judgment

ArcelorMittal Rodange et Schifflange SA  v.  State of the Grand Duchy of Luxembourg - judgment

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Litigation

Sabin

Sabin Litigation

Filing Year For Action

Claimant challenged Luxembourg's law implementing the EU Emissions Trading Scheme (EU ETS), which permitted the government to request the surrender of emissions allowances, without compensation, that had not been used because the claimant had ceased greenhouse gas-emitting activities.  The European Court of Justice (ECJ) held that the Luxembourg law was not inconsistent with Directive 2003/87/EC, which established the EU ETS. 

ArcelorMittal Rodange et Schifflange SA (ArcelorMittal) operated an installation in Schifflange, Luxembourg until the end of 2011, which was subject to the EU ETS. Luxembourg’s Minister of the Environment allocated ArcelorMittal a total quantity of 405,365 emissions allowances for the period between 2008 to 2012. In April 2012, ArcelorMittal requested that the Minister of the Environment cease environmental monitoring because the activities of its Schifflange installation had been suspended for an indefinite period since the end of 2011. In June 2013, the Minister of Sustainable Development and Infrastructure (1) reduced the total emissions allowances allocated to ArcelorMittal between 2008 to 2012 and (2) requested that ArcelorMittal surrender 80,922 emissions allowances without compensation pursuant to Article 13(6) of a Luxembourgish law transposing Directive 2003/87/EC, the Law of 23 December 2004 establishing a scheme for greenhouse gas emission allowance trading.  ArceclorMittal brought an action in an administrative court, which referred the matter to the Constitutional Court of Luxembourg, which in turn referred it to the EJC for a preliminary ruling. 

The question before the EJC was whether Article 13(6) of the 2004 law, which allows the Luxembourgish Minister of the Environment to order the surrender, without full or partial compensation, of allowances issued but not used, is compatible with Directive 2003/87/EC, or whether Directive 2003/87/EC must be interpreted as precluding national laws that allow the competent authorities to require the surrender without compensation of emissions allowances that have been issued but not used.

The ECJ held that Directive 2003/87 must be interpreted as not precluding national legislation that allows member states to require the surrender, without full or partial compensation, of unused allowances that have been improperly issued to an operator, as a result of the operator's failure to comply with its obligation to timely inform the competent authority of the cessation of the operation of an installation. The EJC further concluded that the allowances issued after an operator has ceased the activities performed in the installation to which those allowances relate, without informing the competent authority beforehand, cannot be classified as emissions “allowances” within the meaning of Directive 2003/87.

ArcelorMittal Rodange et Schifflange SA  v.  State of the Grand Duchy of Luxembourg

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Tradable permits are market-based tools that grant permission for specific activities, frequently used to regulate emissions. These permits can be issued within a trading system to manage environmental impacts.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

Conditions that enhance the feasibility of adaptation options. Enabling conditions include finance, technological innovation, strengthening policy instruments, institutional capacity, multi-level governance and changes in human behaviour and lifestyles.

ArcelorMittal Rodange et Schifflange SA v. State of the Grand Duchy of Luxembourg - judgment

Policy instrument

Greenhouse gas

Adaptation/resilience

Finance