Claimant challenged the European Union Emissions Trading Scheme's (EU ETS) excess emissions penalty, imposed on operators that have not surrendered sufficient emissions allowances.  The European Court of Justice upheld the penalty.

German company Ziegelwerk Höxter GmbH operated an installation releasing greenhouse gases until September 2011.  In November 2011 a German district court opened insolvency proceedings against the company, and Sandra Bitter was appointed insolvency administrator.  The German authorities requested that Bitter report and surrender emissions allowances for 2011 as required by the EU ETS, and Bitter responded that the company was not obligated to do so because it had ceased its business activity before the insolvency procedure began.  The government then imposed a fine of 100 euros per non-surrendered ton of carbon dioxide emissions equivalent, pursuant to Article 16(3) of Directive 2003/87/EC of the European Parliament.  Bitter challenged the decision in the Berlin administrative court, which in turn referred to the European Court of Justice the question of whether the 100-euro per ton fine violated the principle of proportionality under EU law.

The Court upheld the penalty, reasoning that the EU legislature must be allowed broad discretion when it is asked to intervene in an area that entails political, economic and social choices.  The Court relied on earlier decisions upholding a fine of 40 euros for non-surrendered allowances during the first phase of the EU ETS, in which the Court credited the legislature's determination that the fine was necessary to establish an efficient allowance trading system.  The Court further held that the fact that the instant penalty of 100 euros exceeded the one previously upheld was irrelevant, particularly because the first trading period of a "learning period for the scheme."

Bitter v. Germany

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Bitter v. Germany - order

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International

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Bitter v. Germany - order

Target

Policy instrument

Greenhouse gas

Finance