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ENERGY : RENEWABLES: EU HAS EXCLUSIVE COMPETENCE, SAYS ADVOCATE-GENERAL.

Yves Bot says an Italian decree is incompatible with EU law

A legal dispute over an Italian decree, which makes imports of electricity conditional on producers' providing a share of green electricity, has been brought before the EU Court of Justice (ECJ). Seized by the Italian State Council, the ECJ was asked to clarify whether under Directive 2001/77/EC on the promotion of electricity produced from renewable energy sources the member states had lost the power to reach agreements with non-EU countries on recognising guarantees of origin. Essentially, the advocate-general has confirmedain conclusions, published on 13 March, that this is the case, since the EU has exercised its internal competence by adopting common standards - giving it the upper hand over member states (Case C-66/13).

Operators importing electricity to Italy should provide the following year a share of green energy, attested by a certificate to be presented to the energy regulator (GSE). Nonetheless, the decree provides for an exemption if these imports come from plants using renewable sources located in third countries using green energies, which hold agreements with Italy. In 2005, the Green Network for selling green energy imported from Switzerland 873,855 MWh of renewable energy, but was denied an exemption because at the time Italy did not have an agreement with Switzerland, and therefore the necessary checks were impossible. An agreement between operators was signed in 2007. The Green Network was obliged to buy green certificates, which cost 2,367,792, and it contested this - arguing that it could expect a tacit agreement.

CASE LAW

Seized with the dossier, the Italian State Council questioned the court more generally on Italy's competence to sign such an agreementawith the Swiss Confederation on recognising guarantees of origin to "trace" the source of compatible energies. Advocate-General Bot recalls that case law (judgement 22/70, as well as several later notices from the court) established that in the areas of shared competence between the EU and member states - such as, in this case, the environment - regulatory practice makes EU competence on international agreements exclusive. Yet, Directive 2001/77 and its amending Directive 2009/28 attest that the EU intends to regulate on the principle of guarantees of origin.

Also, the advocate-general has emphasised that in its decree, Italy may not refer to the conclusion of international agreements with third countries on recognising guarantees of origin, "one of the key instruments for the promotion of green energy within the EU, which is largely regulated by EU law" - although it concerns Switzerland, which concluded a free trade agreement with the EU in 1972.

Moreover, the fact that the agreement was between operators of Italian and Swiss networks - which may have been a way of getting around the obstacle - does not make the decree more compatible, according to the advocate-general.aIf the ECJ follows Bot's advice, the contentious measure in the Italian decree will be made null and void.

However, whatever the result of the judgement, the Green Network seems doomed to pay for green certificates. Other European importers confronted with similar measures must be vigilant.

Bot approves of new approach

Bot also took the opportunity to assess the evolution of EU policy on renewables, which began in the 1970s with the adoption of Directive 2001/77 setting objectives for the progressive contribution of renewables to every member state's energy mix. The directive was completely repealed, from 1 January 2012, by Directive 2009/28, which sets binding national goals, to reach a minimal share of 20% of green energy in the EU's gross consumption of energy by 2020. The third step: setting a single binding EU goal - the Commission proposed last January that the share of renewables should be increased to 27% by 2030 - which will be achieved by establishing a new system of governance based on national plans and supervised by the Commission. This proposal has provoked a general outcry in a number of member states, and among renewable energy industries. However, Bot says that "the setting of a binding objective at EU level showsa new, more collective, coherent and coordinated approach to the promotion of the green energies".

In his conclusions on another dispute (Case C-573/12) between a Finnish wind energy company and the Swedish government, Bot calls for more EU policy and fewer national plans - which are a source of conflicts of interest. The Swedish authorities' refusal to allocate green certificates to the Finnish company which provides it with electricity is contrary to the free circulation of goods, the advocate-general concluded on 28 January.
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Publication:Europe Environment
Date:Mar 21, 2014
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