delivered on 3 June 2021 (1)

Case C‑938/19

(Request for a preliminary ruling from the Verwaltungsgericht Berlin (Administrative Court, Berlin, Germany))

(Reference for a preliminary ruling – Environment – Directive 2003/87/EC – Greenhouse gas emission allowance trading scheme – Article 2(1) – Scope – Article 3(e) – Concept of ‘installation’ – Ancillary units not emitting greenhouse gases – Article 10a – Transitional rules for free allocation of allowances – Corrected eligibility ratio – Method of calculation – Decision 2011/278/EU – Third subparagraph of Article 6(1) – Exportation of cold water to an entity that is part of a sector exposed to a significant risk of carbon leakage)

I.Introduction

1.This request for a preliminary ruling made by the Verwaltungsgericht Berlin (Administrative Court, Berlin, Germany) concerns the interpretation of Article 2(1) and Article 3(e) of Directive 2003/87/EC, (2) which establishes a greenhouse gas emission allowance trading scheme within the European Union, and of the third subparagraph of Article 6(1) of Decision 2011/278/EU, (3) which determines transitional rules for harmonised free allocation of allowances.

2.The request has been made in proceedings between Energieversorgungscenter Dresden-Wilschdorf GmbH & Co. KG (‘EDW’ or ‘the applicant in the main proceedings’) and the Federal Republic of Germany, represented by the Umweltbundesamt (Federal Office for the Environment, Germany; ‘the Office’), concerning the refusal to allocate some of the free allowances requested by EDW for a high-efficiency cogeneration installation for the third trading period (2013 to 2020). Before the referring court, the parties to the proceedings are in dispute as to the confines of EDW’s installation, in particular as to whether ancillary units (specifically, absorption chillers (4)) which do not emit greenhouses gases should be included in that installation, and as to the consequences arising therefrom for the free allocation of emission allowances.

3.Besides those technical details, this case provides the Court, inter alia, with the opportunity to clarify the scope of Directive 2003/87, as defined in Article 2(1) thereof, as well as the interpretation of the concept of ‘installation’ laid down in Article 3(e) of that directive, specifically as regards the criterion relating to the ‘effect on emissions and pollution’.

4.In that regard, I will propose that the Court hold that those provisions do not preclude, for purposes of administrative cooperation, a Member State from providing in its national law that an installation is delimited in the same way in each of the permits that its operator may be granted for greenhouse gas emissions, on the one hand, and pollution, (5) on the other hand. It does, however, follow from those same provisions, read in conjunction with Article 3(b) of the directive, that auxiliary units can be taken into account, inter alia, for the preliminary free allocation of emission allowances only if, whilst being directly associated with the activity of the main installation and having a technical connection with it, their activity could have an effect on greenhouse gas emissions.

II.Legal context

5.Article 2 of Directive 2003/87, which is entitled ‘Scope’, provides in paragraph 1 thereof: ‘This Directive shall apply to emissions from the activities listed in Annex I and greenhouse gases listed in Annex II.’

6.Article 3 of that directive, which is entitled ‘Definitions’, states: ‘For the purposes of this Directive the following definitions shall apply:…

(b) “emissions” means the release of greenhouse gases into the atmosphere from sources in an installation or the release from an aircraft performing an aviation activity listed in Annex I of the gases specified in respect of that activity;…

(e) “installation” means a stationary technical unit where one or more activities listed in Annex I are carried out and any other directly associated activities which have a technical connection with the activities carried out on that site and which could have an effect on emissions and pollution;…’

7.Article 8 of the directive, which is entitled ‘Coordination with Directive [96/61]’, provides: ‘Member States shall take the necessary measures to ensure that, where installations carry out activities that are included in Annex I to Directive [96/61], the conditions of, and procedure for, the issue of a greenhouse gas emissions permit are coordinated with those for the permit provided for in that Directive. The requirements of Articles 5, 6 and 7 of this Directive may be integrated into the procedures provided for in Directive [96/61].’

8.Article 10a of the same directive, which is entitled ‘Transitional Community-wide rules for harmonised free allocation’, provides in paragraph 12 thereof: ‘Subject to Article 10b, in 2013 and in each subsequent year up to 2020, installations in sectors or subsectors which are exposed to a significant risk of carbon leakage shall be allocated, pursuant to paragraph 1, allowances free of charge at 100% of the quantity determined in accordance with the measures referred to in paragraph 1.’

9.Article 6 of Decision 2011/278, which is entitled ‘Division into sub-installations’, provides as follows in paragraph 1 thereof: ‘For the purposes of this Decision, Member States shall divide each installation eligible for the free allocation of emission allowances under Article 10a of Directive [2003/87] into one or more of the following sub-installations, as required:

(a) a product benchmark sub-installation;

(b) a heat benchmark sub-installation;

(c) a fuel benchmark sub-installation;

(d) a process emissions sub-installation. Sub-installations shall correspond, to the extent possible, to physical parts of the installation.

For heat benchmark sub-installations, fuel benchmark sub-installations and process emissions sub-installations, Member States shall clearly distinguish on the basis of NACE and Prodcom codes between whether or not the relevant process serves a sector or subsector deemed to be exposed to a significant risk of carbon leakage as determined by Decision 2010/2/EU. Where an installation included in the Union scheme has produced and exported measurable heat to an installation or other entity not included in the Union scheme, Member States shall consider that the relevant process of the heat benchmark sub-installation for this heat does not serve a sector or subsector deemed to be exposed to a significant risk of carbon leakage as determined by Decision [2010/2] unless the competent authority is satisfied that the consumer of the measurable heat belongs to a sector or subsector deemed to be exposed to a significant risk of carbon leakage as determined by Decision [2010/2].’

10.Point 1.4 of the annex to Decision 2010/2 lists the manufacture of electronic valves and tubes and other electronic components, corresponding to NACE code 3210, as one of the sectors exposed to a significant risk of carbon leakage.

11.Point 1.14 of the annex to Decision 2014/746/EU, (8) which repealed Decision 2010/2, likewise lists the manufacture of electronic components, now corresponding to NACE code 2611, as one of the sectors exposed to such a risk.

4. Directive 96/61

12.Article 2 of Directive 96/61, which is entitled ‘Definitions’, provides: ‘For the purposes of this Directive:…

(2) “pollution” shall mean the direct or indirect introduction, as a result of human activity, of substances, vibrations, heat or noise into the air, water or land which may be harmful to human health or the quality of the environment, result in damage to material property, or impair or interfere with amenities and other legitimate use of the environment;

(3) “installation” shall mean a stationary technical unit where one or more activities listed in Annex I are carried out, and any other directly associated activities which have a technical connection with the activities carried out on that site and which could have an effect on emissions and pollution;…

(5) “emission” shall mean the direct or indirect release of substances, vibrations, heat or noise from individual or diffuse sources in the installation into the air, water or land;…’

5. Directive 2010/75

13.Article 3 of Directive 2010/75, which is entitled ‘Definitions’, provides: ‘For the purposes of this Directive the following definitions shall apply:…

(2) “pollution” means the direct or indirect introduction, as a result of human activity, of substances, vibrations, heat or noise into air, water or land which may be harmful to human health or the quality of the environment, result in damage to material property, or impair or interfere with amenities and other legitimate uses of the environment;

(3) “installation” means a stationary technical unit within which one or more activities listed in Annex I or in Part 1 of Annex VII are carried out, and any other directly associated activities on the same site which have a technical connection with the activities listed in those Annexes and which could have an effect on emissions and pollution;

(4) “emission” means the direct or indirect release of substances, vibrations, heat or noise from individual or diffuse sources in the installation into air, water or land;…’

14.Paragraph 4(1) of the Bundes-Immissionsschutzgesetz (Federal Law on emission control) of 15 March 1974 (BGBl. 1974 I, p. 721; ‘the BImSchG’), in the version thereof of 17 May 2013 (BGBl. 2013 I, p. 1274), reads as follows: ‘The construction and the operation of installations which, on account of their inherent characteristics or their operation, are capable of causing particularly harmful effects for the environment, endangering, damaging significantly or specifically inconveniencing the local community or neighbourhood … shall be subject to authorisation …’

15.Paragraph 2 of the Treibhausgas-Emissionshandelsgesetz (Law on greenhouse gas emission allowance trading) of 21 July 2011 (BGBl. 2011 I, p. 1475; ‘the TEHG’), which is entitled ‘Scope’, provides: ‘(1) This Law shall apply to the greenhouse gas emissions referred to in Part 2 of Annex 1, which result from the activities referred to therein. This Law shall also apply to the installations referred to in Part 2 of Annex 1 where they constitute parts of, or ancillary facilities of, an installation not contained in Part 2 of Annex 1.

(2) For the installations referred to in points 2 to 31 of Part 2 of Annex 1, the scope of this Law shall extend to all parts of the installation and process stages necessary for operation; and ancillary facilities with a physical and operational connection with the parts of the installation and process stages referred to in paragraph 1 and which could contribute to the generation of the greenhouse gases referred to in Part 2 of Annex 1.

The first sentence shall apply mutatis mutandis to the combustion units referred to in point 1 of Part 2 of Annex 1.

…

(4) Where installations referred to in points 2 to 30 of Part 2 of Annex 1 are subject to authorisation pursuant to the third sentence of Paragraph 4(1) of the BImSchG, the specifications contained in the permit for the installation granted in accordance with the BImSchG shall be decisive as regards the confines of the installations referred to in subparagraphs 2 and 3. The first sentence shall apply mutatis mutandis to the combustion units referred to in point 1 of Part 2 of Annex 1. In the situations referred to in the second sentence of subparagraph 1, the first sentence shall apply mutatis mutandis as regards the specifications contained in the permit granted pursuant to the BImSchG in relation to parts of the installation or to ancillary facilities.’

Paragraph 4 of the TEHG, which is entitled ‘Emissions permit’, states:

‘(1) The operator of the installation shall hold a permit for the greenhouse gas emissions generated by an activity referred to in points 1 to 32 of Part 2 of Annex 1. The permit must be granted by the competent authority on application by the operator of the installation, where that authority is able to verify the particulars referred to in subparagraph 3 on the basis of the documents provided together with the application.

…

(4) For installations granted a permit before 1 January 2013 in accordance with the provisions of the BImSchG, the permit granted pursuant to the law on emission control shall be that granted in accordance with subparagraph 1. However, in the situation referred to in the first sentence, the operator of the installation may also apply for a separate application under subparagraph 1. In that case, the first sentence shall apply only until the separate permit is granted.’

Paragraph 9(2) of the TEHG, which is entitled ‘Free allocation of emission allowances to operators of installations’, provides:

‘The free allocation of emission allowances shall be subject to the submission of an application to the competent authority. …’

III. The dispute in the main proceedings, the questions referred for a preliminary ruling and the procedure before the Court

18.The applicant in the main proceedings, EDW, operates in Dresden (Germany) an industrial, gas engine cogeneration power plant (‘EDW’s cogeneration power plant’ or ‘the main installation’). The greenhouse gas emissions permit held by EDW for that installation also covers, as ancillary units, chillers, specifically absorption chillers, which convert heat into cooling without emitting greenhouse gases. (9)

19.EDW’s cogeneration power plant exclusively supplies a factory which manufactures semiconductors belonging to a third party, namely Global Foundries, which is not subject to the ETS (‘Global Foundries’ factory’). It is not in dispute between the parties that the activity of Global Foundries’ factory falls within a sector exposed to a high risk of carbon leakage, (10) pursuant to Decisions 2010/2 and 2014/746.

More specifically, the activity of EDW’s installation (the absorption chillers included) is organised into three stages, the purpose of which is to enable hot, cold and warm water to be exported to Global Foundries’ factory:

–Stage 1: EDW’s cogeneration power plant produces, inter alia, 80 °C hot water. That hot water is, on the one hand, supplied directly to Global Foundries’ factory and, on the other hand, provided to the absorption chillers;

–Stage 2: using the hot water and steam provided by that power plant, the absorption chillers deploy a cooling process in order to supply cold water (at a temperature of 5 °C or 11 °C) to Global Foundries’ factory;

–Stage 3: the absorption chillers also produce 32 °C warm water from the water returned (at a temperature of 11 °C or 17 °C) from the Global Foundries’ factory to those chillers, on the other hand, and from the heat that they release as part of the cooling process, on the other hand. That warm water is likewise supplied to the Global Foundries’ factory. (11)

21.On 19 January 2012, the applicant in the main proceedings filed an application for the free allocation of emission allowances (12) with the Deutsche Emissionshandelsstelle (German Emissions Trading Authority; ‘the DEHSt’). By decision of 17 February 2014, the DEHSt refused to grant it all the allowances requested. Following that refusal, EDW sought the allocation of further allowances. The DEHSt granted that request in part on 28 April 2017.

22.In that connection, the DEHSt took the view that the absorption chillers and EDW’s main installation formed merely one and the same installation, subject to the ETS, and to which a heat benchmark should be applied. (13) On the basis of that assessment, it deducted from the amounts of measurable heat claimed by the applicant in the main proceedings for the purpose of calculating the preliminary number of allowances allocated free of charge (14) the heat imported from Global Foundries’ factory, which is not subject to the ETS (that is to say, the amounts of heat corresponding to the 11 °C or 17 °C flows from that factory and redirected to the absorption chillers to produce warm water as part of stage 3). Furthermore, it refused to allow EDW to benefit from the rules applicable to the sectors or subsectors deemed to be exposed to a ‘significant risk of carbon leakage’ in respect of the amounts of heat provided by its cogeneration power plant to the absorption chillers as part of stage 1. In that regard, it took the view that the cold water produced by those chillers (as part of stage 2) did not come under a sector or subsector deemed to be exposed to a ‘significant risk of carbon leakage’ in accordance with Decision 2010/2.

23.On 1 June 2017, EDW brought an action against the decision partially rejecting its request before the referring court.

24.In that court’s view, the resolution of the dispute brought before it turns, first of all, on whether a national provision which would lead ancillary units, such as the chillers at issue in the main proceedings, which do not emit greenhouse gases, to be included within the confines of the installations subject to the ETS is compatible with Directive 2003/87 and, in particular, with Article 2(1) and Article 3(e) thereof. The referring court states that the question of whether those chillers fall within or outside the confines of EDW’s installation has an effect on the quantity of emission allowances that may be granted to EDW free of charge on a preliminary basis. (15)

25.Next, the referring court asks whether, if that is the case, the corrected eligibility ratio, to which reference is made in the Data Collection Template (16) and which would allow, in the circumstances of the case in the main proceedings, account to be taken of the fact that the heat imported from Global Foundries’ factory is ‘non-eligible’ for the purposes of free allocation, must be applied to the total heat produced in that installation or, on the contrary, whether it is possible to apply it only to the heat flow to which that imported heat can be attributed. (17)

26.Lastly, the referring court asks about the conditions for implementing the rules applicable to the sectors or subsectors deemed to be exposed to a ‘significant risk of carbon leakage’, pursuant to the third subparagraph of Article 6(1) of Decision 2011/278. It seeks, inter alia, to establish whether, in the event that the absorption chillers must be regarded as forming part of EDW’s installation, the supply of cooling to Global Foundries’ factory (as part of stage 2) could be assigned ‘carbon leakage’ status, even though assignment of that status presupposes, in principle, that heat is exported.

In those circumstances, the Verwaltungsgericht Berlin (Administrative Court, Berlin), by decision of 16 December 2019, received at the Court on 24 December 2019, decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:

(1)‘(1) Is Article 2(1) of Directive [2003/87] to be interpreted as meaning that a provision such as that in the first sentence of Paragraph 2(4) of the [TEHG], pursuant to which an installation authorised under the [BImSchG] is also subject to [the ETS] to the extent that the authorisation also covers ancillary facilities that do not emit greenhouse gases, is compatible with that provision of the directive?

(2)If the first question is answered in the affirmative: Does it follow from the rules for calculating the corrected eligibility ratio for heat imported from installations not subject to [the ETS], which are provided for in the [Data Collection Template] drawn up by the European Commission and are prescribed for Member States, that that ratio is applicable to the total amount of heat produced in the installation subject to [the ETS] even if the imported heat can be clearly attributed to one of several identifiable and separately recorded heat flows and/or heat consumptions inside the installation?

(3)Is the third subparagraph of Article 6(1) of [Decision 2011/278] to be interpreted as meaning that the relevant process of the heat benchmark sub-installation for this heat serves a sector or subsector deemed to be exposed to a significant risk of carbon leakage as determined by [Decision 2010/2] where the heat is used to produce cooling and the cooling is consumed by an installation not subject to compulsory emissions trading in a sector or subsector which is exposed to a significant risk of carbon leakage?

Is it relevant for the applicability of the third subparagraph of Article 6(1) of [Decision 2011/278] whether the production of cooling takes place within the boundaries of the installation subject to [the ETS]?’

EDW, the Office, the German Government and the European Commission submitted written observations before the Court.

29.Directive 2003/87 established a greenhouse gas emission allowance trading scheme, which aims to reduce greenhouse gas emissions in the atmosphere to a level that prevents dangerous anthropogenic interference with the climate system, with the ultimate objective of protection of the environment. (18) For a transitional period, Directive 2003/87 provides, in Article 10a thereof, for allowances to be issued free of charge. (19)

30.It is specifically the preliminary allocation of allowances free of charge that is at issue in the dispute in the main proceedings. By its action before the referring court, the applicant in the main proceedings is requesting a greater number of free allowances than that allocated to it on a preliminary basis by the DEHSt. It contests, first, the deduction made to take into account the ‘non-eligibility’ of the heat imported from Global Foundries’ factory (as part of stage 3 described in point 20 of this Opinion) and, secondly, the fact that the heat that is not supplied to Global Foundries’ factory but which is exported from EDW’s cogeneration power plant to the absorption chillers (as part of stage 1) in order to produce the cooling (as part of stage 2) is ineligible for the preferential treatment provided for in respect of the sectors and subsectors exposed to a ‘significant risk of carbon leakage’.

31.In that context, the first question submitted by the referring court concerns whether the scope of Directive 2003/87, as defined in Article 2(1) thereof, precludes a national provision under which an installation is delimited identically in each of the different permits that may be granted to its operator for greenhouse gas emissions and pollution respectively.

32.By that question, that court seeks, in essence, to establish whether, in a case such as that in the main proceedings, the absorption chillers should be regarded as forming part of EDW’s installation (20) under Article 3(e) of Directive 2003/87.

33.The second and third questions are concerned with two factors related to the calculation of the number of emission allowances which EDW is entitled to be allocated free of charge on a preliminary basis: first, the distinction between the amounts of heat that are ‘non-eligible by origin’ and those which are ‘eligible by origin’, which is relevant for the purpose of determining the corrected eligibility ratio, (21) and secondly, the ‘risk of carbon leakage’ factor.

34.With regard to the concept of the ‘risk of carbon leakage’, I note that that concept refers to the risk of the relocation of activities emitting substantial quantities of greenhouse gases, due to the costs associated with the application of the emissions trading scheme, to third countries where there are no such constraints, thereby increasing global emissions and running counter to the climate protection goals pursued by the ETS. (22) Under Article 10a(12) of Directive 2003/87, if an installation belongs to a sector or subsector exposed to a ‘significant risk of carbon leakage’, this means, from the perspective of the allocation made pursuant to that article, that the ‘risk of leakage’ factor is applied to the installation’s historical data that has to be taken into account for the purpose of calculating the preliminary free allocation of allowances, thus enabling a more generous preliminary allocation. (23)

35.Accordingly, where the ‘risk of leakage’ factor is applied to an installation, the allowances allocated to it free of charge on a preliminary basis are not subject to the annual reduction provided for in Article 10a(11) of that directive. The end result is therefore that the number of allowances allocated free of charge on a preliminary basis is higher.

36.Similarly, the question whether, in a case such as that at issue in the main proceedings, the heat imported from a factory such as Global Foundries’ factory (24) should be deducted from the amounts of heat claimed by the applicant in the main proceedings, on the ground that imported heat is ‘non-ineligible’ because it comes from an installation which is not subject to the ETS, has a direct effect on the number of allowances that may be allocated free of charge on a preliminary basis to such an installation.

The corrected eligibility ratio to which reference is made in the referring court’s second question, which corresponds to the ‘amounts of heat eligible by origin’/‘total measurable heat’ ratio, (25) will be a fortiori more favourable to the operator because the eligible amounts of heat (which do not include those imported from installations not subject to the ETS) will be greater in relation to the total measurable heat of the installation.

38.In the present case, the Office states that, for the benchmark period from 2005 to 2008, half of the total measurable heat of EDW’s installation (the absorption chillers included) corresponded to the heat imported from Global Foundries’ factory. Assuming that those chillers are indeed part of EDW’s installation, that heat should be recorded in the installation’s ‘total measurable heat’, but not in the ‘eligible amounts of heat’. The applicable corrected eligibility ratio would then be significantly lower than if account were not to be taken of that heat at all (that is to say, if the absorption chillers were not part of EDW’s installation. All in all, EDW would thus receive fewer free allowances on a preliminary basis.

39.In the remainder of this Opinion, I will consider in turn each of the questions put by the referring court. First of all, with regard to the first question, I will state that the scope of Directive 2003/87, as defined in Article 2(1) thereof, does not preclude, in my view, a national provision under which the confines of the installation are the same for each of the different permits that an operator may be granted in relation to greenhouse gas emissions and pollution. I will explain that that option is, however, subject to the condition that only ancillary units <span class="coj-italic">the activities of which could have an effect on such emissions</span> are taken into account (in addition to the main installation) for the purpose of determining the rights and obligations laid down by the ETS. I will also clarify the different criteria laid down in the definition of the concept of ‘installation’ in Article 3(e) of that directive, whilst making clear that it will be for the referring court to assess whether or not, in the circumstances of the case in the main proceedings, the absorption chillers form part of EDW’s installation.

40.Next, in relation to the second question, on the rules governing the application of the corrected eligibility ratio, I will state that, in my opinion, that ratio must be applied to all of the <span class="coj-italic">measurable heat consumed</span> in the installation that is eligible for free allocation and all of the <span class="coj-italic">measurable heat exported</span> to installations or entities not covered by the ETS, and that it is therefore impossible to attribute it just to one of the various heat flows of the installation in question.

41.Finally, I will answer the third question to the effect that an installation such as EDW’s cannot, in my view, benefit from the ‘risk of carbon leakage’ factor in respect of the amounts of heat used to produce the cold water intended for an installation not subject to the ETS and falling within a sector deemed to be exposed to a ‘significant risk of carbon leakage’ (here: Global Foundries’ factory).

42.As I have stated in point 31 of this Opinion, the first question referred for a preliminary ruling seeks, in essence, to clarify whether Article 2(1) of Directive 2003/87 precludes, as a matter of national law, a greenhouse gas emissions permit from also covering ancillary units which, like EDW’s absorption chillers, do not emit such gases.

43.According to the information provided by the referring court, in view of the noise emissions caused by EDW’s absorption chillers, EDW’s cogeneration power plant and those chillers were regarded by the DEHSt as forming one and the same installation in the greenhouse gas emissions permit held by that operator. This is a result of the integrated approach laid down in German law (26) for the purpose of implementing, on the one hand, Directives 96/61 and 2010/75 concerning pollution prevention and control (which were transposed by the BImSchG into German law) and, on the other hand, Directive 2003/87, which contain an identical definition of the concept of ‘installation’. (27)

44.The German Government, supported by the Office, infers from that single definition that, in order for an ancillary unit to be included within the confines of an installation subject to the ETS, it is sufficient that it produces emissions or pollution of any kind. The fact that the confines of an installation such as that operated, in the circumstances of the case in the main proceedings, by EDW are determined in such a way as to include also activities that could only have an effect on other kinds of emissions or pollution, or even which simply have an effect on the environment in the broad sense, in no way undermines the objectives of Article 2(1) of Directive 2003/87.

45.However, that interpretation cannot be accepted in my view.

46.In that regard, <span class="coj-italic">first</span>, I note that whilst Directive 2010/75 opts, in Article 3(4) thereof, for a relatively broad interpretation of the concept of ‘emission’, (28) that same notion is strictly limited to greenhouse gas emissions in the context of the ETS. (29) In addition, although Directive 2003/87 does refer, in Article 3(e) thereof, to ‘pollution’, it does not contain an autonomous definition of that term. (30)

47.It follows from the foregoing that, although the definition of the concept of ‘installation’ is identical in those three directives (that is to say, in Directive 2003/87, on the one hand, and in Directives 96/61 and 2010/75, on the other hand), it does not appear that the terms ‘emissions’ and ‘pollution’ referred to in that definition should have the same meaning in relation to each of those instruments.

48.Secondly, in so far as I understand it, the sole effect of that provision is that, <span class="coj-italic">in that permit</span>, the installation is physically delimited in the same way as the pollution-related permit. It does not as such require that all parts of the installation thus identified be subsequently taken into account for the purpose of determining the rights and obligations that may be afforded to or imposed upon the operator under the ETS. (38) Furthermore, in that regard, Paragraph 2(2) of the TEHG (which is intended to transpose Directive 2003/87 into German law) (39) provides that only ancillary units that have a physical and operational connection with the other parts of the installation and which <span class="coj-italic">could contribute to the generation of greenhouse gases</span> fall within its scope. (40)

49.When read together, those provisions do not therefore, in my view, in any way preclude the rights and obligations under the ETS from being determined by taking into account (in addition to the main installation) only the ancillary units the activities of which, in accordance with the criterion laid down in point 55 of this Opinion, could have an effect on <span class="coj-italic">greenhouse gas emissions</span>.

50.In those circumstances, I am of the view that Article 2(1) of Directive 2003/87, read in conjunction with Article 3(b) and (e) thereof, is to be interpreted as not precluding a rule of national law which, like the first sentence of Paragraph 2(4) of the TEHG, has the effect of including in the permit relating to an installation subject to the ETS ancillary units that do not themselves emit greenhouse gases. Such ancillary units can, however, be taken into account for the purpose of determining the rights and obligations under the ETS, in particular as regards the free allocation of emission allowances on a preliminary basis, only if, whilst satisfying the other criteria laid down in Article 3(e) of that directive, their activity could have an effect on <span class="coj-italic">greenhouse gas emissions</span>.

51.In the following section of this Opinion, I will provide some guidance as to whether, in the circumstances of the case in the main proceedings, that last criterion is satisfied. I will also clarify the other criteria laid down in that provision so as to enable the referring court to establish whether EDW’s absorption chillers and cogeneration power plant can be regarded as forming one and the same installation.

61.I note that, in the circumstances of the case in the main proceedings, even though the absorption chillers at issue do not themselves emit greenhouse gases but rather merely have an effect on the CO2 emissions from EDW’s cogeneration power plant, the fact that those chillers form part of the main installation will mean that the number of free allowances that may be granted on a preliminary basis to EDW will be lower than the number allocated excluding those chillers. (41)

With regard to the inclusion of ancillary units, Article 3(e) of Directive 2003/87 essentially lays down three criteria:

–the activity of the ancillary unit is directly associated with the activity of the main installation, which is covered by Annex I to that directive (42) (first criterion);

–it has a technical connection with the activities carried out on the site (second criterion); and

–it could have an effect on emissions and pollution (third criterion).

63.With regard to the third criterion, I would point out that, in accordance with point 59 of this Opinion, that criterion must be understood to mean that it must be possible for the activity of the ancillary unit to have an effect on greenhouse gas emissions.

64.The applicant in the main proceedings submits that, in the circumstances of the case in the main proceedings, the activity of the absorption chillers has no effect on the greenhouse gas emissions from its cogeneration power plant. The German Government, the Office and the Commission contend, on the contrary, that the operation of those chillers could have an effect on the emissions from that power plant. The plant releases more greenhouse gases the greater the quantity of heat required for the operation of those chillers and for the production of cold water for the purposes of Global Foundries’ factory (as part of stage 2).

65.Here, it will be for the referring court to assess whether, in the circumstances of the case in the main proceedings, that is actually the case. It would appear to me that, in order to answer that question in the affirmative, it could be sufficient, inter alia, for that court to establish that an increase or a decrease in the absorption chillers’ need for heat leads to an increase or a decrease in the ‘fuel combustion’ activity carried out in EDW’s power plant and, accordingly, to a greater or lesser release of CO2 emissions. The more cold water produced by the absorption chillers, the more heat they will need and the more fuel will have to be used in the cogeneration power plant to produce that heat.

66.As for the criterion relating to the ‘direct association’ (first criterion) and that relating to the ‘technical connection’ (second criterion), I note that, in the judgment in Elektriciteits Produktiemaatschappij Zuid-Nederland EPZ, (43) the Court found inter alia that the direct association between the combustion activity and the coal storage activity at issue was evidenced by the existence of a technical connection between those two activities. I infer from this that, in the Court’s view, there is some degree of overlap between those two criteria.

67.In that connection, I would point out that, in my view, the second criterion relates solely to the technical connections that may exist between the main installation and the ancillary unit, that is to say whether one of the activities which are carried out in one is an integral part of the overall technical process of the other, (44) having regard in particular to how the main installation and the ancillary unit are technically connected and organised in practical terms, (45) and to their technical operation. The first criterion (relating to the ‘direct association’) allows, to my mind, account to be taken of a broader association between the main installation and the ancillary unit. As I see it, the question of whether that first criterion is fulfilled is not confined to a technical assessment, (46) but can also take account of the fact, inter alia, that the activities at issue have a common purpose, in which each participates, and which presupposes that they are part of one and the same installation. (47)

68.The applicant in the main proceedings takes the view that, in the judgment in Elektriciteits Produktiemaatschappij Zuid-Nederland EPZ, (48) the Court concluded that a direct association existed because the part of the installation to be included (a coal park) was essential to the functioning of the main installation (a coal-fired power plant). In the case of the absorption chillers at issue in the case in the main proceedings, it should be held, in its view, that there is no direct association between the activity of those chillers and that of EDW’s cogeneration power plant, since the production of cold water by those chillers is neither necessary for nor relevant to the performance of that power plant’s ‘fuel combustion’ activity.

69.In that connection, I would point out that it does not follow from the judgment in Elektriciteits Produktiemaatschappij Zuid-Nederland EPZ that a direct association could be found to exist only where the activity of the ancillary unit is essential to that of the main installation, and not vice versa (that is to say, where the activity of the main installation is essential to that of the ancillary unit). In addition, the Court does not appear to me to have taken the view in that judgment that only an activity which is ‘essential’ to another can be regarded as fulfilling the ‘direct association’ criterion. (49)

70.In the present case, I am of the view that the referring court could therefore entirely base the ‘direct association’ between the activities of EDW’s cogeneration power plant and those of its chillers on a series of factors, including the fact that the heat produced by that power plant contributes to (or is even necessary for) the functioning of those chillers. It could likewise take the view, as the Commission argues, that those chillers ‘are part of [EDW’s] production process’, or even take into account the fact, highlighted by the Office, that the purpose of EDW’s installation is to supply Global Foundries’ factory with the hot, cold and warm water to meet that factory’s needs, and find that that purpose can be served only if all of that installation’s components, including the chillers, are operating.

71.In the light of all of those considerations, it appears to me, subject to the assessment that it will be for the referring court to conduct, that the activity of the absorption chillers at issue is directly associated with that of EDW’s cogeneration power plant. Provided that there is also a technical connection between those activities (50) and those chillers could have an effect on the CO2 emissions, the chillers could, in my view, be regarded by that court as forming, together with that power plant, one single installation with the meaning of Article 3(e) of Directive 2003/87.

72.If that were so, those chillers would have to be taken into account for the purpose, inter alia, of the free allocation of emission allowances on a preliminary basis. That approach would mean that, as I have stated in point 61 of this Opinion, the number of free allowances allocated on a preliminary basis to EDW would thus be lower than the number it is requesting, which is consistent with the general objective of the ETS of achieving an overall reduction in greenhouse gas emissions. (51)

73.In the following section, which seeks to provide an answer to the second question referred for a preliminary ruling, I will work on the assumption that EDW is operating one single installation, which includes its cogeneration power plant and the absorption chillers at issue in the main proceedings. It is clear from the request made by the referring court that if, conversely, those chillers are not part of EDW’s installation, there is no need to answer the second question.

The corrected eligibility ratio of the Data Collection Template (second question)

74.The second question referred for a preliminary ruling concerns, in essence, whether the corrected eligibility ratio, which in the circumstances of the case in the main proceedings would allow account to be taken of the fact that the amounts of heat imported from Global Foundries’ factory by EDW’s absorption chillers in order to produce warm water as part of stage 3 (described in paragraph 20 of this Opinion) are ‘imported from an installation that is not subject to the ETS’ and therefore non-eligible, (52) can be applied to the 32 °C warm water flow only, as the applicant in the main proceedings claims.

75.In this regard, first, I would observe that, if the absorption chillers are part of EDW’s installation, there can be no doubt that that installation imports heat from an installation which is not subject to the ETS, since those machines use heat from Global Foundries’ factory in order to produce the warm water. The parties are not in dispute as to that assessment. (53)

76.Secondly, I would point out that neither the Commission’s Data Collection Template nor the guidance document adopted by the Commission in connection with that template, (54) both of which refer to the corrected eligibility ratio, is legally binding. (55)

77.However, the Member States are completely entitled to use the template for the purpose of the preliminary free allocation of greenhouse gas emission allowances. In that connection, I would point out that, under the second subparagraph of Article 7(5) of Decision 2011/278, if a Member State requires an operator to use another electronic template or specifies a file format for submission of the data, it is, as a general rule, (56) obliged also to accept the operator’s use of that same template. The Commission’s Data Collection Template can therefore clearly produce legal effects.

78.Thirdly, I note that, in order to determine the preliminary annual number of emission allowances that may be allocated free of charge for a heat benchmark installation, that benchmark must be multiplied by the ‘heat-related historical activity level’. (57) That level refers to the median annual historical import from an installation covered by the ETS, production, or both, during the baseline period, of measurable heat. (58) It is therefore calculated by taking as a starting point the amounts of heat imported from other installations covered by the ETS and/or those produced by the installation in question over the baseline period. (59)

79.I infer from this that, in order to determine the preliminary annual number of emission allowances that may be allocated free of charge for a heat benchmark installation, the amounts of heat imported from installations not covered by the ETS are simply irrelevant.

80.In the case in the main proceedings, the DEHSt is therefore right to seek to exclude the amounts of heat imported from Global Foundries’ factory from the ‘eligible’ amounts of heat of EDW’s installation. Any other interpretation could result, as the Office notes, in an overestimation of the heat entitling emission allowances to be allocated free of charge on a preliminary basis.

81.I would add, in that connection, that the corrected eligibility ratio referred to in the Data Collection Template is specifically intended to avoid such a problem: as I have explained in point 37 of this Opinion, it corresponds to the ‘amounts of heat eligible by origin’/‘total measurable heat’ ratio. The amounts of heat non-eligible by origin are those which, like the heat from Global Foundries’ factory, are imported from installations not covered by the ETS.

82.As to whether that ratio may be applied to a single heat flow within the installation at issue, I note that it is made explicitly clear in the Data Collection Template that that ratio must be applied to the ‘total amount of heat potentially part of the heat benchmark sub-installations’, which corresponds to the total of the measurable heat consumed in the installation and eligible for free allocation, on the one hand, and of the measurable heat exported to installations or entities which are not covered by the ETS, on the other hand. (60) Contrary to what the applicant in the main proceedings proposes, there can therefore be no question of applying that ratio to just one of the heat flows (in the present case, to the 32 °C warm water flow only).

83.I would point out that it is likewise apparent from the Data Collection Template that the calculation of the corrected eligibility ratio already assumes, in itself, that an integrated approach has been adopted which takes account of all heat flows. (61)

84.Finally, it appears to me relevant to point out that, as the Office rightly observes, the application of the corrected eligibility ratio to all heat flows has the advantage of guaranteeing that, in all Member States, account is taken, at installation level (and not just for certain parts of the installation), of the extent to which heat is produced within the installation (which, therefore, creates an entitlement to the free allocation of emission allowances) and the extent to which that heat has been imported from an installation not subject to the ETS (which does not, therefore, create an entitlement to the allocation of such allowances).

85.I therefore propose that the Court answer the second question referred for a preliminary ruling to the effect that the corrected eligibility quota must be applied to the total of the measurable heat consumed in the installation in question which is eligible for free allocation and of the measurable heat exported to installations or entities which are not covered by the ETS, it being impossible to distinguish between the different heat flows.