Sweden's Green-Energy Scheme Bests Challenge

     (CN) - Finding that Sweden need not support green-energy production in Finland, the EU highest court shot down a wind farm's demand for energy certificates.
     At issue is the Renewable Energy Directive, which the European Parliament passed in 2009 to reduce greenhouse-gas emissions in compliance with the international Kyoto Protocol, setting obligatory emissions-reduction goals on industrialized nations.
     The directive lets member states establish support schemes that support renewable-energy production for their individual energy profiles, or their mix of renewable- and traditional-energy sources and their potential for clean-energy production.
     Though the schemes of most countries favor energy sources produced within their own borders, the directive includes "optional cooperation mechanisms" that enable countries to support each other's energy schemes while determining if, and to what extent, energy from other nations fits into their existing national scheme.
     Sweden's green energy scheme calls for the award of "electricity certificates" to producers for each megawatt-hour of renewable energy they produce within Swedish territory. Producers can then sell these certificates to electricity suppliers and certain users that must hold a quota of such certificates to avoid paying fees.
     In June 2010, Swedish authorities rejected the application for electricity certificates by Finish generation company Alands Vindkraft, which runs the Oskar wind farm in Finland's Aland archipelago rather than in Sweden.
     Alands Vindkraft challenged the decision before Sweden's Administrative Court, arguing that Sweden's certificate scheme unfairly favors Swedish electricity producers at the expense of electricity imports from other EU nations.
     That court sought clarification from the European Court of Justice on whether Sweden's energy scheme complies with EU law, among other issues.
     EU's highest judicial body sided with Sweden Tuesday.
     The Renewable Energy Directive allows countries to create schemes that support green energy produced within their own borders "to ensure the effectiveness of those schemes as measures intended to help meet the respective national overall targets," the 22-page ruling states.
     Given the specifications surrounding the use of green-certificate schemes, it is apparent that the EU legislature did not intend to force countries that choose to implement such schemes to include renewable energy produced in other EU countries, the ruling adds.
     The Renewable Energy Directive was not enacted to create uniform support schemes among member states but to enable each country to create a program that could meet its "mandatory national overall [green energy] targets," the ruling states.
     Alands Vindkraft is correct, however, that Sweden's certificate scheme may obstruct the import of green electricity, the court found. It noted that the scheme lets electricity suppliers and users use only certificates awarded under Sweden's scheme to meet their certificate quota obligations, and enables electricity producers to sell their electricity and certificates as package deals.
     Though the scheme is technically impermissible under EU legislation precluding the adoption of measures that place quantitative restrictions on imports from member countries, it is justified by the need to promote renewable energy sources as a method of environmental protection and to combat climate change, the court found. Since determining the source and origin of electricity is practically impossible once it enters the national networks, Sweden's favoring of green energy produced domestically over that produced by other nations may actually be necessary for it to enact its support scheme and promote the increased use of renewable electricity production in its territory, according to the ruling.
     Moreover, such a scheme is necessary for Sweden to encourage long-term investments in new domestic renewable production facilities, the ruling adds.
     The court also found that the Swedish law need not specifically bar participation by foreign electricity producers in the green-certificate scheme because such "territorial limitation" is allowable under the Renewable Energy Directive.
     It is the referring court's job, however, to determine whether that law complies with the principle of legal certainty - that laws must be clear as to their intent, and that those whom they affect know their rights and obligations, the ruling adds.