Brussels, 12/11/2015 (Agence Europe) - The European Commission is expected to revise its method for calculating the “correction factor” when allocating companies free greenhouse gas emissions allowances because a large number of these allocations have already been distributed.
This is the conclusion presented to the European Court of Justice by Advocate General Juliane Kokott on Thursday, 12 November in seven cases (C-191/14, C-192/14, C-522/14, C-389/14, C-391/14, C-392/14 and C-393/14) involving the Community's emissions trading system, which seeks to reduce the overall number of CO2 emissions.
These cases affect the ceilings imposed on industry since 2013 with regard to the number of free quotas that can be allocated by the national authorities every year. The Community system operates on the basis of trading and the allocation of free allowances, as a means of creating a genuine carbons market.
Several companies have questioned what is called the “trans-sectoral correction factor”, which the Commission set up after having observed that the number of free allowances temporarily allocated went above the authorised ceiling. The companies disputed the calculating method used by the Commission, which led to a uniform reduction in the number of quotas freely allocated to all the different plants concerned.
Although the Advocate General found in favour of the plaintiffs, her conclusion ultimately goes against them. Kokott is indeed proposing that the Court annuls the Commission decision with regard to the mode for establishing the correction factor. She justifies this by the fact that if the Commission took into account the emissions from the plants that have recently been made accountable to the system, she could not do the same for the new activities carried out in the plants already included.
It transpires, however, that contrary to what the companies concerned asserted, the free quotas allocated were not too low but rather, too high. Advocate General Kokott is proposing that the Court grants the Commission a year to adopt another decision but without requesting it to reduce the number of free quotas because this would breach, she claims, the legitimate trust of a large number of operators and expose them to a financial risk that is not of their making. (Original version in French by Jan Kordys)
* * * * * * * * * * * * *