In a judgment dated Thursday 12 April in case C-302/17, the judges of the Court of Justice of the European Union (CJEU) took the view that the former Slovak tax of 80% on the value of greenhouse gas emissions quotas sold or unused ran counter to EU law, as it did not respect the principle of the free allocation of almost all quota over the period 2008-2012.
In 2011 and 2012, Slovakia levied a tax of 80% on the value of greenhouse gas emissions quotas that were sold or unused by businesses, in the framework of the emissions trading system, even though these were awarded to the operators in question free of charge by virtue of Directive 2003/87/EC.
The company PPC Power, which considered that the tax was in breach of the directive in question, referred the matter to the Slovak courts. The regional court of Bratislava, which heard the case, asked the CJEU for a preliminary ruling to ascertain whether or not the tax was compatible with the text.
In their judgment, the European judges recall that Directive 2003/87/EEC provides that between 2008 and 2012, a minimum of 90% of the quotas are awarded free of charge, as the aim was to give the operators in question the opportunity to reduce their greenhouse gas emissions whilst ensuring that their competitiveness was not jeopardised.
They then note that within this framework, the member states could adopt tax measures, but that these could not compromise the objective of the directive. However, by taxing the value of the quotas at a level of 80%, Slovakia removed the incentive on businesses to promote the reduction of their emissions, as companies were discouraged from selling them in order to make investments to make their activities greener.
The Court therefore concluded that the tax was incompatible with Directive 2003/87/EC. (Original version in French by Lucas Tripoteau)