CO2 Emissions Trading and Emission Limit Values: Is EU Environmental Law Restricting Member States to Act Against Climate Change?

The competence to protect the environment in Europe could be described as a ‘shared’ competence. While the EU may adopt environmental directives on the basis of Article 192 TFEU (Treaty on the Functioning of the EU) that obligate Member States to implement them in their national legal order, Article 193 TFEU makes clear that the protective measures adopted pursuant to Article 192 TFEU shall not prevent any Member State from maintaining or introducing more stringent protective measures. A cornerstone of the EU’s policy to combat climate change is the 2005 Emission Trading System Directive (ETS Directive). This system is an example of a market based instrument for regulating greenhouse gas emissions from so-called ETS-installations. The 1996 Integrated Pollution Prevention and Control Directive (IPPC Directive) as well as its recently adopted successor, the Industrial Emissions Directive (IE Directive) represents a command-and-control instrument by demanding emission limit values to be set in national permits for so-called IPPC-installations. In order to clarify the interaction and guarantee a smooth interplay between the two directives, Article 9(3)(iii) IPPC Directive was introduced in 2005. It provides that national permits issued under the IPPC Directive shall not contain an emission limit value (ELV) for direct emissions of greenhouse gases from ETS-installations unless necessary to ensure that no significant local pollution is caused. The intended strict division between the two regulatory systems has been challenged from a political and a legal perspective.[1] At the European level the European Parliament – during the legislative process for the IE Directive – discussed amendments that would explicitly allow Member States to adopt more stringent protective national measures, including greenhouse gas emission requirements for installations that are covered by the ETS Directive. The amendments aimed at clarifying the consequences of Article 193 TFEU but weren’t adopted. At the national level both the UK and the Netherlands have indicated the intention to adopt national standards for CO2 emissions. They feel an increasing urgency to cut greenhouse gas emissions and therefore the need to use instruments other than the EU-ETS. This paper will focus on the legal question whether EU Member States are – in accordance with Article 193 TFEU – allowed to introduce ELV’s for CO2 (command and control) for installations covered by the ETS Directive (marked based instrument). [1] Derrick Wyatt, & Richard Macrory, Does the EU’s Proposed Directive On Industrial Emissions (IPPC) Preclude Member States From Imposing Emission Limits for Co2 Under National Rules Other Than Those Implementing the Proposed Directive?, Legal Advice, February 2010 \u3chttp://www.ucl.ac.uk/cclp/ccsnews.php?rn=988\u3