judgment

Borealis Polyolefine GmbH v. Minister for Land, Forestry, Environment, and Water Management - judgment

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Litigation

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Filing Year For Action

This European Court of Justice rejected arguments from three industrial firms—one German, one Dutch, and one Italian—that they should be granted a larger number of free greenhouse gas emissions allowances under the European Union’s greenhouse gas Emissions Trading Scheme (ETS). The Court also instructed the European Commission to revise its approach to determining how many free allowances to grant—a step that has injected uncertainty into the markets built on the ETS. Several features of the ETS are critical to the case: 

- some allowances are auctioned to emitters and others are given away for free; 
- there are a fixed proportion of free allowances, which are granted only to firms that face competition from non-EU firms—a category that excludes electricity generators;
- the process for calculating the number of allowances—auctioned and free—begins with member states’ submission of emission sources and estimated volumes;
- responding to members states’ overestimation of the allowances due to their industrial firms, the European Commission issued Decisions in 2011 and 2013 to govern the calculation of a “correction factor.”

The Court found that the European Commission’s 2013 Decision established a “correction factor” calculation that ignored relevant information, and on that basis instructed the Commission to revise its approach by March 2017. The Court’s ruling largely ratified the November 2015 recommendation issued in the case by Advocate General Kokott, but deviated in one important respect: whereas Kokott had concluded that too many free allowances were granted to the firms, the ECJ determined that it was unclear whether too many or too few had been granted. 

Borealis Polyolefine GmbH v. Minister for Land, Forestry, Environment, and Water Management

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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.

Slow onset events evolve gradually from incremental changes over many years or from increased frequency or intensity of recurring events. As defined in the Cancun Adaptation Framework (2010), slow onset events include risks and impacts from rising temperatures, desertification, biodiversity loss, land and forest degradation, glacial retreat, ocean acidification, sea level rise, and salinization.

A target to reduce the prevalence of a greenhouse gas over a specific time frame

Activities that involve the cultivation of crops and raising of livestock for food, fibre, and other products essential for human life and industry.

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.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

The activities of industries that transforms raw materials into finished goods through industrial processes.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

This sector creates and distributes information and entertainment through television, radio, print, and digital platforms.

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

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

Borealis Polyolefine GmbH v. Minister for Land, Forestry, Environment, and Water Management - judgment

Target

Policy instrument

Risk

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance