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Schaefer Kalk GmbH & Co. KG v. Bundesrepublik Deutschland

Jurisdiction: European Union

Principle law(s): EU Emission Trading Scheme (EU ETS) (Directive 2003/87/EC establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC)

Side A: Schaefer Kalk GmbH & Co. KG (Corporation)

Side B: Bundesrepublik Deutschland (Government)

Core objectives: Company challenged rejection of application to subtract CO2 that is subsequently chemically bound and not emitted from its emissions report

Schaefer Kalk GmbH & Co. KG (Schaefer Kalk) operates an installation for the calcination of lime in Hahnstótten, Germany, which is subject to the European Union Emissions Trading Scheme (ETS). In the process of getting its monitoring plan approved, Schaefer Kalk applied for authorisation to subtract the CO2 transferred for the production of precipitated calcium carbonate (PCC) to an installation not subject to the ETS from the amount of greenhouse gas emissions in the company's emissions report. Schaefer Kalk argued that the transferred CO2 is chemically bound in the PCC and that, not being emitted into the atmosphere, it cannot be regarded as "emissions" as defined in Article 3(b) of Directive 2003/87/EC. 

The German Emissions Trading Authority at the Federal Environment Agency (DEHSt) approved the monitoring plan without addressing the issue of subtracting transferred CO2. Schaefer Kalk brought a complaint to the DEHSt, which was rejected. The DEHSt argued that subtraction was not legal under Article 49 of Regulation (EU) No 601/2012 and Annex IV thereto, which only provides that CO2 transferred to one of the long-term geological storage installations listed in that article may be subtracted from the emissions. Schaefer Kalk subsequently brought the matter before the Berlin Administrative Court and argued that Article 49(1) of Regulation No 601/2012 and point 10(B) of Annex IV thereto subject CO2 bound in PCC and transferred for the production of that substance to mandatory participation in the ETS, and are therefore not covered by the powers granted under Article 14(1) of Directive 2003/87/EC. 

The Berlin Administrative Court then referred the matter to the European Court of Justice (ECJ). The ECJ held that the second sentence of Article 49(1) of Regulation No 601/2012 and point 10(B) of Annex IV to that regulation are invalid in so far as they systematically include the CO2 transferred to another installation for the production of PCC in the emissions of the lime combustion installation, regardless of whether or not that CO2 is released into the atmosphere.
Case documents

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