European Union

Trinseo Deutschland Anlagengesellschaft mbH 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: Trinseo Deutschland Anlagengesellschaft mbH (Corporation)


Side B: Bundesrepublik Deutschland (Government)


Core objectives:

Company challenged rejection of application of free allocation of emissions allowances


Summary
Trinseo operates an installation for the production of polycarbonate that obtains the steam needed for that production from a plant which is operated, on the same site, by another company, Dow Deutschland Anlagengesellschaft, which is subject to the emission allowance trading scheme established by Directive 2003/87/EC. Trinseo applied for free allocation of emission allowances to its installation for the trading period 2013?2020, which the German government denied because polycarbonates do not fall under the list of products approved for free allocation. Trinseo originally claimed that it was entitled to free allocation of emissions allowances because the steam it uses during the production of polymers requires the emission of greenhouse gases. 

The German government rejected this application and, subsequently, Trinseo sued the German government in the Berlin Administrative Court, which referred the case to the ECJ for preliminary ruling. The ECJ considered "whether Article 2(1) of Directive 2003/87 must be interpreted as meaning that an installation for the production of polymers, in particular the polymer polycarbonate, such as the installation at issue in the main proceedings, which obtains the heat needed for that production from a third-party installation, falls within the activity of ‘[p]roduction of bulk organic chemicals by cracking, reforming, partial or full oxidation or by similar processes', within the meaning of Annex I to that directive, so that it must be considered to fall within the scope of the emissions allowance trading scheme established by that directive." 

The ECJ ruled that, because Directive 2003/87/EC is intended to incentivise emissions reductions in companies, and because polycarbonate production does not directly produce emissions, Trinseo was not entitled to free allocation of emissions trading allowances. Rather, only the company that directly emits greenhouse gases as the result of producing steam, which might later be used to manufacture polymers, is entitled to free emissions allocations.
Case documents

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