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Emissions trading: Administrative tribunal in Berlin dismisses suits filed against Federal Environmental Agency
Federal Environmental Agency allocated carbon dioxide emissions certificates properly
Year of issue
Date 27/04/2006
Date 27/04/2006
A major court case concerning the allocation of certificates for the greenhouse gas carbon dioxide (CO2) has been settled: the Federal Environmental Agency (UBA) was keeping with the law in its allocation of the legally scheduled annual budget of 495 million tons CO2 emissions certificates to German businesses. Such was the ruling made by the administrative tribunal of first instance in Berlin on 7 April 2006. The Berlin judges dismissed a total of nine exemplary suits filed to protest so-called proportional curtailment. The legislator provides for these cuts in the event that businesses apply for more emissions certificates than the total annual budget provides. The legislator provided for certificates amounting to an annual 495 million tons CO2 during the first trade period in 2005-2007. However, participating businesses in the German economy applied for a total of 42.3 million surplus certificates. In this case, the law stipulates that the German Emission Trading Authority (DEHSt) of UBA is to make proportional cuts in allocations to some businesses in order to stay within the total budget of 495 million tons carbon dioxide. UBA President Prof. Dr. Andreas Troge said, “It is out of the question that the Agency made illegal decisions such as was partly implied by the plaintiffs”.
In European emissions trading, the legislators in each country determine national maximum volumes, or so-called caps, on CO2 emissions from facilities in the energy sector and emissions-intensive industry. In the course of the application procedure the DEHST at UBA allocates these emissions certificates free of charge to concerned operators– all according to rules anchored in law. If operators apply for surplus amounts of CO certificates, DEHSt must make some proportional cuts. They calculated the curtailment factor after the application deadline in2 December 2004 and applied it across the board to all existing facilities participating in emissions trading. No cuts were made in allocations awarded according to special rules, as for example for past emission reductions. Businesses filed some 500 objections to these proportional cuts, and a group of facility operators went to court in Berlin. The administrative tribunal in Berlin heard nine cases as exemplary suits. The businesses had called the calculation of the additional reduction factor and its application into question and made demands for corrections and higher allocation of certificates. The rulings made by the administrative tribunal of Berlin positively affirm the DEHSt procedure and how it handles proportional curtailment. The plaintiffs may resort to the usual legal means to appeal the decision.