Trinseo v. Federal Republic of Germany

Trinseo operates an installation for the production of polycarbonate. That installation obtains the steam needed for that production from a plant which is operated, on the same site, by another company, Dow Deutschland Anlagengesellschaft. On 23 January 2012, Trinseo applied to the German Emissions Trading Authority for the free allocation of emission allowances. By decision of 17 February 2014, the German authority refused that application, on the ground that polycarbonate is not included in the list of substances and groups of substances referred to in the provision of the German legislation transposing Directive 2003/87/CE, which establishes a scheme for greenhouse gas emission allowance trading within the European Community. On 2 October 2015, Trinseo brought an action against that decision before the Berlin Administrative Court and claimed that the directive at issue shall be interpreted as including in its scope all activities for the production of bulk organic chemicals without any limitation to specific substances. The Administrative Court of Berlin referred to the European Court of Justice (ECJ) a question regarding the interpretation of Article 1 and Annex I of the Directive 2003/87/CE and its scope of application. The ECJ observed that, according to Article 2(1) of Directive 2003/87, the activities referred to in Annex I of the directive fall within the scope of that directive only if they generate greenhouse gas emissions. Yet, the production of polycarbonate by an installation, which imports heat from a third-party installation, does not generate direct emissions of CO2 and cannot rely on the ‘indirect emissions’ generated by the third-party. The ECJ has therefore ruled that Article 2(1) of Directive 2003/87 must be interpreted as meaning that an installation for the production of polycarbonate, which obtains the heat needed for that production from a third-party installation, does not fall within the scope of the emissions allowance trading scheme established by that directive, since it does not generate direct CO2 emissions. Accordingly, Trinseo is not entitled to free allocation of emissions trading allowances.