Bot AG in Essent, Cases C-204/12 through to C-208/12 Essent v VREG (at the time of writing the English version of the Opinion was not yet available, however it will be soon) summarised the questions referred as whether the Flemish support scheme for renewable energy, which grants renewable energy certificates to producers of such energy only if they are located in the Flemish Region, and which obliges electricity distributors to surrender a minimum amount of such certificates without being able to offer such certificates obtained in other EU Member States, is compatible with the free movement of goods and with the EU’s non-discrimination principle. Directive 2001/77 regulates both renewable energy (or ‘green’) certificates – which are used by a Member State to show its meeting its obligations to produce a minimum amount of electricity from renewable sources – and certificates of origin, which allow an electricity distributors to prove that x amount of its electricity distributed, originates from renewable energy.
The Advocate General did not entertain at length the issue of whether renewable certificates in themselves qualify as ‘goods’ under the Treaty. The Flemish system may definitely have an impact on the import of ‘green’ electricity, with the latter undeniably having been held to be a ‘good’ under the protection of the free movement of goods. If the certificates scheme unjustifiably restricts the free movement of goods, it would at any rate be illegal and in need of proper justification.
Unlike in Preussen Elektra, distributors of electricity could still purchase renewable energy abroad – however such electricity is often more expensive (for it does not receive Flemish government support), and even if distributors were to purchase abroad, they would still have to surrender, after purchase, the necessary Flemish certificates.
The AG notes that the Court in Preussen Elektra allowed the German scheme despite it being discriminatory. This might have been an implicit reversal of the case-law that infringements of the free movement of goods may only be based on the court-invented ‘mandatory requirements’ (of which environmental protection is one; as opposed to those societal interests which are included in the explicit list of exceptions of Article 36 TFEU) where they do not discriminate. That it might have been such reversal leads the AG to suggest, finding support in the integration principle, that the Court in Essent should make that reversal explicit. However an alternative reading of Preussen Elektra suggests that the judgment was simply poor precedent, especially given that the court did not only ignore the discriminatory nature of the German measure, but omitted at the same time to assess its proportionality. The poor judgment in Preussen Elektra may be explained by the series of harmonising measures in the Internal Market for electricity, which were being prepared at the time of the judgment and which have since entered the statute books.
Despite the AG suggesting such a rare explicit reversal of the Court’s case-law on the free movement of goods, he does not suggest that in the case at issue, the infringement is justified. Among his arguments for rejecting the measure (which also features the argument that the Flemish Region violated a promise made at the time the relevant scheme was approved by the European Commission under State aid rules), the one dismissing the ‘local production’ requirement is probably the least forceful. There is in my view merit in the argument that the relevant Union laws require Member States to roll-out their own, national renewable energy capabilities, and that systems such as the Flemish one may be required to support industry to work towards that goal (see the similar arguments at the WTO level).
The AG’s opinion contains a wealth of suggestions for the ECJ. It is likely that the Court will not take too much of that bait.
'Is a national rule, such as that embodied in the Flemish Decreet van 17 juli 2000 houdende de organisatie van de elektriciteitsmarkt (Decree of 17 July 2000 on the organisation of the market in electricity), as implemented by the Besluit (Decision) of the Flemish Government of 5 March 2004, as amended by the Besluit of the Flemish Government of 25 February 2005 on the promotion of the generation of electricity from renewable energy sources, where an obligation is imposed on the suppliers of electricity to final customers connected to the distribution network or the transmission network, to submit a certain number of green certificates annually to the Regulatory Authority (Article 23 of the aforementioned Decreet); an administrative fine is imposed by the Vlaamse Reguleringsinstantie voor de Elektriciteits- en Gasmarkt (VREG) on the suppliers of electricity to final customers connected to the distribution network or the transmission network when the supplier has not submitted a sufficient number of green certificates to fulfil a quota obligation which has been imposed in respect of green certificates (Article 37(2) of the aforementioned Decreet); the Regulatory Authority cannot or will not take into account any guarantees of origin originating from Norway and the Netherlands, and that being in the absence of implementing measures on the part of the Flemish Government, which has acknowledged the equality or equivalence of those certificates (Article 25 of the aforementioned Decreet and Article 15(1) of the Besluit of 5 March 2004), without that equality or equivalence being investigated by the Regulatory Authority in concrete terms; in fact, during the whole time that the Decreet of 17 July 2000 was in force, only certificates for the production of green energy generated in the Flemish Region were taken into account when ascertaining whether the quota obligation had been fulfilled, whereas for the suppliers of electricity to final customers connected to the distribution network or transmission network there was no possibility whatsoever of demonstrating that the guarantees of origin submitted met the condition of the existence of equal or equivalent guarantees regarding the granting of such certificates, compatible with Article 34 of the Treaty on the Functioning of the European Union and Article 11 of the EEA Agreement and/or Article 36 of that Treaty and Article 13 of the EEA Agreement?' Is a national rule as referred to in subquestion 1 above compatible with Article 5 of the then Directive 2001/77/EC 2 of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market? Is a national rule as referred to in subquestion 1 above compatible with the principle of equal treatment and the prohibition of discrimination as embodied inter alia in Article 18 of the Treaty on the Functioning of the European Union and Article 3 of the then Directive 2003/54/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC?'