Benchmarks under the ETS to be judged at a national level

The General Court of the European Union has declared inadmissible Eurofer's court case for the annulment of the Commission Decision on the benchmarks under the EU emissions trading system. (Commission Decision of 27 April 2011 determining transitional Union-wide rules for harmonized free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC).

The decision does not mean that the steel benchmarks set by the Commission are correct. The ETS directive makes it very clear that the benchmarks must be set at a level which allows the allocation of sufficient emission certificates to the best performing installations (ca 5 out of 100 installations). This is clearly not the case with the benchmarks set by the Commission.

The decision of the General Court is that a complaint on the allocation of allowances (which are based on the benchmarks) has to be judged by a national court after allocation of certificates on national level. Only after a judgement by a national court may the case be referred to the European Court.

This is a delay but action by the steelmakers will now take place on a national level followed by European action.

In principle this means that the European steel industry will not have certainty before the coming into force of the directive on 1st of January 2013 and during the first years of the third trading period. The allocation of free allowances will now be implemented according to the benchmarks set by the Commission. However, if a court case at a national level is successful, the Commission may have to change its benchmarks retroactively.