judgment

Elektriciteits Produktiemaatschappij Zuid-Nederland EPZ NV v. Dutch Emissions Authority - judgment

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The European Court of Justice (EJC) held that a coal-fired power plant and unburned coal in a storage site constitute one installation covered by the EU Emissions Trading Scheme (EU ETS).  The EJC further concluded that the coal lost due to self-heating while in storage could not be regarded as exported fuel for purposes of monitoring emissions. 

Elektriciteits Produktiemaatschappij Zuid-Nederland EPZ NV (EPZ) operates a coal-fired power plant in the Netherlands and holds a quantity of its unburned coal in a storage site approximately 800 meters from the power plant, which is separated from it by a public road. When designing the monitoring plan for the installation operated by EPZ for the third period of the EU ETS, the Dutch Emissions Authority (Nea) determined that coal lost due to its self-heating during the storage period could not be regarded as fuel exported from EPZ’s installation within the meaning of Article 27(2) of Regulation No 601/2012.

Consequently, the NEa refused to approve modifications of the monitoring plan sought by EPZ and later rejected EPZ’s objection to their initial decision. EPZ then lodged an appeal with the Dutch Raad van State (Council of State), seeking to have the latter decision annulled. The Council of State referred the case to the EJC and asked for a preliminary ruling on two questions.

(1) Could EPZ’s storage facility be considered an “installation” as referred to in Article 3(e) of Directive 2003/87/EC, which established the EU ETS? 

(2) Could EPZ’s lost coal due to its self-heating during storage be considered “fuel exported from the installation” as referred to in Article 27(2) of Regulation (EU) No 601/2012?  That provision allows operators to deduct the quantity of fuel exported from the installation for purposes of monitoring greenhouse gas emissions. 

On the first question, the ECJ ruled that a fuel storage site of a coal-fired power plant is part of an “installation” within the meaning of Article 3(e) of Directive 2003/87/EC. The ECJ reasoned that the coal’s self-heating during storage does not amount to combustion and that it was not apparent that the coal’s self-heating required 20 MW of thermal input - two of the requirements for the storage site to be considered an installation under Annex I of Directive 2003/87/EC. However, the ECJ ruled that the coal is essential to the functioning of the power plant and is therefore directly associated with the plant’s activity. Moreover, because the coal’s self-heating emits greenhouse gases, storing coal is an activity that could have an effect on emissions and pollution within the meaning of Article 3(e) of Directive 2003/87/EC. The ECJ deemed it irrelevant that the storage site is located approximately 800 meters and across a public road from the power plant.

On the second question, the ECJ ruled that coal lost due to self-heating while in storage on a site that is part of an installation cannot be regarded as coal exported from that installation. Because the storage site is part of an installation within the meaning of Article 3(e) of Directive 2003/87/EC, it cannot be regarded as a separate installation. Therefore, coal lost due to self-heating cannot be considered to be exported from the installation in question.

Elektriciteits Produktiemaatschappij Zuid-Nederland EPZ NV v. Dutch Emissions Authority

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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.

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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.

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

This sector involves the wholesale and retail selling of goods.

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.

Coal is a combustible sedimentary rock formed from carbonised plant matter, rich in carbon and hydrocarbons, and occurring in several main types including hard coal and brown coal.

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.

This sector involves activities to move goods and people, alongside the storage of products.

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.

Elektriciteits Produktiemaatschappij Zuid-Nederland EPZ NV v. Dutch Emissions Authority - judgment

Policy instrument

Fossil fuel

Greenhouse gas

Economic sector

Finance