- European law does not exhaust itself in the promotion of renewable sources for the generation of electricity, but provides considerable efforts in areas such as heating and biofuels, too. In the interest of the reader some cuts, however, had to be made. The article is therefore solely focused on electricity generation issues and support schemes.
- However, on the question of whether the European regulatory framework for renewable energy confirms the status of fuel cells as green energy and benefits from such qualification, including the economic valuation of green certificates, see Guy Block and David Haverbeke ‘Are fuel cells ‘green energy’? European financial support for fuel cells’ (2001) 12(2) ULR 39–45.
- National rules have also sparked controversy in the area of hybrid generation. Cf ‘Generators press for rule changes to support biomass co-firing’, ENDS Report, 2002, no 335, pp 16–17.
- Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market, OJ 2001 L 283/33.
- For an overview and discussion, see ‘Electricity from renewable sources’ (2002) 11(2) EELR 58–61.
- Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/ 92/EC, OJ 2003 L 176/37.
- Regulation (EC) 1228/2003 of the European Parliament and of the Council of 26 June 2003 on conditions for access to the network for cross-border exchanges in electricity, OJ 2003 L 176/1.
- Judgment of the ECJ of 13 March 2001, [2001] ECR 1–2099. For a discussion, see Jason Lowther, ‘State aids and free movement issues for renewables’ (2001) 13(3) ELM 103–104.
- Eg for amounts of imported renewable electricity exempted from the climate change levy in 2001 and whether modification of 2010 target for renewables reflects attempts to enable imports to make up any shortfall in renewables target, cf ‘French generators enjoy boost from UK climate levy’, ENDS Report, 2002, no 331, pp 3–4.
- The Commission will have a reporting function in this regard. See Electricity Directive, Art 28(f) providing that the Commission must provide: A general assessment of the progress achieved with regard to bilateral relations with third countries which produce and export or transport electricity, including progress in market integration, the social and environmental consequences of the trade in electricity and access to the networks of such third countries.’
- Cf Commission Staff Working Paper, ‘Inventory of public aid granted to different energy sources’ (2002); also the DTI commissioned review on renewable energy development in Europe and the US (October 2003) provided by Imperial College London.
- At the same time, the EU provides aid for the development of renewables through its regional policy funds, Altener, the European programme for promoting renewable energies, R&D and aid to the development of biomass sources.
- However, see Council Directive 2003/96 restructuring the Community framework for the taxation of energy products and electricity on the impact for renewables; a general review ‘Energy taxation: Council adopts new rules’, EU Focus, 2003, no 133, pp 30–31.
- For some of the national issues discussed, see Geoff Hewitt, ‘UK Energy Bill—the great wind-up?’ (2004) 6IELTR 146–148; Sarah Hills, Joseph Griffiths and Clare Costello, ‘The UK Energy Act 2004 changes blowing in the wind?’ (2004) 5 IELTR 124–127; Mike Nash, ‘Emissions trading and green certificates in the United Kingdom’ (2003) 2 IELTR 45–51; Marcus Strelow and Daniel Schmachtenberg, ‘Germany: renewable energy—draft Act in support of renewable energy’ (2004) 3 IELTR N11-N12 and ‘Germany: renewable energy—obligation to provide grid access extends to operators of transmission networks’ (2004) 3 IELTR Nil; Renate Pirstner, ‘Implementation of the Renewable Energy Directive in Austria and the EU accession countries’ (2003) 2 Eu LF 72–79; Loredana De Angelis, ‘Italy: electricity—incentivising use of renewable resources’ (2003) 4 IELTR N20-N22; Macedo Vitorino e Associados, ‘The Portuguese energy market’ (2002) 25 Euro LB 55–56; Fleming Larsen, ‘Denmark: new Danish initiatives supporting renewable energy production’ (2001) 9(6) Env Liability CS79-CS81.
- See Commission Staff Working Document, ‘The share of renewable energy in the EU Country Profiles Overview of Renewable Energy Sources in the Enlarged European Union ‘, COM (2004) 366 final; Pablo Del Rio and Miguel Guai, ‘The promotion of green electricity in Europe: present and future’ (2004) v(4) Euro Env 219–234.
- ‘The green premium: certificate trading in environmental commodities’ (2002) 13(9) IT Rev Supp (Industry guide energy), pp 5–10.
- For a view on renewable policies beyond European borders, see Emma Sutherland, ‘Australia: renewable energy—project financing—resurgence in renewable energy market’ (2004) 2IELTR N5-N6; Tim Wach and Noreen Flaherty, ‘New tax incentives for wind energy investment in Canada’ (2003) 31 (1) IBL 3–5; Jean-Paul Prates, ‘Brazil: electricity: renewable energy’ (2003) 7 IELTR N35-N36; Brendan Oviedo Doyle, ‘Peru: renewable energy resources’ (2002) 20(3) JERL 312–313.
- Article 3(7) goes on by providing an example with regard to use of system: ‘Such measures may include, in particular, the provision of adequate economic incentives, using, where appropriate, all existing national and Community tools, for the maintenance and construction of the necessary network infrastructure, including interconnection capacity.’
- Cf Opinion of the Economic and Social Committee (ESC) on the Commission working document ‘Electricity from renewable energy sources and the internal electricity market’, OJ 1999 C 368/6. In discussing the proposal for the Renewables Directive, the ESC considered two options: (1) gradual achievement of an internal market through continued application of the EU Treaty rules; and (2) proactive creation of a single market through Community action. Uoption (1), each Member State would continue freely to choose the support system th views as most appropriate in the light of its particular circumstances; subject, however, to the continued application of the EU Treaty rules, notably those with respect to state aid. The arguments in favour of such an option included, from the view of the ESC, the following: (a) the physical conditions relevant to the development of renewable generated electricity differ significantly across the EU. It might be considered appropriate to limit the proactive development of a single market in this area to ensure that each Member State takes the measures most appropriate to its particular situation; and (b) one argument in favour of a fixed-price feed-in tariff system is its possible appropriateness to ensure the rapid take-off of renewables generation from very low levels, which is the existing situation for most EU Member States. Under option (2), the ESC envisaged the adoption of a basic Community framework, probably in the form of a Directive. Member States would have to ensure that, after an appropriate transitional period, their direct support schemes for renewable generated electricity would comply with a number of basic requirements, in such a manner that would ensure that the different schemes were sufficiently compatible with one another, permitting effective trade and, thus, competition. The ESC decided on option (2) because, although it favoured a gradual achievement of an internal market, it believed that it was unlikely to be achieved unless a market-wide regime was developed for each technology.
- See Christopher Jones, EC Energy Law, at 2.25.
- Ibid.
- Cf”Towards an international trade in green certificates’, ENDS Report, 2000, no 301, p 18.
- Communication from the Commission to the Council and the European Parliament—The share of renewable energy in the EU—Commission Report in accordance with Article 3 of Directive 2001/77/EC, evaluation of the effect of legislative instruments and other Community policies on the development of the contribution of renewable energy sources in the EU and proposals for concrete actions SEC (2004) 5470E; COM/2004/0366 final at pt 2.5.
- Cf recital 25 of Directive 2003/54/EC: ‘The Commission has indicated its intention to take initiatives especially as regards the scope of the labeling provision and notably on the manner in which the information on the environmental impact in terms of at least emissions of CO2 and the radioactive waste resulting from electricity production from different energy sources, could be made available in a transparent, easily accessible and comparable manner throughout the European Union and on the manner in which the measures taken in the Member States to control the accuracy of the information provided by suppliers could be streamlined.’
- Cf recital 26 of Directive 2003/54/EC: ‘The respect of the public service requirements is a fundamental requirement of this Directive, and it is important that common minimum standards, respected by all Member States, are specified in this Directive, which take into account the objectives of common protection, security of supply, environmental protection and equivalent levels of competition in all Member States. It is important that the public service requirements can be interpreted on a national basis, taking into account national circumstances and subject to the respect of Community law.’
- See also Electricity Directive, Art 3(8): ‘Member States may decide not to apply the provisions of Articles 6, 7, 20 and 22 insofar as their application would obstruct the performance, in law or in fact, of the obligations imposed on electricity undertakings in the general economic interest and insofar as the development of trade would not be affected to such an extent as would be contrary to the interests of the Community. The interests of the Community include, among others, competition with regard to eligible customers in accordance with this Directive and Article 86 of the Treaty.’
- See Art 3(9): ‘Member States shall, upon implementation of this Directive, inform the Commission of all measures adopted to fulfill universal service and public service obligations, including consumer protection and environmental protection, and their possible effect on national and international competition, whether or not such measures require a derogation from this Directive. They shall inform the Commission subsequently every two years of any changes to such measures, whether or not they require a derogation from this Directive.’
- See Christopher Jones, EU Energy Law, at 610.
- Em AG v Austria (Case C-448/01) [2004] 1 CMLR 22 (ECJ (6th Chamber)). EU Focus, 2004, 135/136, pp 37–38. The case arose from proceedings in Austria. The Government published an invitation to tender for a contract concerning the provision of electricity to federal administration services. Under the heading ‘award criteria’, was the provision ‘the most economically advantageous tender according to the following criteria: impact of the services on the environment in accordance with the contract documents’. The tender specifications required the successful supplier to supply federal offices with electricity produced from renewable energy sources, but did not require proof of such sources. The contract required the supplier to supply at least 22.5 gigawatt hours (GWh) per annum from renewable sources. The award criteria laid down were the net price per kilowatt hour, which was calculated with a weighting of 45 per cent for energy from renewable sources in excess of 22.5 GWh per annum, and 55 per cent for that from other sources. EVN AG and Weinstrom tendered unsuccessfully. They claimed, however, that the criteria used in the tender award criteria relating to renewable energy were illegal and demanded the opening of a conciliation procedure with the Federal Procurement Review Commission. They also brought an action to the Federal Procurement Office for the annulment of various decisions relating to the rejection of their offer and claimed that the invitation to tender be withdrawn. That Office referred questions to the ECJ concerning the interpretation of Art 26 of Directive 93/36 on public supply contracts (OJ 1993 L 199/1) and Directive 89/665 on review procedures for the award of public supply and public works contracts (OJ 1989 L 395/33).
- Cf EU Focus, 2004, 135/136, pp 37–38; further, Michael Bowsher, ‘The ECJ, transparency, and procurement as an environmental policy: Evn AG & Wienstrom GmbH v Austria’ (2004) 21(2) ICL Rev 189–196.
- For a discussion compare ‘Unlawful criteria must lead to cancellation of tender procedure’, EU Focus, 2004, 135/136, pp 37–38; Richard Macrory, ‘Public procurement and renewable energy’, ENDS Report, 2004, no 350, p 60; ‘Energy/public procurement’, C McK Env LB, 2004, July, pp 42–43.
- For an overview, see Bram Delvaux, ‘The EC state aid regime regarding renewables: opportunities and pitfalls’ (2003) 12(4) EELR 103–112;
- Van Tiggele (Case 82/77) [1978] ECR 25, paras 24 and 25; Sloman Neptun, para 19; Kirsammer-Hack (Case C-189/91) [1993] ECR 1–6185, para 16; Visado (Joined Cases C-52/97, C-53/97 and C-54/97) [1998] ECR 1–2629, para 13; Ecotrade (Case C-200/97) [1998] ECR 1–7907, para 35; Piaggio (Case C-295/97) [1999] ECR 1–3735, para 35.
- Preussenelektra, n 8 above, at para 58.
- Preussenelektra, n 8 above, at para 60.
- The argument of the Commission, that on the basis of Art 5 (now 10) Art 92 (now 87) must be interpreted as also prohibiting such measures as the feed-in tariff at hand, was dismissed by the Court at paras 63–65: ‘In the alternative, the Commission maintains that, in order to preserve the effectiveness of Articles 92 and 93 of the Treaty, read in conjunction with Article 5 of the EC Treaty (now Article 10 EC), it is necessary for the concept of State aid to be interpreted in such a way as to include support measures which, like those laid down by the amended Stromeinspeisungsgesetz, are decided upon by the State but financed by private undertakings. It draws that argument by analogy from the case-law of the Court of Justice to the effect that Article 85 of the EC Treaty (now Article 81 EC), read in conjunction with Article 5 of the Treaty, prohibits Member States from introducing measures, even of a legislative or regulatory nature, which may render the competition rules applicable to undertakings ineffective (see, in particular, Case C-2/91 Meng [1993] ECR1–5751, paragraph 14). In that respect, it is sufficient to point out that, unlike Article 85 of the Treaty, which concerns only the conduct of undertakings, Article 92 of the Treaty refers directly to measures emanating from the Member States. In those circumstances, Article 92 of the Treaty is in itself sufficient to prohibit the conduct by States referred to therein and Article 5 of the Treaty, the second paragraph of which provides that Member States are to abstain from any measure which could jeopardise the attainment of the objectives of the Treaty, cannot be used to extend the scope of Article 92 to conduct by States that does not fall within it.’
- In the author's view, this criticism was very much justified, but a detailed discussion is beyond the scope of this article. For arguments compare Sara Poli, ‘National schemes supporting the use of electricity produced from renewable energy sources and the Community legal framework’ (2002) 14(2) J Env L 209–231; Christos Golfinopoulos, ‘Legality of national measures to promote the procurement of energy from renewable sources’ (2002) 1 PPLR NA8-NA11; Marco Bronckers and Rosalinde Van der Vlies, ‘The European Court's PreussenElektrajudgment: tensions between EU principles and national renewable energy initiatives’ (2001) 10(2) EELR 51–56; Felix B Krieglstein, ‘Renewable energy schemes and EC state aids provisions’ (2001) 22(10) ECLR 458–468; Julio Baquero Cruz and Fernando Castillo De La Torre, ‘Note on PreussenElektra’ (2001) 26(5) EL Rev 489–501; Geert Van Calster, ‘Feeding-in laws—renewable sources of energy—purchasing obligation—minimum price—does not constitute State aid—acceptable restriction of the internal market’ (2001) 10(3) RECIEL 335–337.
- For a discussion of the subsequent Commission decision of 22 May 2002 that German national laws On promotion of electricity from renewable sources did not constitute state aid, cf Brigitta Renner-Loquenz and Volker Zuleger, ‘Commission raises no objections to German feed-in laws for electricity from renewable energy sources and combined heat and power’, EC CPN 2002, 3(Oct), p 67.
- It has also been possible to apply for an exemption on the basis of Art 87(3) (b) of the EC Treaty. This relates to aid, which promotes the execution of important projects of common European interest which are an environmental priority and will often have beneficial effects beyond the frontiers of the Member State (s) concerned. However, there are additional requirements insofar as the aid must be necessary for the project to proceed, and the project must be specific, well defined and qualitatively important and must make an exemplary and clearly identifiable contribution to the common European interest. When this exemption is applied, the Commission may authorise aid at higher rates than the limits laid down for aid authorised pursuant to Art 87(3) (c).
- See Community guidelines on state aid for environmental purposes of 3 February 2001, OJ 2001 C 37/03 (hereinafter ‘the Guidelines’).
- Cf Guidelines, ibid, at n 74.
- Cf Christopher Jones, EU Energy Law, vol 1, at 6.20. While it has been argued that it is rather difficult to see how a public service obligation with the objective of environmental protection could require any derogation from the Directives—a fact that may at the moment be supported by the fact that no such derogation has been made—it is likely that some of the potentially more far-ranging positions of the Directive, for instance on access regulation or even non-discrimination, may see such arguments in the future when the impact of renewable power is more appreciable.
- See Altmark Trans GmbH, Regierungspräsidium Magdeburg v Nahverkehrsgesellschaft Altmark GmbH (Altmark), OJ 2003 C 224/1.
- Preussenelektra, n 8 above, at 69: ‘It must first be borne in mind that, according to the case-law of the Court, Article 30 of the Treaty, in prohibiting all measures having equivalent effect to quantitative restrictions on imports, covers any national measure which is capable of hindering, directly or indirectly, actually or potentially, intra-Community trade, Case 8/74 DassonviUe [1974] ECR 837, paragraph 5.’
- Preussenelektra, n 8 above, at 73.
- Preussenelektra, n 8 above, at 74. Citing obligations which Member States contracted by virtue of the United Nations Framework Convention on Climate Change, approved on behalf of the Community by Council Decision 94/69/EC of 15 December 1993 (OJ 1994 L 33/11), and by virtue of the Protocol of the third conference of the parties to that Convention, done in Kyoto on 11 December 1997, signed by the European Community and its Member States on 29 April 1998 (see, inter alia, Council Resolution 98/C 198/01 of 8 June 1998 on renewable sources of energy (OJ 1998 C 198/1), and Decision No 646/ 2000/EC of the European Parliament and of the Council of 28 February 2000 adopting a multiannual programme for the promotion of renewable energy sources in the Community (Altener) (1998 to 2002) (OJ 2000 L 7/1)).
- Preussenelektra, n 8 above, at 75.
- Ibid, at 76.
- Ibid, at 77.
- Ibid, at 78.
- Ibid, at 79.
- Proposal for a Directive 2000/C 311 E/22 of the European Parliament and of the Council on the promotion of electricity from renewable energy sources in the internal electricity market (OJ 2000 C 311 E/320).
- Preussenelektra, n 8 above, at 80.
- Cf Commission Communication relating to the methodology for analysing state aid linked to stranded costs, adopted 26July 2001, Commission letter SG (2001) D/290869 of 6 August 2001.
- Cf Directive 2003/55/EC, Art 27; Regulation 1228/2003, Art 7; Directive 2003/55/EC, Art 22, Note of DG TREN of 16 January 2004 on exemptions from certain provisions of the third party access regime in the electricity and gas internal market.
- CfECJ decision in T-Port, for hardship (1) the person concerned must have entered into legally relevant economic arrangements under the previous national system and must have displayed the customary care which is necessary in any business transaction; (2) the value of those arrangements must have been reduced as a result of the entry into force of the common organisation of the market; (3) the difficulties encountered must not have been foreseeable; (4) it must be necessary to regulate cases of hardship, having regard, in particular, to the existence of difficulties threatening the survival of importers and the protection of fundamental Community rights. The Commission then states that the measures capable of being adopted within the framework of the regulation of cases of hardship are intended to attenuate the particular difficulties encountered by traders owing to the transition from the national arrangements to the common organisation of the market, not to ensure that those traders are able to perform in full the contracts concluded prior to the announcement of the establishment of that organisation by protecting those against changes in the law.
Journal of Energy & Natural Resources Law
Volume 23, 2005 - Issue 2: Renewables