By Stephanie Chuffart, Visiting fellow
On July 19, Advocate General Kokott[1] delivered an important Opinion clarifying EU Member States’ obligations in legislating with regard to biofuels, and in particular in establishing biofuels quotas.[2] According to the Opinion, biofuels quotas are only justifiable if they meet the five strict cumulative sustainability criteria laid down by the 2009 Fuel Directive, which notably governs the quality of petrol and diesel fuel and establishes a mechanism to monitor and reduce greenhouse gas emissions.[3] With 20 EU Member States having introduced biofuels quotas in their national legislations[4], the Opinion will undoubtedly have great impact. Indeed, if the interpretation is followed by the Court of Justice, it will bind all national Courts of the EU in which the same legal issue is raised.
The main question referred to the Court of Justice of the EU was whether biofuels quotas are compatible with the EU Fuel Directive as amended in 2009. The Opinion followed a referral for a preliminary ruling by the Belgian Constitutional Court in the Case of Belgische Petroleum Unie VZW and Others v Belgian State in which various Belgian fuel companies brought an action challenging a biofuels quota introduced by Belgium in 2009. The Belgian biofuels quota, established in 2009, requires fuel companies to sell a particular quantity of biofuels, representing 4% of the overall quantity of conventional fuels sold.[5]
Compatibility of the Belgian biofuels quota
The main issue at stake was whether the biofuels quota complied with Article 5 of the Fuel Directive, which states that “[n]o Member State may prohibit, restrict or prevent the placing on the markets of fuels which comply with the requirements of the Directive”. Advocate General Kokott found that the Belgian rule constituted an additional fuel specification (§ 48) and that this additional specification restricted the sale of fuels, as meeting the quota requirements may be associated with higher costs or additional risks (§ 51). The biofuels quota hence qualifies as a restriction prohibited by Article 5 of the Fuel Directive. Unless the quota falls within one of the possible exceptions to the prohibition, it would thus not comply with the Directive.
Possible exceptions to the prohibition on restriction under Article 5 of the Fuel Directive and the question of sustainability
The most relevant exception to the prohibition can be found in Article 7a(2) of the Fuel Directive -as amended in 2009- which states that Member States may require suppliers to reduce life cycle greenhouse gas emissions from fuel and energy supplied by up to 10 % by December 31 2020. Nevertheless, energy from biofuels may be taken into account for the purposes of Article 7a only if it fulfills the sustainability criteria set out in Article 7b. These five cumulative criteria are the following:
1) The greenhouse gas emission savings from the use of biofuels must be at least 35 %
2) Biofuels should not be made from raw material obtained from land with high biodiversity value
3) Biofuels should not be made from raw material obtained from land with high carbon stock
4) Biofuels should not be made from raw material obtained from land that was peatland in January 2008
5) Agricultural raw materials cultivated in the Community and used for the production of biofuels must be obtained in accordance with Part A and point 9 of Annex II to Council Regulation (EC) No 73/2009 of 19 January 2009.
The criteria allowing for biofuels to fall under the exception of Article 7a(2) are hence rather restrictive.
The Advocate General found it out of the reach of the referral to determine whether the Belgian law met the relevant sustainability criteria (§ 60). He however pointed out that “it is not obvious that the definition of sustainable biofuels in Article 2(8) of the Belgian law of 22 July 2009 is sufficient in that regard” (id.), opening the door to a limiting interpretation of the sustainability criteria.[6]
Conclusions
The Opinion of the Advocate General follows the legislative efforts of the EU in 2009 to ensure that biofuels’ drawbacks are relevantly addressed and it appears that the time when biofuels were widely encouraged within the EU is hence definitely over. By treating biofuel quotas as a restriction in trade, the Advocate General joins many national Courts in ensuring that biofuels are not given a blank check ultimately detrimental to the environment. If followed by the Court of Justice of the EU, the Opinion of Advocate General Kokott will undoubtedly have important impacts in the 20 Member States which introduced biofuels quotas in their national legislation and it will be interesting to watch as they adapt to the requirements.
[1] The Court of Justice of the EU is helped by eight Advocates General whose function is to impartially and publicly present opinions on the cases brought before the Court.
[2] Court of Justice of the European Union, Case C-26/11, Opinion of Advocate General Kokott delivered on 19 July 2012.
[3] Directive 2009/30/EC of the European Parliament and of the Council of 23 April 2009 of the European Parliament and of the Council amending Directive 98/70/EC as regards the specification of petrol, diesel and gas-oil and introducing a mechanism to monitor and reduce greenhouse gas emissions from the use of road transport fuels and amending Council Directive 1999/32/EC, as regards the specification of fuel used by inland waterway vessels and repealing Directive 93/12/EEC (OJ 2009 L 140, p. 88).
[4] See Doc. COM (2011) 31 at p. 12.
[5] See Moniteur Belge of 3 August 2009, p. 51920.
[6] The State of Belgium invoked other exception grounds such as Article 3(4) of the EU Promotion Directive, Article 3 of the Biofuels Directive, and Article 193 of the TFEU. If Article 193 was rejected because Belgium hadn’t met with the applicable prerequisites, the validity of the two other claims was equally submitted to the respect of the sustainability criteria (§ 61 and 76).
