Case C-573/12, Ålands Vindkraft

Swedish support scheme promoting green energy production in national territory compatible with EU law

>> The Renewable Energy Directive (Directive 2009/28) allows Member States to support the production of green energy. Member States which grant benefits to producers are not required to support the use of green energy produced in another Member State.

Swedish legislation provides that green electricity production installations located on the national territory may be awarded electricity certificates. Those certificates may then be sold to electricity suppliers or to certain users, who are under an obligation to hold a certain number (quota) of certificates, corresponding to a proportion of the total quantity of electricity supplied or consumed, failing which they must pay a fee.  

Ålands Vindkraft applied  for electricity certificates in respect of its wind farm in the Åland archipelago, in Finland. The application was refused on the grounds that only green electricity production installations located in Sweden may be awarded such electricity certificates. Ålands Vindkraft challenged that administrative decision before the Swedish courts, arguing that the principle of the free movement of goods precluded the Swedish electricity certificates scheme.

Whether support system within meaning Directive 2009/28.

The referring court asks whether point (k) of the second paragraph of Article 2 and Article 3(3) of Directive 2009/28 must be interpreted as allowing a Member State to establish a support scheme which provides for the award of tradable certificates to producers of green electricity solely in respect of green electricity produced in the territory of that State and which places suppliers and certain electricity users under an obligation to deliver annually to the competent authority a certain number of those certificates, corresponding to a proportion of the total volume of electricity that they had  supplied or consumed.

The Court first of ll assessed whether a green electricity support system such as that at issue in the main proceedings constituted a ‘support scheme’ within the meaning of point (k) of the second paragraph of Article 2 and Article 3(3) of Directive 2009/28.

The Court found that  a support scheme for green electricity production using green certificates, such as that at issue in the main proceedings, had the necessary characteristics to be categorised as a ‘support scheme’ within the meaning of point (k) of the second paragraph of Article 2 and Article 3(3) of Directive 2009/28.

The referring court expressed doubts concerning the fact that the support scheme at issue in the main proceedings provided for the award of electricity certificates solely in respect of green electricity produced in the national territory. The Court however held that it was clear that, in adopting Directive 2009/28, the EU legislature left open the possibility of such a territorial limitation.

The Court found that the EU legislature did not intend to require Member States who opted for a support scheme using green certificates to extend that scheme to cover green electricity produced on the territory of another Member State. The Court thus concluded that Directive 2009/28 must be interpreted as allowing a Member State to establish a support scheme, such as that at issue in the main proceedings.

Whether legislation caught by  Article 34 TFEU

The referring court also asked whether Article 34 TFEU must be interpreted as meaning that national legislation such as that at issue in the main proceedings constituted a measure having equivalent effect to a quantitative restriction on imports for the purposes of that provision. If so, the referring court asked whether such legislation might nevertheless be justified in the light of its objective of promoting the production of green electricity.

The Court reiterated that, where a matter had been the subject of exhaustive harmonisation at EU level, any national measure relating thereto must be assessed in the light of the provisions of that harmonising measure and not in the light of primary law (see, inter alia, Radlberger Getränkegesellschaft and S. Spitz, C‑309/02, EU:C:2004:799).

The Court thus found that it was necessary to determine whether the harmonisation brought about by Directive 2009/28 ought to be regarded as being of such a kind as to preclude an examination of whether legislation such as that at issue was compatible with Article 34 TFEU. In that regard, it should be noted at the outset that, far from seeking to bring about exhaustive harmonisation of national support schemes for green energy production, the EU legislature — as is apparent, inter alia, from recital 25 to Directive 2009/28 — based its approach on the finding that Member States apply different support schemes and on the principle that it is important to ensure the proper functioning of those schemes in order to maintain investor confidence and to enable those States to define effective national measures in order to achieve their mandatory national overall targets under the directive. The Court that it could not be considered that, in covering that aspect of the territorial scope of national support schemes, the harmonisation brought about by Directive 2009/28 in the field of support schemes was of such a kind as to preclude an examination of their compatibility with Article 34 TFEU. 

Whether existence of barrier to trade

The Court stressed that the free movement of goods between Member States was a fundamental principle of the Treaty which found its expression in the prohibition set out in Article 34 TFEU (see, inter alia, Commission v Denmark, C‑192/01, EU:C:2003:492).

Reiterating its famous Dasonville case law, the Court held that in prohibiting between Member States measures having equivalent effect to quantitative restrictions on imports, Article 34 covered any national measure capable of hindering, directly or indirectly, actually or potentially, intra-Community trade (see, inter alia, Dassonville, 8/74, EU:C:1974:82, and PreussenElektra, EU:C:2001:160).

As it is, it must be noted in that regard that the legislation at issue is capable, in various ways, of hindering — at least indirectly and potentially — imports of electricity, especially green electricity, from other Member States.

In the first place, it follows from that legislation that suppliers and certain consumers are required to hold on the annual due date a certain number of electricity certificates for the purposes of meeting their quota obligation, which depends on the total volume of electricity that they supply or consume. However, in the absence, inter alia, of an international agreement to that effect, only certificates awarded under the national scheme could be used to meet that obligation. Accordingly, those suppliers and consumers were as a rule required, on the basis of the electricity that they import, to purchase such certificates, failing which they had to pay a specific fee.Such measures were thus capable of impeding electricity imports from other Member States (see, inter alia, by analogy, Ligur Carni and Others, C‑277/91, C‑318/91 and C‑319/91, EU:C:1993:927).

In the second place, the referring court noted both in its order and in its questions that, although green electricity producers might, in the context of the support scheme established by the legislation at issue in the main proceedings, trade their electricity certificates on an open, competitive market that was dedicated to that trade, there was nothing in that legislation to stop the producers from selling those certificates together with the electricity that they produced, as a package.The existence of such a possibility seemed capable in practice of facilitating the opening of negotiations and the establishment of contractual relationships — in some cases, on a long-term basis — concerning the supply of national electricity by those producers to suppliers or electricity users, the latter being able to obtain, in that way, both the electricity and the green certificates that they needed in order to meet their quota obligation. The Court thus found that, to that extent also, the effect of the support scheme at issue in the main proceedings was, at least potentially, to curb electricity imports from other Member States (see, to that effect, Commission v Ireland, 249/81, EU:C:1982:402).

In that context, the Court noted that failure by a Member State to adopt adequate measures to prevent barriers to the free movement of goods that had been created, in particular, through the actions of traders but made possible by specific legislation that that State had introduced, is just as likely to obstruct intra-Community trade as is a positive act (see Commission v France, C‑265/95, EU:C:1997:595, and Schmidberger, C‑112/00, EU:C:2003:333, paragraph 58).

The Court thus concluded that t legislation such as that at issue in the main proceedings was capable of impeding imports of electricity, especially green electricity, from other Member States and that, in consequence, it constituted a measure having equivalent effect to quantitative restrictions on imports, in principle incompatible with the obligations under EU law resulting from Article 34 TFEU, unless that legislation could be objectively justified (see, to that effect, inter alia, Commission v Austria, C‑320/03, EU:C:2005:684).

Whether a possible justification
The Court stressed that national legislation or a national practice that constituted a measure having equivalent effect to quantitative restrictions might be justified on one of the public interest grounds listed in Article 36 TFEU or by overriding requirements. In either case, the national provision must, in accordance with the principle of proportionality, be appropriate for ensuring attainment of the objective pursued and must not go beyond what is necessary in order to attain that objective (see, inter alia, Commission v Austria, C‑524/07, EU:C:2008:717).


1. The objective of promoting the use of renewable energy sources

 According to settled case-law, national measures that are capable of hindering intra-Community trade may inter alia be justified by overriding requirements relating to protection of the environment (see, to that effect, Commission v Austria, EU:C:2008:717, paragraph 57 and the case-law cited).

In the present case,   the Court noted that the use of renewable energy sources for the production of electricity, which legislation such as that at issue in the main proceedings sought to promote, was useful for the protection of the environment inasmuch as it contributed to the reduction in greenhouse gas emissions. The Court stressed that the the increase in the use of renewable energy sources constituted one of the important components of the package of measures needed to reduce greenhouse gas emissions and to comply with the Kyoto Protocol to the United Nations Framework Convention on Climate Change, and with other Community and international greenhouse gas emission reduction commitments beyond the year 2012.

The Court found that the objective of promoting the use of renewable energy sources for the production of electricity, such as the objective pursued by the legislation at issue in the main proceedings, was in principle capable of justifying barriers to the free movement of goods.

2. Proportionality 

The Court held the by its very nature, a scheme such as in the present case required for its proper functioning market mechanisms that were capable of enabling traders — who were subject to the quota obligation and who did not yet possess the certificates required to discharge that obligation — to obtain certificates effectively and under fair terms. The Court stressed that it was therefore important that mechanisms be established which ensured the creation of a genuine market for certificates in which supply could match demand, reaching some kind of balance, so that it was actually possible for the relevant suppliers and users to obtain certificates under fair terms.

According to the findings of the referring court, the green certificates were actually sold, in the Member State concerned, on a market that was open to competition and, accordingly, the price of those certificates was determined by the interplay of supply and demand.

The Court held that provided that there was a market for green certificates which actually met the conditions set out above and on which traders who had imported electricity from other Member States were genuinely able to obtain certificates under fair terms, the fact that the national legislation at issue in the main proceedings did not prohibit producers of green electricity from selling to traders under the quota obligation both the electricity and the certificates did not mean that the legislation went beyond what was necessary to attain the objective of increasing the production of green electricity. The fact that such a possibility remains open appeared to be an additional incentive for producers to increase their production of green electricity.

The Court thus concluded that Article 34 TFEU must be interpreted as not precluding national legislation which provided for the award of tradable certificates to green electricity producers solely in respect of green electricity produced in the territory of the Member State concerned and which places suppliers and certain electricity users under an obligation to surrender annually to the competent authority a certain number of those certificates, corresponding to a proportion of the total volume of electricity that they had  supplied or used, failing which they must pay a specific fee.


Text of Judgment