On March 10, 2016, ExxonMobil filed a challenge against Germany in the Verwaltungsgericht Berlin (Administrative Court, Berlin, Germany), concerning an application to the German Emissions Trading Authority (DEHSt) for the allocation of greenhouse gas emission allowances ("ghg allowances") free of charge to a Exxon-owned natural gas processing installation in Germany which, among other activities, engages in sulphur recovery that by the combustion of fuels generates electricity and heat and releases carbon dioxide (CO2) into the atmosphere.
The Administrative Court referred the case to the European Union's Court of Justice for a preliminary ruling interpreting the laws which establish a greenhouse gas emission allowance trading system with the European Union to determine whether this facility was entitled to ghg allowances free of charge. On June 20, 2019, the Court of Justice ruled that part of Exxon's natural gas processing plant in Germany should be classified as an electricity generator. The Court of Justice interpreted Article 3(u) and Article 10a of, and Annex I to, Directive 2003/87/EC of the European Parliament and of the Council (which established a scheme for greenhouse gas emission allowance trading within the EU) and as amended by Directive 2009/29/EC ("Directive 2003/87"). It additionally interpreted Article 3(c) and (h) of Commission Decision 2011/278/EU concerning rules for the temporary free allocation of emission allowances pursuant to Article 10a of Directive 2003/87.
The court concluded that Article 3(u) of Directive 2003/87/EC must be interpreted to mean that an installation, such as that at issue in the proceedings, (which produces electricity through the "combustion of fuels in installations with a total rated thermal input exceeding 20 [megawatts (MW)]"), must be understood as an â€˜electricity generator' when even a small portion of that electricity is continuously fed into the public electricity network (unless the product of the installation meets an exempted category in the annex). The installation in question could not be exempted even if its purpose was to produce electricity for the natural gas processing facility.
The Court of Justice further determined that Article 3(c) of Commission Decision 2011/278/EU must be interpreted to mean that an installation such as that at issue in the main proceedings is not entitled to be allocated free emission allowances for the heat produced "where that heat is used for purposes other than the production of electricity, since such an installation does not fulfill the conditions laid down in Article 10a(4) and (8) of the directive." The activities of natural gas desulphurisation and sulphur recovery did not meet the criteria of those articles. An analyst reviewing the decision noted that if it is followed by EU governments, it could result in thousands of facilities no longer qualifying for free allocation of ghg emission permits and drive up the cost of carbon in the market.
The French NGOs Notre Affaire à Tous, Sherpa, Zea, and Les Eco Maires along with more than a dozen French local governments have taken the first step in a legal proceeding against French oil company and carbon major Total. Provided this action proceeds, it will represent the first French climate lawsuit against a fossil fuel company. The initiative seeks a court order forcing Total to issue a corporate strategy that 1) identifies the risks resulting from GHG emissions resulting from the use of goods and services that Total produces, 2) identifies the risks of serious climate-related harms as outlined in the last IPCC special report of October 2018, and 3) undertakes action to ensure the company’s activities align with a trajectory compatible with the climate goals of the Paris Agreement. The plaintiffs argue these obligations stem from domestic law Article L. 225-102-4.-I of the Commercial Code (Loi 27 Mars 2017 sur le devoir de vigilance des sociétés mères et des entreprises donneuses d'ordre). This law requires a company to produce a "plan of vigilance" that identifies and seeks to mitigate risks to human rights, fundamental freedoms, the environment, and public health that could result directly or indirectly from the operations of the company and of the companies it controls.
On June 18th, 2019, following a formal meeting with Total, the plaintiffs announced the launch of a legal proceeding and issued a letter of formal notice (mise en demeure) to Total. Plaintiffs asserted that Total had 3 months to include adequate GHG emissions reductions targets in its latest “plan de vigilance” before they filed a lawsuit seeking a court order to force the company to comply with the law and the goals of the Paris Climate Agreement.
On January 28, 2020, plaintiffs filed a complaint asking a Nanterre court to order Total to recognize the risks generated by its business activities and make it conduct consistent with the goal of limiting global warming to 1.5°C. According to the plaintiffs, their complaint relies on the Law on the Duty of Vigilance, as well as the duty of environmental vigilance arising out of the the French Environmental Charter.
A German court has held that the German government’s climate policy is judicially reviewable and must not be so inadequate as to fail to protect fundamental rights such as the rights to life and property. However, the court dismissed an action by German families to challenge the government’s failure to adhere to a cabinet decision to reduce greenhouse gas emissions by 40% by 2020, concluding that the target was not legally enforceable.
In December 2014, the German cabinet set a goal of reducing national greenhouse gas emissions by 40% compared to 1990 levels by the end of 2020 (the Climate Protection Plan). According to the government’s 2018 official climate protection report, however, the government will likely only achieve a reduction of 32% from 1990 levels by the end of 2020. In October 2018, three German families and Greenpeace Germany filed suit in the Administrative Court of Berlin seeking to compel the German government to adhere to the 40% reduction goal. The German families are comprised of organic farmers who claim they are already experiencing the impacts of climate change. Plaintiffs argued that the government was bound by the Climate Protection Plan, and alleged that the government’s failure to adhere to the 40% target encroaches on their human rights in violation of the German Constitution -- the Grundgesetz -- under Article 2(2) (right to life and health), Article 12(1) (occupational freedom), and Article 14(1) (right to property). They further alleged that failure to meet the original 2020 goal violates Germany’s minimum obligations under the EU Effort Sharing Decision (406/2009/EC).
According to Greenpeace, plaintiffs asked for court orders holding that the government is obliged to: 1) implement the national Climate Protection Program 2020 by updating or supplementing appropriate measures to meet the 2020 target; 2) compensate for the excess of approximately 650 million tons of CO2 equivalent between 2007 and today due to insufficient implementation of the 2020 target; and 3) supplement the national Climate Protection Program 2020 to meet the reduction targets set out in European environmental law. Greenpeace reports that this is the first climate lawsuit to refer to the publication of the UN’s Intergovernmental Panel on Climate Change’s (IPCC) Special Report on 1.5°C.
On October 31, 2019 the Administrative Court of Berlin dismissed the case, concluding that the 2020 target, as a cabinet decision, was not legally binding. The court further held that plaintiffs had not conclusively demonstrated that the government had violated its constitutional obligations by setting inadequate climate protection targets. However, the court did hold that the government’s climate policy is subject to judicial review and must be consistent with the government’s duties to protect fundamental rights under the German Constitution. The court also determined that the government must undertake measures to provide adequate and effective protection of the fundamental rights potentially affected by climate change, including the rights to life and property. Nonetheless, the court concluded that the government is entitled to wide discretion in deciding how to fulfill these obligations, so long as precautionary measures to protect fundamental rights not are wholly unsuitable or wholly inadequate. In the court’s view, the government’s current protection policy, which will lower emissions by 32% rather than 40% by the end of 2020, is within its discretion.
Moreover, the court noted that the EU is only aiming for a 40% reduction in greenhouse emissions by 2030 and has pledged a reduction of only 20% below 1990 levels by 2020. In this context, the court concluded that the German government’s reduction target of 32% by the end of 2020 does not appear to be completely inadequate.
An Italian company, Green Network SpA ("Green Network"), imported renewable energy from a Swiss supplier in 2005. Under Italian law, energy companies were required to purchase a certain number of green certificates each year, but could seek an exemption where they imported renewable energy from countries with analogous laws promoting renewable energy. Where the exporting country was not a member of the European Union, the exemption was available only if there was a prior agreement between the importing and exporting countries regarding recognition of guarantees of origin. When Green Network requested an exemption from its obligation to purchase green certificates, the Italian national grid manager rejected that request since there was no agreement regarding guarantees of origin between Italy and Switzerland at the time the renewable energy was imported.
Green Network brought an action in administrative court, which was dismissed. Green Network appealed the dismissal, and the appeals court referred to the European Court of Justice the question, inter alia, whether the Italian law conflicted with EU directives. The Court held that the Italian law was precluded since guarantees of origin fall within an area largely covered by EU law.
Applicants sought reference for a preliminary ruling as to whether Italy's national legislation prohibiting the construction of wind turbines in a national park is consistent with EU's energy policy, which promotes renewable energy to combat climate change and comply with the Kyoto Protocol. The court found no evidence that the prohibition hindered renewable energy production at the national or regional level and thus determined that the prohibition was consistent with EU energy policy goals.
A Finnish wind farm challenged defendant Swedish energy agency's refusal to grant a green electricity certificate. The agency refused on the grounds that only green electricity production installations located within the Swedish territory may be awarded the certificate. Plaintiff claimed that the territorial limitation of Sweden's energy certificate scheme under Directive 2009/28 was inconsistent with Article 34 of the Treaty on the Functioning of the European Union (TFEU). The court upheld Sweden's national support scheme and found that it was compatible with TFEU Article 34 because the national quota promotes increased use of renewable energy sources in electricity production.
The European Union’s (EU) Directive 2003/87 established a scheme for greenhouse gas emission allowance trading at the EU level (ETS). As the ETS developed, it had a growing structural imbalance in the supply and demand of allowances, resulting in an excess that could reach around 2 billion allowances.
In October 2014, the European Council adopted an instrument to stabilize the market as part of the ETS called a "market stability reserve.” These reserves would not be released unless the total number of allowances in circulation was less than 400 million. The market stability reserve would result in an increase in the price of emission allowances. When adopting this measure, the Council did not adopt it under a special legislative procedure pursuant to Article 192(2)(c) of the Treaty on the Functioning of the EU (TFEU). That procedure is required if the Council adopts "measures significantly affecting a Member State's choice between different energy sources and the general structure of its energy supply."
In 2016 Poland filed an application with the European Court of Justice arguing that the decision should be annulled as it should have been adopted under a special legislative procedure. Poland is particularly reliant on fossil fuels and this decision significantly affects Poland's choice between different energy sources and the general structure of its energy supply. An increase in emission allowance prices could lead to a change in the competitiveness of various types of power stations and in the structure of electricity production at a national level, and to a decrease in the competitiveness of the energy sector and the Polish economy. The Court rejected this argument, holding that the aim and content of the contested decision was not to have the primary outcome of significantly affecting Poland's choice between different energy sources and the general structure of its energy supply.
Poland also argued that the European Council had set the date of the application of the market stability reserve at 2021, and that the defendants, by bringing forward the date to 2019, breached article 15 of TEU and infringed the obligation of sincere cooperation. The Court ruled that there was no reference in the Council's decision to starting the market stability reserve at 2021 and rejected the argument. Poland also argued the infringement of legal certainty, protection of legitimate expectations and principle of proportionality, all of which the Court also rejected.