Testing PreussenElektra?

Oct 22 2013 Published by under European and German energy law

FAZ reports that Commissioner Almunia has plans to sue Germany, because he thinks that the very successful FIT system is somehow incompatible with European Union subsidy rules. The article, written by one enemy of renewable energy called “Hendrik Kafsak”, doesn’t mention it, but actually this question has been decided in 2001 by the European Court of Justice in the PreussenElektra case.

As the Court noted at the time:

56 In the light of the above, the first question referred should be understood as asking, essentially, whether legislation of a Member State which, first, requires private electricity supply undertakings to purchase electricity produced in their area of supply from renewable energy sources at minimum prices higher than the real economic value of that type of electricity, and, second, allocates the financial burden arising from that obligation amongst those electricity supply undertakings and upstream private electricity network operators, constitutes State aid within the meaning of Article 92(1) of the Treaty.

57 It should be recalled in that respect that Article 92(1) of the Treaty provides that any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is, in so far as it affects trade between Member States, incompatible with the common market.

58 In that connection, the case-law of the Court of Justice shows that only advantages granted directly or indirectly through State resources are to be considered aid within the meaning of Article 92(1). The distinction made in that provision between aid granted by a Member State and aid granted through State resources does not signify that all advantages granted by a State, whether financed through State resources or not, constitute aid but is intended merely to bring within that definition both advantages which are granted directly by the State and those granted by a public or private body designated or established by the State (see Case 82/77 Van Tiggele [1978] ECR 25, paragraphs 24 and 25; Sloman Neptun, paragraph 19; Case C-189/91 Kirsammer-Hack [1993] ECR I-6185, paragraph 16; Joined Cases C-52/97, C-53/97 and C-54/97 Viscido [1998] ECR I-2629, paragraph 13; Case C-200/97 Ecotrade [1998] ECR I-7907, paragraph 35; Case C-295/97 Piaggio [1999] ECR I-3735, paragraph 35).

59 In this case, the obligation imposed on private electricity supply undertakings to purchase electricity produced from renewable energy sources at fixed minimum prices does not involve any direct or indirect transfer of State resources to undertakings which produce that type of electricity.

60 Therefore, the allocation of the financial burden arising from that obligation for those private electricity supply undertakings as between them and other private undertakings cannot constitute a direct or indirect transfer of State resources either.

61 In those circumstances, the fact that the purchase obligation is imposed by statute and confers an undeniable advantage on certain undertakings is not capable of conferring upon it the character of State aid within the meaning of Article 92(1) of the Treaty.

There is another case before the Court of Justice where the French feed-in tariff is questioned as a possible subsidy. In Case C-2012/12 the Advocate General says that subsidy rules apply to the French system on July 11 of this year. Maybe Almunia feels encouraged by that to try litigating this point again.

We will have to wait and see. I recall that SPIEGEL (another enemy of renewable energy) hoped for the Commission to sue Germany in July this year, and such hopes failed to materialize. It will be interesting to see what will happen this time around.

I for one am firmly opposed to any attempt of the European Union to meddle in the renewable energy policy of the Member States. We finally succeeded in kicking out the FDP out of the German Parliament in the last election. Should this victory become meaningless because the European Union suddenly gets to decide about these issues?

Trying this kind of power grab is not compatible with basic values of democracy. It is also stupid policy. The feed-in tariff has proven to be wildly successful. The last thing we need is European Union Commissioners trying to put the brakes on this success.

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