Strict Belgium Green Energy Rules Pass Muster

(CN) - European nations can offer incentives for green energy produced domestically, the EU's highest court ruled Thursday.

Under the scheme set up by authorities in the Flemish region of Belgium to encourage the production of renewable energy, electricity suppliers must prove that green sources drive a certain percentage of their energy.

While EU law allows for the renewable energy to come from any source within Europe, Flemish law requires that the electricity be produced locally to satisfy its scheme.

Energy supplier Essent told Flemish officials it had filled its green-energy quota with sources in Denmark, Sweden, Norway and the Netherlands.

Facing fines of nearly $2 million, Essent appealed the authorities' decisions to a Brussels trial court - which asked the European Court of Justice whether the Flemish scheme is even legal under the EU's renewable-energy directive.

In a ruling Thursday, the Luxembourg-based high court pointed out that EU lawmakers never intended to address where member states got their green energy, only that it happened. So EU law does not expressly prohibit the Flemish scheme, the court said.

But while requiring domestic renewable-energy production certainly restricts the free movement of goods - a tenet of European law - it is justified because helps achieve a public-interest environmental goal.

"The fact that a national support scheme is designed to favor directly the production of green electricity, rather than solely its consumption, can be explained in particular by the fact that the green nature of the electricity relates only to its method of production and that, accordingly, it is primarily at the production stage that the environmental objectives in terms of the reduction of greenhouse gases can actually be pursued," the court wrote.

The court nevertheless cautioned Flemish utilities regulators not to make the quotas to difficult to achieve or the fines too steep. It advised setting up a market where green-energy importers like Essent can trade electricity to comply with the regional scheme.

The Brussels court must decide whether the $2 million fine against Essent is fair, the EU high court concluded.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit