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Wednesday, April 24, 2024 | Back issues
Courthouse News Service Courthouse News Service

Steel Loses Challenge to Greenhouse Gas Directive

(CN) - The European Court of Justice has ruled that a greenhouse gas reduction system enforced by the French government is justified in treating the steel industry with greater severity than other carbon dioxide emitters, because it is a good place to start.

The 1997 Kyoto Protocol led to development of an EU greenhouse gas directive issued in 2003, which took effect in 2005. The directive established an allowance system where certain sectors must apply for permits to emit greenhouse gases, in particular carbon dioxide, and submit to an annual reckoning to surrender their allowances or pay fines.

The 2003 directive applied only to certain sectors, including energy, steel, mining and paper production. Steel company Arcelor Atlantique et Lorraine sued the French ecology and environment ministers, claiming the directive violated the principle of equal treatment, since aluminum and chemical industries - though in the same position - were not subject to the directive.

Europe's highest court found that although the industries are in the same position but treated differently, this is justified because of the differing circumstances around each industry and the long view that eventually, all sectors would be treated the same with respect to greenhouse gas emissions.

Specifically, the court cited observations that non-steel metal producers emit 16.2 million metric tons of carbon dioxide, less than one-tenth of the steel industry's 174.8 million metric tons.

The court wrote that the chemical industry, though a net emitter of 26.2 million metric tons of carbon dioxide, consists of more than 34,000 separate facilities and thus "would have considerably increased the administrative complexity of the allowance trading scheme in its initial stage."

The Luxembourg court added that because the greenhouse gas directive has a "view to including other sectors in (its) scope," excluding the aluminum and chemical sectors at this stage is fine.

The court described the greenhouse gas allowance system as "a novel and complex scheme whose implementation and functioning could have been disturbed by the involvement of too great a number of participants," but that its original scope was created to attain a "critical mass" of engagement.

The high court remanded a decision on legal costs to the national court.

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