred to inArticle 23(1) shall consider options available in order to provide foroptimal interaction between the Community scheme and that countryrsquosmeasures
Where necessary the Commission may adopt amendments to providefor flights arriving from the third country concerned to be excludedfrom the aviation activities listed in Annex I or to provide for anyother amendments to the aviation activities listed in Annex I whichare required by an agreement pursuant to the fourth subparagraphThose measures designed to amend non-essential elements of this
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 35
ETS Directive as amended
M2
Directive shall be adopted in accordance with the regulatory procedurewith scrutiny referred to in Article 23(3)
The Commission may propose to the European Parliament and theCouncil any other amendments to this Directive
The Commission may also where appropriate make recommendationsto the Council in accordance with Article 300(1) of the Treaty to opennegotiations with a view to concluding an agreement with the thirdcountry concerned
2 The Community and its Member States shall continue to seek anagreement on global measures to reduce greenhouse gas emissions fromaviation In the light of any such agreement the Commission shallconsider whether amendments to this Directive as it applies to aircraftoperators are necessary
B
Article 26
Amendment of Directive 9661EC
In Article 9(3) of Directive 9661EC the following subparagraphs shallbe added
lsquoWhere emissions of a greenhouse gas from an installation arespecified in Annex I to Directive 200387EC of the EuropeanParliament and of the Council of 13 October 2003 establishing ascheme for greenhouse gas emission allowance trading within theCommunity and amending Council Directive 9661EC () inrelation to an activity carried out in that installation the permitshall not include an emission limit value for direct emissions ofthat gas unless it is necessary to ensure that no significant localpollution is caused
For activities listed in Annex I to Directive 200387EC MemberStates may choose not to impose requirements relating to energyefficiency in respect of combustion units or other units emittingcarbon dioxide on the site
Where necessary the competent authorities shall amend the permitas appropriate
The three preceding subparagraphs shall not apply to installationstemporarily excluded from the scheme for greenhouse gas emissionallowance trading within the Community in accordance withArticle 27 of Directive 200387EC
___________() OJ L 275 25102003 p 32rsquo
M4
Article 27
Exclusion of small installations subject to equivalent measures
1 Following consultation with the operator Member States mayexclude from the Community scheme installations which havereported to the competent authority emissions of less than25 000 tonnes of carbon dioxide equivalent and where they carry outcombustion activities have a rated thermal input below 35 MWexcluding emissions from biomass in each of the three yearspreceding the notification under point (a) and which are subject tomeasures that will achieve an equivalent contribution to emissionreductions if the Member State concerned complies with thefollowing conditions
(a) it notifies the Commission of each such installation specifying theequivalent measures applying to that installation that will achieve anequivalent contribution to emission reductions that are in placebefore the list of installations pursuant to Article 11(1) has to be
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 36
ETS Directive as amended
M4
submitted and at the latest when this list is submitted to theCommission
(b) it confirms that monitoring arrangements are in place to assesswhether any installation emits 25 000 tonnes or more of carbondioxide equivalent excluding emissions from biomass in any onecalendar year Member States may allow simplified monitoringreporting and verification measures for installations with averageannual verified emissions between 2008 and 2010 which arebelow 5 000 tonnes a year in accordance with Article 14
(c) it confirms that if any installation emits 25 000 tonnes or more ofcarbon dioxide equivalent excluding emissions from biomass inany one calendar year or the measures applying to that installationthat will achieve an equivalent contribution to emission reductionsare no longer in place the installation will be reintroduced into theCommunity scheme
(d) it publishes the information referred to in points (a) (b) and (c) forpublic comment
Hospitals may also be excluded if they undertake equivalent measures
2 If following a period of three months from the date of notificationfor public comment the Commission does not object within a furtherperiod of six months the exclusion shall be deemed approved
Following the surrender of allowances in respect of the period duringwhich the installation is in the Community scheme the installation shallbe excluded and the Member State shall no longer issue free allowancesto the installation pursuant to Article 10a
3 When an installation is reintroduced into the Community schemepursuant to paragraph 1(c) any allowances issued pursuant toArticle 10a shall be granted starting with the year of the reintroductionAllowances issued to these installations shall be deducted from thequantity to be auctioned pursuant to Article 10(2) by the MemberState in which the installation is situated
Any such installation shall stay in the Community scheme for the rest ofthe trading period
4 For installations which have not been included in the Communityscheme during the period from 2008 to 2012 simplified requirementsfor monitoring reporting and verification may be applied for deter-mining emissions in the three years preceding the notification underparagraph 1 point (a)
Article 28
Adjustments applicable upon the approval by the Community of aninternational agreement on climate change
1 Within three months of the signature by the Community of aninternational agreement on climate change leading by 2020 tomandatory reductions of greenhouse gas emissions exceeding 20 compared to 1990 levels as reflected in the 30 reductioncommitment as endorsed by the European Council of March 2007the Commission shall submit a report assessing in particular thefollowing elements
(a) the nature of the measures agreed upon in the framework of theinternational negotiations as well as the commitments made by otherdeveloped countries to comparable emission reductions to those ofthe Community and the commitments made by economically moreadvanced developing countries to contributing adequately accordingto their responsibilities and respective capabilities
(b) the implications of the international agreement on climate changeand consequently options required at Community level in order to
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 37
ETS Directive as amended
M4
move to the more ambitious 30 reduction target in a balancedtransparent and equitable way taking into account work under theKyoto Protocolrsquos first commitment period
(c) the Community manufacturing industriesrsquo competitiveness in thecontext of carbon leakage risks
(d) the impact of the international agreement on climate change onother Community economic sectors
(e) the impact on the Community agriculture sector including carbonleakage risks
(f) the appropriate modalities for including emissions and removalsrelated to land use land use change and forestry in the Community
(g) afforestation reforestation avoided deforestation andforest degradation in third countries in the event of the estab-lishment of any internationally recognised system in this context
(h) the need for additional Community policies and measures in view ofthe greenhouse gas reduction commitments of the Communityrsquo andof Member States
2 On the basis of the report referred to in paragraph 1 theCommission shall as appropriate submit a legislative proposal to theEuropean Parliament and to the Council amending this Directivepursuant to paragraph 1 with a view to the amending Directiveentering into force upon the approval by the Community of the inter-national agreement on climate change and in view of the emissionreduction commitment to be implemented under that agreement
The proposal shall be based upon the principles of transparencyeconomic efficiency and cost-effectiveness as well as fairness and soli-darity in the distribution of efforts between Member States
3 The proposal shall allow as appropriate operators to use inaddition to the credits provided for in this Directive CERs ERUs orother approved credits from third countries which have ratified theinternational agreement on climate change
4 The proposal shall also include as appropriate any other measuresneeded to help reach the mandatory reductions in accordance withparagraph 1 in a transparent balanced and equitable way and inparticular shall include implementing measures to provide for the useof additional types of project credits by operators in the Communityscheme to those referred to in paragraphs 2 to 5 of Article 11a or theuse by such operators of other mechanisms created under the interna-tional agreement on climate change as appropriate
5 The proposal shall include the appropriate transitional andsuspensive measures pending the entry into force of the internationalagreement on climate change
Article 29
Report to ensure the better functioning of the carbon market
If on the basis of the regular reports on the carbon market referred to inArticle 10(5) the Commission has evidence that the carbon marketis not functioning properly it shall submit a report to the EuropeanParliament and to the Council The report may be accompanied if
2003L0087 mdash EN mdash 25062009 mdash 004001mdash 38
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M4
appropriate by proposals aiming at increasing transparency of thecarbon market and addressing measures to improve its functioning
Article 29a
Measures in the event of excessive price fluctuations
1 If for more than six consecutive months the allowance price ismore than three times the average price of allowances during the twopreceding years on the European carbon market the Commission shallimmediately convene a meeting of the Committee established byArticle 9 of Decision No 2802004EC
2 If the price evolution referred to in paragraph 1 does notcorrespond to changing market fundamentals one of the followingmeasures may be adopted taking into account the degree of priceevolution
(a) a measure which allows Member States to bring forward theauctioning of a part of the quantity to be auctioned
(b) a measure which allows Member States to auction up to 25 of theremaining allowances in the new entrants reserve
Those measures shall be adopted in accordance with the managementprocedure referred to in Article 23(4)
3 Any measure shall take utmost account of the reports submitted bythe Commission to the European Parliament and to the Council pursuantto Article 29 as well as any other relevant information provided byMember States
4 The arrangements for the application of these provisions shall belaid down in the regulation referred to in Article 10(4)
B
Article 30
Review and further development
1 On the basis of progress achieved in the monitoring of emissionsof greenhouse gases the Commission may make a proposal to theEuropean Parliament and the Council by 31 December 2004 toamend Annex I to include other activities and emissions of othergreenhouse gases listed in Annex II
2 On the basis of experience of the application of this Directive andof progress achieved in the monitoring of emissions of greenhouse gasesand in the light of developments in the international context theCommission shall draw up a report on the application of thisDirective considering
(a) how and whether Annex I should be amended to include otherrelevant sectors inter alia the chemicals aluminium andtransport sectors activities and emissions of other greenhousegases listed in Annex II with a view to further improving theeconomic efficiency of the scheme
(b) the relationship of Community emission allowance trading with theinternational emissions trading that will start in 2008
(c) further harmonisation of the method of allocation (includingauctioning for the time after 2012) and of the criteria for nationalallocation plans referred to in Annex III
M1(d) the use of credits from project activities including the need for
harmonisation of the allowed use of ERUs and CERs in theCommunity scheme
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B
(e) the relationship of emissions trading with other policies andmeasures implemented at Member State and Community levelincluding taxation that pursue the same objectives
(f) whether it is appropriate for there to be a single Communityregistry
(g) the level of excess emissions penalties taking into account interalia inflation
(h) the functioning of the allowance market covering in particular anypossible market disturbances
(i) how to adapt the Community scheme to an enlarged EuropeanUnion
(j) pooling
(k) the practicality of developing Community-wide benchmarks as abasis for allocation taking into account the best available tech-niques and cost-benefit analysis
M1(l) the impact of project mechanisms on host countries particularly on
their development objectives whether JI and CDM hydroelectricpower production project activities with a generating capacityexceeding 500 MW and having negative environmental or socialimpacts have been approved and the future use of CERs or ERUsresulting from any such hydroelectric power production projectactivities in the Community scheme
(m) the support for capacity-building efforts in developing countriesand countries with economies in transition
(n) the modalities and procedures for Member States approval ofdomestic project activities and for the issuing of allowances inrespect of emission reductions or limitations resulting from suchactivities from 2008
(o) technical provisions relating to the temporary nature of credits andthe limit of 1 for eligibility for land use land-use change andforestry project activities as established in Decision 17CP7 andprovisions relating to the outcome of the evaluation of potentialrisks associated with the use of genetically modified organisms andpotentially invasive alien species by afforestation and reforestationproject activities to allow operators to use CERs and ERUsresulting from land use land-use change and forestry projectactivities in the Community scheme from 2008 in accordancewith the decisions adopted pursuant to the UNFCCC or theKyoto Protocol
BThe Commission shall submit this report to the European Parliamentand the Council by 30 June 2006 accompanied by proposals as appro-priate
M13 In advance of each period referred to in Article 11(2) eachMember State shall publish in its national allocation plan its intendeduse of ERUs and CERs and the percentage of the allocation to eachinstallation up to which operators are allowed to use ERUs and CERs inthe Community scheme for that period The total use of ERUs andCERs shall be consistent with the relevant supplementarity obligationsunder the Kyoto Protocol and the UNFCCC and the decisions adoptedthereunder
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Member States shall in accordance with Article 3 of DecisionNo 2802004EC of the European Parliament and of the Council of11 February 2004 concerning a mechanism for monitoringCommunity greenhouse gas emissions and for implementing theKyoto Protocol (1) report to the Commission every two years on theextent to which domestic action actually constitutes a significantelement of the efforts undertaken at national level as well as theextent to which use of the project mechanisms is actually supplementalto domestic action and the ratio between them in accordance with therelevant provisions of the Kyoto Protocol and the decisions adoptedthereunder The Commission shall report on this in accordance withArticle 5 of the said Decision In the light of this report theCommission shall if appropriate make legislative or other proposalsto complement provisions adopted by Member States to ensure that useof the mechanisms is supplemental to domestic action within theCommunity
M24 By 1 December 2014 the Commission shall on the basis of moni-toring and experience of the application of this Directive review thefunctioning of this Directive in relation to aviation activities in Annex Iand may make proposals to the European Parliament and the Councilpursuant to Article 251 of the Treaty as appropriate The Commissionshall give consideration in particular to
(a) the implications and impacts of this Directive as regards the overallfunctioning of the Community scheme
(b) the functioning of the aviation allowance market covering inparticular any possible market disturbances
(c) the environmental effectiveness of the Community scheme and theextent by which the total quantity of allowances to be allocated toaircraft operators under Article 3c should be reduced in line withoverall EU emissions reduction targets
(d) the impact of the Community scheme on the aviation sectorincluding issues of competitiveness taking into account in particularthe effect of climate change policies implemented for aviationoutside the EU
(e) continuing with the special reserve for aircraft operators taking intoaccount the likely convergence of growth rates across the industry
(f) the impact of the Community scheme on the structural dependencyon aviation transport of islands landlocked regions peripheralregions and the outermost regions of the Community
(g) whether a gateway system should be included to facilitate thetrading of allowances between aircraft operators and operators ofinstallations whilst ensuring that no transactions would result in anet transfer of allowances from aircraft operators to operators ofinstallations
(h) the implications of the exclusion thresholds as specified in Annex Iin terms of certified maximum take-off mass and number of flightsper year performed by an aircraft operator
(i) the impact of the exemption from the Community scheme of certainflights performed in the framework of public service obligationsimposed in accordance with Council Regulation (EEC)No 240892 of 23 July 1992 on access for Community aircarriers to intra-Community air routes (2)
(j) developments including the potential for future developments inthe efficiency of aviation and in particular the progress towardsmeeting the Advisory Council for Aeronautics Research in Europe
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M2
(ACARE) goal to develop and demonstrate technologies able toreduce fuel consumption by 50 by 2020 and whether furthermeasures to increase efficiency are necessary
(k) developments in scientific understanding on the climate changeimpacts of contrails and cirrus clouds caused by aviation with aview to proposing effective mitigation measures
The Commission shall then report to the European Parliament and theCouncil
CHAPTER V
FINAL PROVISIONS
B
Article 31
Implementation
1 Member States shall bring into force the laws regulations andadministrative provisions necessary to comply with this Directive by31 December 2003 at the latest They shall forthwith inform theCommission thereof The Commission shall notify the other MemberStates of these laws regulations and administrative provisions
When Member States adopt these measures they shall contain areference to this Directive or be accompanied by such a reference onthe occasion of their official publication The methods of making suchreference shall be laid down by Member States
2 Member States shall communicate to the Commission the text ofthe provisions of national law which they adopt in the field covered bythis Directive The Commission shall inform the other Member Statesthereof
Article 32
Entry into force
This Directive shall enter into force on the day of its publication in theOfficial Journal of the European Union
Article 33
Addressees
This Directive is addressed to the Member States
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ANNEX I
CATEGORIES OF ACTIVITIES TO WHICH THIS DIRECTIVEAPPLIES
1 Installations or parts of installations used for research development andtesting of new products and processes and installations exclusively usingbiomass are not covered by this Directive
2 The thresholds values given below generally refer to production capacities oroutputs Where several activities falling under the same category are carriedout in the same installation the capacities of such activities are addedtogether
3 When the total rated thermal input of an installation is calculated in order todecide upon its inclusion in the Community scheme the rated thermal inputsof all technical units which are part of it in which fuels are combustedwithin the installation are added together These units could include alltypes of boilers burners turbines heaters furnaces incinerators calcinerskilns ovens dryers engines fuel cells chemical looping combustion unitsflares and thermal or catalytic post-combustion units Units with a ratedthermal input under 3 MW and units which use exclusively biomass shallnot be taken into account for the purposes of this calculation lsquoUnits usingexclusively biomassrsquo includes units which use fossil fuels only during start-up or shut-down of the unit
4 If a unit serves an activity for which the threshold is not expressed as totalrated thermal input the threshold of this activity shall take precedence forthe decision about the inclusion in the Community scheme
5 When the capacity threshold of any activity in this Annex is found to beexceeded in an installation all units in which fuels are combusted other thanunits for the incineration of hazardous or municipal waste shall be includedin the greenhouse gas emission permit
6 From 1 January 2012 all flights which arrive at or depart from an aerodromesituated in the territory of a Member State to which the Treaty applies shallbe included
Activities Greenhouse gases
Combustion of fuels in installations with atotal rated thermal input exceeding 20 MW(except in installations for the incinerationof hazardous or municipal waste)
Carbon dioxide
Refining of mineral oil Carbon dioxide
Production of coke Carbon dioxide
Metal ore (including sulphide ore) roastingor sintering including pelletisation
Carbon dioxide
Production of pig iron or steel (primaryor secondary fusion) including continuouscasting with a capacity exceeding 25tonnes per hour
Carbon dioxide
Production or processing of ferrous metals(including ferro-alloys) where combustionunits with a total rated thermal inputexceeding 20 MW are operated Processingincludes inter alia rolling mills re-heatersannealing furnaces smitheries foundriescoating and pickling
Carbon dioxide
Production of primary aluminium Carbon dioxide and perfluor-ocarbons
Production of secondary aluminium wherecombustion units with a total rated thermalinput exceeding 20 MW are operated
Carbon dioxide
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M4
Activities Greenhouse gases
Production or processing of non-ferrousmetals including production of alloysrefining foundry casting etc wherecombustion units with a total rated thermalinput (including fuels used as reducingagents) exceeding 20 MW are operated
Carbon dioxide
Production of cement clinker in rotary kilnswith a production capacity exceeding 500tonnes per day or in other furnaces with aproduction capacity exceeding 50 tonnes perday
Carbon dioxide
Production of lime or calcination ofdolomite or magnesite in rotary kilns or inother furnaces with a production capacityexceeding 50 tonnes per day
Carbon dioxide
Manufacture of glass including glass fibrewith a melting capacity exceeding 20tonnes per day
Carbon dioxide
Manufacture of ceramic products by firingin particular roofing tiles bricks refractorybricks tiles stoneware or porcelain with aproduction capacity exceeding 75 tonnes perday
Carbon dioxide
Manufacture of mineral wool insulationmaterial using glass rock or slag with amelting capacity exceeding 20 tonnes perday
Carbon dioxide
Drying or calcination of gypsum orproduction of plaster boards and othergypsum products where combustion unitswith a total rated thermal input exceeding20 MW are operated
Carbon dioxide
Production of pulp from timber or otherfibrous materials
Carbon dioxide
Production of paper or cardboard with aproduction capacity exceeding 20 tonnesper day
Carbon dioxide
Production of carbon black involving thecarbonisation of organic substances suchas oils tars cracker and distillationresidues where combustion units with atotal rated thermal input exceeding 20MW are operated
Carbon dioxide
Production of nitric acid Carbon dioxide and nitrousoxide
Production of adipic acid Carbon dioxide and nitrousoxide
Production of glyoxal and glyoxylic acid Carbon dioxide and nitrousoxide
Production of ammonia Carbon dioxide
Production of bulk organic chemicals bycracking reforming partial or fulloxidation or by similar processes with aproduction capacity exceeding 100 tonnesper day
Carbon dioxide
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M4
Activities Greenhouse gases
Production of hydrogen (H2) and synthesisgas by reforming or partial oxidation with aproduction capacity exceeding 25 tonnes perday
Carbon dioxide
Production of soda ash (Na2CO3) andsodium bicarbonate (NaHCO3)
Carbon dioxide
Capture of greenhouse gases from instal-lations covered by this Directive for thepurpose of transport and geological storagein a storage site permitted under Directive200931EC
Carbon dioxide
Transport of greenhouse gases by pipelinesfor geological storage in a storage sitepermitted under Directive 200931EC
Carbon dioxide
Geological storage of greenhouse gases in astorage site permitted under Directive200931EC
Carbon dioxide
Aviation
Flights which depart from or arrive in anaerodrome situated in the territory of aMemberState to which the Treaty applies
This activity shall not include
(a) flights performed exclusively for thetransport on official mission of areigning Monarch and his immediatefamily Heads of State Heads ofGovernment and GovernmentMinisters of a country other than aMember State where this is substan-tiated by an appropriate statusindicator in the flight plan
(b) military flights performed by militaryaircraft and customs and police flights
(c) flights related to search and rescue fire-fighting flights humanitarian flights andemergency medical service flightsauthorised by the appropriatecompetent authority
(d) any flights performed exclusively undervisual flight rules as defined in Annex 2to the Chicago Convention
(e) flights terminating at the aerodromefrom which the aircraft has taken offand during which no intermediatelanding has been made
(f) training flights performed exclusivelyfor the purpose of obtaining a licenceor a rating in the case of cockpit flightcrew where this is substantiated by anappropriate remark in the flight planprovided that the flight does not servefor the transport of passengers andorcargo or for the positioning or ferryingof the aircraft
(g) flights performed exclusively for thepurpose of scientific research or forthe purpose of checking testing orcertifying aircraft or equipmentwhether airborne or ground-based
Carbon dioxide
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M4
Activities Greenhouse gases
(h) flights performed by aircraft with acertified maximum take-off mass ofless than 5 700 kg
(i) flights performed in the framework ofpublic service obligations imposed inaccordance with Regulation (EEC)No 240892 on routes withinoutermost regions as specified inArticle 299(2) of the Treaty or onroutes where the capacity offered doesnot exceed 30 000 seats per year and
(j) flights which but for this point wouldfall within this activity performed by acommercial air transport operatoroperating either
mdash fewer than 243 flights per period forthree consecutive four-monthperiods or
mdash flights with total annual emissionslower than 10 000 tonnes per year
Flights performed exclusively for thetransport on official mission of areigning Monarch and his immediatefamily Heads of State Heads ofGovernment and GovernmentMinisters of a MemberState may notbe excluded under this point
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