EU Court Overturns Free Carbon Quotas In Blow For Energy-Intensive Industries

  • Date: 29/04/16
  • EurActiv

Europe’s highest court on Thursday (28 April) ruled that the European Commission’s calculation for handing out free carbon permits to industries was flawed, raising the prospect of higher costs for big energy users.

The Luxembourg-based European Court of Justice gave the European Commission ten months to draw up a new calculation method for handing out free carbon permits.

The decision followed a court advisor’s opinion in November that the ceiling was too high, when a calculation known as the correction factor was used to cap the total amount of allowances distributed to shelter industry from added energy costs they say could drive them out of Europe.

Discrepancies in the data provided by the bloc’s 28 nations on new industrial installations led to error, the court said, giving the Commission 10 months to review the policy.

“The maximum annual amount of allowances could be higher or lower than that thus far determined,” the court said in a statement.

The ruling will not be retroactive and will not affect the overall cap of the EU’s Emissions Trading System (ETS) but could lead to a slight cut in future free permits to industry from 2018.

“This ruling must serve as a shot across the bow of those again pushing for an over-supply of allowances to be simply given away,” said Bas Eickhout, a green member of the European Parliament.

A Commission spokesman said it would work diligently to implement the court’s ruling so as to reduce the uncertainty created by the ruling for market participants.

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