(CN) - The European Commission exceeded its powers by imposing a greenhouse gas emissions ceiling on Poland and Estonia, the union's high court ruled.
Under the 2003 Emissions Trading Directive, which established a scheme for greenhouse gas emission allowance trading between member states, each country develops a five-year national allocation plan for the total quantity of allowances that it intends to allocate for that period. After taking comments from the public, each state publishes its plan to the commission, which may reject all or parts of the plan. Member states are only allowed to allocate the greenhouse gas allowances after the commission accepts their plans.
In 2007, the commission rejected the 2008-12 plans of Poland and Estonia, finding them incompatible with the directive. The commission ordered Poland to reduce its emissions allowances by 26.7 percent and Estonia by 47.8 percent. This amounted to a CO2 reduction of 76 million tons for Poland and nearly 12 million tons for Estonia. The countries sued the Commission, supported by Hungary, Lithuania and Slovakia, seeking an annulment of the order.
In 2009 the EU's General Court overturned the commission's decision, saying that the commission had exceeded its powers. The court found that the commission failed to state its objections with Poland's plan, and it failed to comply with the principle of sound administration for Estonia. The commission appealed both decisions with the Court of Justice in Luxembourg.
In denying those appeals Thursday, the court said that the directive does not lay down a particular method for drawing up an allocation plan or fix the total quantity of greenhouse gas emission allowances to be allocated.
"Indeed on the contrary, it expressly provides that the member states must lay down the total quantity of allowances to be allocated taking into account, inter alia, the national energy policy and the national climate change program," the court said in a statement.
This gives member states a margin for maneuver in applying the directive to national policies, and in choosing measures they consider most appropriate in achieving the directive's objective, the court said.
While the commission must ensure equal treatment between member states by diligently examining each country's allocation plan, it must also respect any differences in choices between member states as an expression of the margin for maneuver, according to the decision.
The commission failed to show that, in the interest of procedural economy, it should have the right to fix the maximum quantity of greenhouse gas emissions allowances to be allocated.
"To hold that the commission may fix such a maximum quantity would be tantamount to conferring on that institution powers which lacked any legal basis," the court said.
The EU Legislature, which alone has the power to amend the directive, did so to provide "for the introduction of a more harmonized scheme in order to better exploit the benefits of emission trading, to avoid distortions in the market and to facilitate the linking of the various emissions trading systems," the court noted.
Since the provisions contested by Poland and Estonia are interlinked from the other provisions of the contested decisions, the General Court was right to annul the decisions in their entirety, the high court concluded.
The Court of Justice renders final judgment in EU cases when it does not refer the case back to the General Court. It issued separate opinions Thursday on Polandand Estonia.
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