delivered on 14 November 2024 (1)

Case C‑621/23 P

Luossavaara-Kiirunavaara AB

European Commission

( Appeal – Action for annulment – Environment – System for greenhouse gas emission allowance trading – Free allocation of allowances – Scope of the allocation – Production of iron ore pellets – Applicability of the benchmark for the production of sintered iron ore – Legality of the benchmark for sintered iron ore – Regulatory discretion available to the Commission – Risk of carbon leakage )

1.Directive 2003/87/EC (2) establishes a system for greenhouse gas emission allowance trading intended to pave the way towards reducing greenhouse gas emissions in a cost-effective and economically efficient manner. In order to release greenhouse gases, in practice almost exclusively CO2, installations subject to that system must have emission allowances, which they ‘consume’, as it were, by releasing such gases.

2.According to Article 9 of Directive 2003/87, the quantity by volume of emission allowances in the European Union is capped and to be reduced annually. In certain cases, Member States are to allocate emission allowances to installation operators free of charge. Otherwise, Article 10 provides, operators must purchase the required allowances at auctions organised by the Member States.

3.The present appeal is directed against the judgment of the General Court of 26 July 2023, *Luossavaara-Kiirunavaara* v *Commission* (T‑244/21, EU:T:2023:428). It concerns the free allocation of emission allowances.

4.The background to this dispute is that the appellant, Luossavaara-Kiirunavaara AB (LKAB), produces iron ore pellets from the iron ore it extracts and wishes to receive free emission allowances for those pellets in the same quantity as is allocated to it to for the production of sintered ore. Pellets and sinter are intermediate products occurring at the same stage in the production of basic iron, although significantly fewer greenhouse gases are generated in the production of pellets than in the production of sinter.

5.Up until now, LKAB has received fewer free emission allowances for its pellets because the quantity of that allocation is determined according to rules different from those that govern the allocation for sinter. The allocation for sinter is based on a ‘benchmark’ calculated by reference to the most efficient sinter production installations. The allocation for pellets, on the other hand, is based on the greenhouse gases actually produced by the installation in question (heat and fuel benchmarks). However, LKAB is seeking an allocation based on the benchmark for sinter, which would be significantly higher than the previous allocation for pellets.

6.If LKAB were successful, there would be an incentive to use more pellets in basic iron production, thereby reducing emissions. Although the additional allowances would probably not all be needed for production purposes, on account of the lower emission intensity, the surplus could be sold.

7.However, the existing benchmark for sinter cannot be applied to pellets. A common benchmark for both intermediate products would, after all, have to be based on the emissions associated with pellet production, which is significantly more efficient than sinter production. Under such a provision applicable to both intermediate products, therefore, significantly fewer allowances would be allocated than under the existing benchmark for sinter.

8.The lower emission intensity of pellets can therefore be taken into account only in the context of an examination of the validity of the benchmark for sinter. The extensive regulatory discretion available to the Commission is of decisive importance in this regard.

II. Legal framework

9.The bases for the free allocation of emission allowances are laid down in Article 10a of Directive 2003/87:

‘1. The Commission is empowered to adopt delegated acts in accordance with Article 23 to supplement this Directive concerning the Union-wide and fully harmonised rules for the allocation of allowances referred to in paragraphs 4, 5, 7 and 19 of this Article.

The measures referred to in the first subparagraph shall, to the extent feasible, determine Union-wide *ex-ante* benchmarks so as to ensure that allocation takes place in a manner that provides incentives for reductions in greenhouse gas emissions and energy efficient techniques, by taking account of the most efficient techniques, substitutes, alternative production processes, high efficiency cogeneration, efficient energy recovery of waste gases, use of biomass and capture and storage of CO2, where such facilities are available, and shall not provide incentives to increase emissions. No free allocation shall be made in respect of any electricity production, except for cases falling within Article 10c and electricity produced from waste gases. …

For each sector and subsector, in principle, the benchmark shall be calculated for products rather than for inputs, in order to maximise greenhouse gas emission reductions and energy efficiency savings throughout each production process of the sector or the subsector concerned.

In defining the principles for setting *ex-ante* benchmarks in individual sectors and subsectors, the Commission shall consult the relevant stakeholders, including the sectors and subsectors concerned.

…

…

The Commission shall adopt implementing acts for the purpose of determining the revised benchmark values for free allocation. Those acts shall be in accordance with the delegated acts adopted pursuant to paragraph 1 of this Article and shall comply with the following:

(a) For the period from 2021 to 2025, the benchmark values shall be determined on the basis of information submitted pursuant to Article 11 for the years 2016 and 2017. On the basis of a comparison of those benchmark values with the benchmark values contained in Commission Decision 2011/278/EU …, as adopted on 27 April 2011, the Commission shall determine the annual reduction rate for each benchmark, and shall apply it to the benchmark values applicable in the period from 2013 to 2020 in respect of each year between 2008 and 2023 to determine the benchmark values for the period from 2021 to 2025.

(b) Where the annual reduction rate exceeds 1.6% or is below 0.2%, the benchmark values for the period from 2021 to 2025 shall be the benchmark values applicable in the period from 2013 to 2020 reduced by whichever of those two percentage rates is relevant, in respect of each year between 2008 and 2023.

(c) …’

10.The Commission defined the benchmarks provided for in Article 10a of Directive 2003/87 first in Decision 2011/278/EU (3) and most recently in Delegated Regulation (EU) 2019/331. (4)

11.In recitals 4, 5, 8 and 9 of Decision 2011/278, the Commission explained its approach to setting benchmarks:

‘(4) … In principle, for each product one benchmark should be defined. Where a product is a direct substitute of another product, both should be covered by the same product benchmark and the related product definition.

(5) The Commission considered that setting a benchmark for a product was feasible where, taking into account the complexity of the production processes, product definitions and classifications were available that allow for verification of production data and a uniform application of the product benchmark across the Union for the purposes of allocating emission allowances. No differentiation was made on the basis of geography or on the basis of technologies, raw materials or fuels used, so as not to distort comparative advantages in carbon efficiency across the Union economy, and to enhance harmonisation of the transitional free allocation of emission allowances.

…

(8) For the determination of benchmark values, the Commission has used as a starting point the arithmetic average of the greenhouse gas performance of the 10% most greenhouse gas efficient installations in 2007 and 2008 for which data has been collected. In addition, the Commission has in accordance with Article 10a(1) of Directive 2003/87/EC analysed for all sectors for which a product benchmark is provided for in Annex I, on the basis of additional information received from several sources and on the basis of a dedicated study analysing most efficient techniques and reduction potentials at European and international level, whether these starting points sufficiently reflect the most efficient techniques, substitutes, alternative production processes, high efficiency cogeneration, efficient energy recovery of waste gases, use of biomass and capture and storage of carbon dioxide, where such facilities are available. Data used for determining the benchmark values has been collected from a wide range of sources in order to cover a maximum of installations producing a benchmarked product in the years 2007 and 2008. First, data on the greenhouse gas performance of ETS installations producing benchmarked products has been collected by or on behalf of the respective European sector associations based on defined rules, so-called “sector rule books”. As reference for these rule books, the Commission provided guidance on quality and verification criteria for benchmarking data for the EU-ETS. Second, to complement the data collection by European sector associations, consultants on behalf of the European Commission collected data from installations not covered by industry’s data and also competent authorities of Member States provided data and analyses.

(9) To ensure that the benchmark values are based on correct and compliant data, the Commission, supported by consultants, carried out in-depth compliance checks of the sector rule books as well as plausibility checks of the starting point values derived from the data. As indicated in the guidance on quality and verification, data has been verified to the extent necessary by independent verifiers.’

12.Point 1 of Annex I to Delegated Regulation 2019/331 provided for a product benchmark of 0.171 allowances per tonne for sintered iron ore, which the Commission later reduced to 0.157 allowances per tonne. (5) As a product, sintered ore is described as follows:

‘Agglomerated iron-bearing product containing iron ore fines, fluxes and iron-containing recycling materials with the chemical and physical properties such as the level of basicity, mechanical strength and permeability required to deliver iron and necessary flux materials into iron ore reduction processes. Expressed in tonnes of sintered ore as leaving the sinter plant’.

13.On the processes and emissions covered (system boundaries), point 1 of that Annex I provides:

‘All processes directly or indirectly linked to the process units sinter strand, ignition, feedstock preparation units, hot screening unit, sinter cooling unit, cold screening unit and steam generation unit are included.’

14.Article 10b(1) of Directive 2003/87 provides that, in certain sectors in which there is a risk of carbon leakage, the emission allowances to be granted in accordance with the relevant benchmark are to be allocated entirely free of charge until 2030.

15.Recitals 24 and 25 of Directive 2009/29/EC, (6) by which the abovementioned rule was first introduced, provide as follows in this regard:

‘(24) … In the event that other developed countries and other major emitters of greenhouse gases do not participate in [the Kyoto Protocol], this could lead to an increase in greenhouse gas emissions in third countries where industry would not be subject to comparable carbon constraints (carbon leakage), and at the same time could put certain energy-intensive sectors and subsectors in the Community which are subject to international competition at an economic disadvantage. This could undermine the environmental integrity and benefit of actions by the Community. To address the risk of carbon leakage, the Community should allocate 100% of allowances free of charge to sectors or subsectors meeting the relevant criteria. …

(25) The Commission should therefore review the situation by 30 June 2010, consult with all relevant social partners, and, in the light of the outcome of the international negotiations, submit a report accompanied by any appropriate proposals. In this context, the Commission should identify which energy-intensive industry sectors or subsectors are likely to be subject to carbon leakage by 31 December 2009. It should base its analysis on the assessment of the inability of industries to pass on the cost of required allowances in product prices without significant loss of market share to installations outside the Community which do not take comparable action to reduce their emissions. Energy-intensive industries which are determined to be exposed to a significant risk of carbon leakage could receive a higher amount of free allocation …’.

16.The Commission has recognised both the mining of iron ores and the manufacture of basic iron and steel and of ferro-alloys as sectors in which there is a risk of carbon leakage within the meaning of Article 10b(1) of Directive 2003/87. (7)

III. <b>Factual and historical background</b>

17.To produce basic iron from iron ore, the ore must first be processed into an intermediate product which is then fed into a blast furnace. This intermediate product is partly *sinter*, which is usually produced in the steel plants themselves. It consists of relatively coarse lumps of iron ore and other materials:

18.In some cases, however, the iron ore, immediately after being mined, is processed into *pellets*, which are smaller balls of similar composition.

19.According to LKAB, 2020 saw the production in the European Union of some 29 million tonnes of pellets, including some 25 million in its own installations, and some 77 million tonnes of sinter. (10)

The starting point of the present dispute is the fact that the emission intensity associated with sinter production is around six to seven times higher than that associated with pellet production. (11) This means that the production of sinter triggers the release of correspondingly greater quantities of greenhouse gases – an average of 265 kg of CO2 per tonne of sinter, according to LKAB data. Conversely, LKAB’s production of pellets generates only 29.3 kg CO2 per tonne of pellets. (12)

In order to release CO2 when producing sinter or pellets, the installation operator must have the corresponding emission allowances, which it ‘consumes’, as it were, by releasing CO2. As those participating in the proceedings concur, it is generally the case that those allowances increasingly have to be purchased by auction. The mining of iron ore and the production of basic iron, however, are sectors in which there is a risk of carbon leakage. The fear, therefore, is that these activities will cease to be pursued in the European Union and will be carried on instead in places outside the European Union. Consequently, the emission allowances required for the production of sinter (13) and pellets (14) are in principle to be allocated entirely free of charge until 2030. (15)

The quantity of emission allowances to be allocated follows from a benchmark which the Commission has defined on the basis of the average performance of the most efficient 10% of the installations in a sector or subsector.

The Commission has defined such a benchmark for the production of sintered iron ore. (16) This benchmark is based largely on the performance of sinter installations, although the Commission also included an installation for the combined production of pellets and sinter in a Dutch steel plant. (17)

However, the Commission has not defined a separate benchmark for the production of iron ore pellets. Instead, the quantity of emission allowances to be allocated to the corresponding installations is measured by reference to heat and fuel benchmarks. (18) Under that method, since the production of pellets is less emission-intensive than the production of sinter, pellet producers receive a correspondingly lower, but still sufficient, (19) quantity of free emission allowances than sinter producers, who are subject to the aforementioned benchmark.

In the context of the mining of iron ore, LKAB operates three installations for the production of iron ore pellets and wishes to be allocated emission allowances on the basis of the benchmark for sinter. The Kingdom of Sweden, which owns LKAB, (20) submitted a proposal to that effect to the Commission.

The Commission rejected that proposal in Article 1(3) of the contested Decision 2021/355. (21) In recital 13, the Commission stated:

‘… Sweden proposed that three installations would use different benchmark sub-installations compared to what they used in phase 3 NIMs for production of iron ore pellets. Sweden proposed the use of a sintered ore benchmark sub-installation for the production of iron ore pellets, while in phase 3 heat and fuel benchmarks were used. However, the sintered ore benchmark is defined in Annex I to Delegated Regulation (EU) 2019/331 and the definition of products as well as the definition of processes and emissions covered by that product benchmark are tailored to sinter production and do not include iron ore pellets. Moreover, Article 10a(2) of Directive 2003/87/EC requires an update of the benchmark values for phase 4, and does not provide for any adjustment of the interpretation of the benchmark definitions. The data submitted for the production of iron ore pellets based on a sintered ore sub-installation are therefore to be rejected’.

Supported by Sweden, LKAB brought an action against the contested decision before the General Court, which dismissed that action by the judgment under appeal.

By its appeal, LKAB claims that the Court should:

–set aside the judgment under appeal,

–annul Article 1(3) of Commission Decision 2021/355 of 25 February 2021 concerning national implementation measures for the transitional free allocation of greenhouse gas emission allowances in accordance with Article 11(3) of Directive 2003/87;

–order the Commission to pay the costs of the proceedings.

The Kingdom of Sweden supports the forms of order sought by LKAB.

The European Commission, however, contends that the Court should:

–dismiss the appeal and

–order LKAB to pay the costs of the proceedings.

Written observations have been submitted by Luossavaara-Kiirunavaara AB, the Kingdom of Sweden and the European Commission. In accordance with Article 76(2) of the Rules of Procedure, the Court decided not to hold a hearing because it considers that it has sufficient information to give a ruling.

LKAB’s primary objective in bringing these proceedings is to ensure that the quantity of free emission allowances to be allocated to its installations for the production of iron ore pellets is calculated on the basis of the benchmark for the production of sintered ore. If it achieves that objective, it should ultimately receive for those installations six to seven times as many emission allowances as on the basis of the previously applied heat and fuel benchmark, which should have reflected the emissions actually produced. It is for this reason that LKAB is pursuing its appeal against the contested decision by which the Commission refused to allow the benchmark for sinter to be used.

Unlike in the action before the General Court, however, LKAB is no longer claiming by a separate ground of appeal that the benchmark for sinter production defined in Delegated Regulation 2019/331 is unlawful. LKAB raised that plea in the event that the General Court rejected its line of argument regarding the interpretation of the benchmark. In this case, LKAB claims that the benchmark is not compatible with its legal basis, namely the first subparagraph of Article 10a(1) of Directive 2003/87, inasmuch as, in accordance with that provision, the benchmark must include the production of pellets.

Contrary to the argument put forward by the Commission, (22) the fact that LKAB has refrained from raising a dedicated ground of appeal in this regard does not mean, however, that it has abandoned on appeal its pursuit of the form of order to that effect which it sought in the alternative. On the contrary, all five of the grounds of appeal put forward by LKAB are also expressly directed against the findings, contained in paragraph 166 of the judgment under appeal, by which the General Court dismissed that indirect challenge raised in the alternative against Delegated Regulation 2019/331.

It is true that this approach by LKAB is clumsy and misleading, inasmuch as it invites a temptation to overlook that challenge on appeal. The line of argument put forward by the Commission illustrates that risk. However, the appeal reflects in its formulation the way in which the case is presented in the judgment under appeal. It is only towards the end of that judgment that the General Court dismisses that challenge, in relatively brief terms, by way of a global reference to the previously expressed considerations on the contested decision. This in itself is no reason to disregard the indirect challenge on appeal.

It falls rather to be clarified whether the grounds of appeal reveal an error of law in paragraph 166 of the judgment under appeal that is relevant to the decision to be given. If the judgment under appeal should have to be set aside in this regard, the incidental challenge would regain currency and require a new judicial decision.

I shall therefore begin by examining the grounds of appeal from the point of view of whether they call into question the findings contained in the judgment under appeal in so far as these confirm the legality of refusing to allow the benchmark for sinter to be applied to pellets (see in this regard section A). Next, I shall look at whether those grounds of appeal raise doubts as to the compatibility of the benchmark for sinter with its legal basis (see in this regard section B).

The challenges which LKAB directs against the contested decision as such seek a finding that, in accordance with higher-ranking law, in particular the second subparagraph of Article 10a(1) of Directive 2003/87, the benchmark for the production of sinter must be interpreted as meaning that it covers not only sinter but also pellets.

Unlike before the General Court, however, LKAB is no longer maintaining that pellets are to be regarded as sinter for the purposes of the benchmark. It is not therefore calling into question the rejection of that view in paragraphs 25 and 26 of the judgment under appeal. Neither is LKAB challenging the General Court’s findings to the effect that the benchmark was not designed to include the production of pellets. This is true in particular of the findings in paragraphs 55 to 57 of the judgment under appeal, to the effect that the benchmark would be lower if the production of pellets were taken into account.

However, the latter finding in particular makes it impossible to interpret the benchmark as including the production of pellets. On that interpretation, after all, too many free emission allowances would be allocated to all of the installations covered by that benchmark.

This follows from the fact that, in accordance with the first subparagraph of Article 10a(2) of Directive 2003/87, benchmark values are determined on the basis of the most efficient installations in a sector. On the basis of a combined examination of sinter and pellets, these would be installations for the production of pellets, as the General Court finds in paragraph 57 of the judgment under appeal. Since, by its own account, LKAB releases some 30 kg CO2 per tonne in connection with the production of pellets, (23) the benchmark value, instead of being 0.157 allowances per tonne, would probably only be around 0.03 allowances per tonne.

If the benchmark were also applied to pellets using the allocation values currently laid down, the result of the allocation would therefore be incorrect – in respect of both the production of pellets and the production of sinter. That error would stem from the internal contradiction that the quantity of emission allowances to be allocated was calculated only on the basis of sinter production but those allowances would be allocated for pellet production too, which generates significantly lower emissions.

That contradiction could be avoided only if the Court were also able, by interpretation, to adjust the benchmark value, that is to say the quantity of allowances to be allocated, so as to take into account the production of pellets. However, none of those participating in the proceedings is proposing that the Court do this, and I too consider such an interpretation to be ruled out. Since there is no basis for it in the text of the benchmark, it would be contra legem. Moreover, the Court is not empowered, and does not have the necessary technical and scientific knowledge of the emissions generated and of the method for measuring the benchmark, to make that adjustment reliably. In accordance with Article 10a of Directive 2003/87, that task rightly falls instead to the Commission.

The objectives highlighted by LKAB and Sweden as being pursued by Directive 2003/87, in particular that of reducing the release of greenhouse gases through the use of more efficient processes, do nothing to change this. Not even those objectives make it possible to overcome the contradiction shown to exist between the basis for calculating the benchmark and the inclusion of pellets.

Furthermore, the free allocation of emission allowances is intended to cover the needs of the installations concerned, but not to exceed those needs. This, however, is exactly what would happen as a result of extending the benchmark for sinter to pellets.

This does not necessarily rule out the possibility of interpreting benchmarks so as to include products which may not have been considered when the benchmark was defined. However, benchmarks cannot be applied to products the inclusion of which would have led to a lower benchmark value, because, in that event, the application of the benchmark would lead to the contradictory result just described.

Consequently, LKAB’s argument that the judgment under appeal must be set aside and the contested decision annulled because they are based on an interpretation of the benchmark for sinter that is informed by an error of law, cannot prevail. To this extent, the grounds of appeal are ineffective. Even if LKAB’s reasoning on these grounds were correct, it could not lead to a different interpretation of the benchmark. Below is a more detailed explanation of the foregoing.

By the first ground of appeal, LKAB challenges the General Court’s findings to the effect that pellets are not directly substitutable for sinter.

Those findings of the General Court are based on the confirmation by the General Court, in paragraphs 85 to 88 of the judgment under appeal, of LKAB’s view that the benchmark could also be applied to pellets if these were directly substitutable for sinter. From that point of view, the question as to whether pellets are directly substitutable for sinter was of decisive importance.

In the light of the foregoing considerations, however, the latter findings on the importance of direct substitutability to the interpretation of the benchmark are vitiated by an error of law. Nonetheless, that error of law is not such as to warrant the setting aside of the judgment under appeal, since the General Court ultimately concluded rightly that the benchmark could not be applied to pellets.

Since, for the purposes of interpreting the benchmark, it is immaterial whether pellets are directly substitutable for sinter, the challenges directed by the first ground of appeal against the General Court’s findings in this regard are ineffective, in so far as that ground of appeal concerns the interpretation of the benchmark for sinter.

However, the question of substitutability is certainly of some importance in relation to the validity of the benchmark. (24)

By the second ground of appeal, LKAB claims that, in paragraphs 93 to 99 of the judgment under appeal, the General Court replaced the Commission’s statement of reasons with its own. In this statement, the Commission confined itself to citing the fact that the benchmark is tailored to sinter production, while the General Court makes comments concerning the substitutability of pellets for sinter.

54. However, such substitutability is, as I have said, not decisive from the point of view of the applicability of the benchmark to pellets. Whether the General Court’s comments in this regard deviate from the Commission’s statement of reasons or simply explain it is therefore not relevant to the decision to be given.

3. <i><b>Third ground of appeal</b> – <b>distortion of the clear sense of the evidence</b></i>

55. Neither would any distortion in paragraphs 116 and 117 of the judgment under appeal of the clear sense of the expert opinion submitted by LKAB be relevant to the decision to be given on the question of the application of the benchmark to pellets. After all, that expert opinion likewise concerns the substitutability of pellets for sinter.

56. By the fourth ground of appeal, LKAB reveals a possible contradiction in the judgment under appeal. In paragraph 85 of the judgment under appeal, the General Court sets out the unanimous view of those participating in the proceedings that any direct substitutability of pellets for sinter would have an impact on the scope of the benchmark for sinter. In paragraph 88, the General Court therefore concludes that the Commission must carefully examine the substitutability of iron ore pellets for sintered ore, and states in paragraph 89 that there is no evidence of any such examination.

57. In paragraphs 145 and 146 of the judgment under appeal, however, the General Court finds the absence of any examination of substitutability to be irrelevant, since the refusal to allow the benchmark to be applied to pellets does not constitute a manifest error of assessment.

58. As I have already said, the finding in paragraph 88 of the judgment under appeal is itself vitiated by an error of law, since substitutability would not be capable of rendering the benchmark applicable to pellet production because – as I have already explained – the benchmark value laid down would be too high. Neither, therefore, was the Commission under an obligation in the proceedings for the adoption of the contested decision to examine whether pellets are directly substitutable for sinter.

59. That error of law is not, however, relevant to the decision to be given, since the General Court nonetheless rightly concludes that the benchmark is not applicable to pellets and, again rightly, justifies that conclusion by reference to the aforementioned comments, to which there has been no objection on appeal. It is only the superfluous statement of reasons with respect to the substitutability of pellets for sinter that is erroneous in law.

60. Consequently, this ground of appeal too is ineffective in this regard.

5. <i><b>Fifth ground of appeal</b> – <b>failure to state the reasons for the contested decision</b></i>

61. Finally, the objections raised against the findings concerning the statement of reasons for the contested decision in paragraphs 157 to 159 of the judgment under appeal are also ineffective. Those objections are likewise based on LKAB’s view that the Commission should have given consideration to the direct substitutability of pellets for sinter and the fact that the General Court did not criticise the absence of any such consideration.

62. Here too, however, the fact is that the Commission was under no obligation to consider such matters, because not even direct substitutability would have been capable of justifying the application of the benchmark for sinter to pellets.

6. <i><b>Interim conclusion</b></i>

63. The appeal must therefore be dismissed in so far as it is directed against the General Court’s findings concerning the refusal to allow the benchmark for sintered ore to be applied to iron ore pellets.

64. The grounds of appeal are therefore of interest only in so far as they are intended to show errors of law in the judgment under appeal in relation to the assessment of the legality of the benchmark for sintered ore.

65. LKAB’s interest in bringing legal proceedings in connection with this aspect of the appeal rests on the fact that, if the benchmark were annulled, there would be no legal basis for the contested decision. The Commission might even have to define a new benchmark which includes the production of pellets and then decide accordingly on Sweden’s application that is the subject of the present dispute.

66. The legality of the benchmark must be examined by reference to higher-ranking law, in particular, therefore, by reference to its legal basis, that is to say the first sentence of the second subparagraph of Article 10a(1) of Directive 2003/87. That provision states that, when defining a benchmark, the Commission must take account of, inter alia, substitutes. The third and first grounds of appeal, by which LKAB wishes to show that iron ore pellets are substitutable for sintered ore in the production of basic iron, and that the Commission should therefore have included both intermediate products in a common product benchmark, are linked to that criterion. By the third ground of appeal, LKAB therefore accuses the General Court of having distorted the clear sense of the expert opinion on such substitutability which it submitted (see in this regard section 1). And, by the first ground of appeal, LKAB criticises the General Court’s finding that pellets are not directly substitutable for sinter (see in this regard section 2).

67. It is true that LKAB also directs the other grounds of appeal against paragraph 166 of the judgment under appeal, which concerns the incidental challenge as to the illegality of the benchmark. Nonetheless, the second, the fourth and the fifth ground of appeal are ineffective in this regard, since, by these, LKAB expressly challenges alleged deficiencies in the statement of reasons for, or the legality of, the contested decision as such, rather than the benchmark on which the Commission based the contested decision (see in this regard sections 3 to 5 below).

68. By the third ground of appeal, LKAB claims that, in paragraphs 116 and 117 of the judgment under appeal, the General Court distorted the clear sense of an expert opinion submitted with the application. That expert opinion concerns the question as to whether pellets are substitutable for sinter and is therefore of potential relevance to the legality of the benchmark.

69. In accordance with the second subparagraph of Article 256(1) TFEU and the first paragraph of Article 58 of the Statute of the Court of Justice of the European Union, the appraisal of those facts and the assessment of that evidence by the General Court thus do not, save where the facts and evidence are distorted, constitute a point of law which is subject, as such, to review by the Court of Justice on appeal.

70. A distortion of the clear sense of the evidence is present, however, where, without recourse to new evidence, the assessment of the existing evidence appears to be clearly incorrect, because the General Court manifestly exceeded the limits of a reasonable assessment of that evidence.

71. In paragraphs 116 and 117 of the judgment under appeal, the General Court attributes to the expert opinion the assertion that converting a steel plant from sintered ore to pellets or increasing the proportion of pellets requires test runs and substantial adjustments, as well as preparatory work, including updating internal logistics to a new material flow. In any event, switching from one to the other cannot be ‘by the press of a button’.

72. While in fact the expert opinion itself does not actually expressly state that switching can be done ‘by the press of a button’, the General Court distorts also the basic assertions contained in that document.

73. Thus, in paragraphs 15, 18 and 19 cited by LKAB, the expert opinion states that switching is easy and occurs regularly in most steel plants. Adjustments to the proportions of sinter and pellets occur on a daily basis and these adjustments are no different from the adjustments made when the properties of the iron ore material used for sinter production change. In fact, changes in the properties of the sinter material would lead to adjustments more frequently than changes in connection with pellets. Certain changes could actually be taken into account by entering the new values in a computer system which makes the necessary adjustments automatically.

74. The expert opinion thus asserts that it is relatively easy to introduce ore pellets into the blast furnace in place of sinter. Whether that assertion by the expert opinion is correct is irrelevant to the question as to whether the General Court distorted the content of the expert opinion.

75. The distortion of the clear sense of the expert opinion by the General Court may stem from the fact that it attaches excessive importance to whether pellets are directly substitutable for sinter, as I shall explain below when assessing the first ground of appeal. In that assessment, however, I shall also explain why the distortion in the present case is not such as to warrant the setting aside of the judgment under appeal.

76. The first ground of appeal is of decisive importance to the success of the incidental challenge raised by LKAB. By this ground, LKAB contests the General Court’s findings in paragraphs 69 and 88 of the judgment under appeal, concerning the interpretation of the legal basis of the benchmark (see in this regard section (a)), and in paragraphs 93 to 99, concerning the application of that provision to the definition of the benchmark (see in this regard section (b)). That submission is intended to show that the Commission should have defined a common benchmark for sinter and iron ore pellets, with the result that the definition of a benchmark which covers only sintered ore was unlawful.

(a) <i><b>Interpretation of the first sentence of the second subparagraph of Article 10a(1) of Directive 2003/87</b></i>

77. As regards the interpretation of the legal basis for the benchmark, that is to say the first sentence of the second subparagraph of Article 10a(1) of Directive 2003/87, LKAB contests paragraph 69 of the judgment under appeal. In that paragraph, the General Court confirms the Commission’s position that, when examining whether two products are covered by a common benchmark, it may not take into account only whether the products are substitutable. It must instead take a number of factors into consideration. Conversely, LKAB is of the view that substitutability is of decisive importance.

78. LKAB is right to say that, in accordance with the first sentence of the second subparagraph of Article 10a(1) of Directive 2003/87, the Commission must take account of ‘substitutes’. Whether products are substitutable is therefore an important factor in determining whether they must be covered by a common benchmark. LKAB also rightly notes that that provision does not refer to whether products are directly substitutable, only to substitutes in general.

79. However, the first sentence of the second subparagraph of Article 10a(1) of Directive 2003/87 is a relatively complex provision. It states that the Commission must, <i>to the extent feasible</i>, determine EU-wide <i>ex-ante</i> benchmarks so as to ensure that allocation takes place in a manner that provides incentives for reductions in greenhouse gas emissions and energy efficient techniques. They (the benchmarks) must take account of the most efficient techniques, <i>substitutes</i>, alternative production processes, high efficiency cogeneration, efficient energy recovery of waste gases, use of biomass and capture and storage of CO2, where such facilities are available, and must not provide incentives to increase emissions.

80. The very wording of that provision therefore shows that the Commission must indeed take into account not only substitutes but also other factors, such as the most efficient techniques and alternative production processes. Furthermore, as LKAB itself emphasises in connection with the caveat ‘to the extent feasible’, the purpose of defining benchmarks is to create incentives for energy efficient techniques and the reduction of greenhouse gas emissions.

81. What is more, the assessment necessary when it comes to defining a benchmark must also include the other objectives pursued by Directive 2003/87, such as the safeguarding of economic development and employment and the preservation of the integrity of the internal market and of conditions of competition, as referred to in recitals 5 and 7, although these are not expressly mentioned in the first sentence of the second subparagraph of Article 10a(1), or the provisions of higher-ranking law, in particular fundamental rights such as the principle of equal treatment.

82. This is not altered by recital 4 of Decision 2011/278, which already the Court of Justice and the General Court, in paragraph 86 of the judgment under appeal, have cited. It is true that, in that recital, the Commission had stated that, where a product is a <i>direct substitute</i> of another product, both should be covered by the same product benchmark and the related product definition. However, this is not a provision that would be capable of derogating from the higher-ranking legal basis for Decision 2011/278, that is to say from the first sentence of the second subparagraph of Article 10a(1) of Directive 2003/87. Rather, as the Commission itself submits, that recital serves only as a guideline which the Commission has not put into practice in every case.

83. Contrary to the view expressed by LKAB, the definition of a benchmark therefore presupposes comprehensive consideration of the factors and objectives referred to in the first sentence of the second subparagraph of Article 10a(1) of Directive 2003/87 and of the other objectives pursued by that directive. The provisions of higher-ranking law, such as fundamental rights, must of course not be disregarded either.

84. As the Court of Justice has already held, the Commission has a wide discretion to determine the benchmarks in the course of making this complex assessment. It is, after all, better placed than the Court of Justice to make such an assessment.

According to the Court of Justice, a measure adopted in this area is (substantively) unlawful only if it is manifestly inappropriate. (36)

85.It is against this background that we must assess LKAB’s objections to the finding in paragraph 69 of the judgment under appeal that the Commission is required to achieve the objective of reducing greenhouse gases by rewarding more efficient technologies, referred to in the first sentence of the second subparagraph of Article 10a(1) of Directive 2003/87, only ‘to the extent feasible’. According to the General Court, there is therefore no obligation to achieve a particular result.

86.LKAB submits conversely that the caveat that the Commission must determine the benchmarks ‘to the extent feasible’ has to do only with the question of whether a benchmark is to be determined. The group of products which are substitutable and should therefore be covered by the same benchmark, on the other hand, must not be restricted. In this regard, account is to be taken rather of the objective of creating incentives for reducing greenhouse gas emissions and for energy efficient techniques.

87.That view is unconvincing, however. Because there are so many factors to take into account when defining a benchmark, the tasks of putting together the benchmark and, in particular, determining its scope call for a complex assessment of all the relevant circumstances. That assessment cannot be confined to the question of whether a benchmark should be defined but includes in particular the question of which products a benchmark covers. In this regard, the Commission must also assess whether it is possible to subject products to a common benchmark.

(b) Application of the first sentence of the second subparagraph of Article 10a(1) of Directive 2003/87

88.We must therefore examine in the light of the broad discretion thus shown to be available to the Commission, the second part of the first ground of appeal, which concerns LKAB’s objections to the application of the first sentence of the second subparagraph of Article 10a(1) of Directive 2003/87. LKAB bases those objections primarily on the view that the pellets produced in its installations are a substitute for sinter and on the release of less CO2.

89.The General Court rejected that argument in paragraphs 93 to 99 of the judgment under appeal, which LKAB has contested, and therefore concluded in paragraph 166 that the benchmark was not manifestly incompatible with its legal basis.

90.It is true that LKAB puts forward strong reasons to counter that conclusion. On a comprehensive view of the relevant factors, however, these are not sufficient to support the finding that the definition of the benchmark must be regarded as manifestly inappropriate.

(1) Arguments put forward by LKAB

91.LKAB’s main argument is that the production of sinter indisputably triggers the release of significantly more CO2 than the production of pellets, as noted by the General Court in paragraph 98 of the judgment under appeal.

92.In the case of a common benchmark, therefore, the production of pellets and sinter would qualify for the free allocation of only as many emission allowances as are required for the production of pellets. This would create an incentive to use pellets instead of sinter, which would ultimately fulfil the main objective pursued by Directive 2003/87 of reducing the release of greenhouse gases.

93.Greater use of pellets is also possible in principle, the General Court having recognised in paragraph 94 of the judgment under appeal that, with certain adaptations, iron ore pellets (like sintered ore) can be used to produce steel in a blast furnace. The General Court refers in this regard to similarities (‘ressemblances’). There is therefore also a certain degree of substitutability.

94.What is more, given the already established distortion of the clear sense of the expert opinion submitted by LKAB, it is not inconceivable in my opinion that the General Court exaggerated the differences between sinter and pellets when used in the blast furnace. This proposition is supported by, inter alia, the fact that, in paragraph 97 of the judgment under appeal, the General Court cites a passage from the iron ore report according to which sinter and pellets are comparable in so far as they are used in the same way in the production of crude steel. The Commission relied on that report and on the iron-steel report when it originally defined the benchmark in Decision 2011/278.

95.In the light of those considerations, it seems possible that the Commission could have defined a common benchmark in order to promote the use of pellets as a more efficient technique.

(2) Sufficient basis for the benchmark

96.Given the discretion available to the Commission, however, the fact that the definition of a common benchmark seems possible is not sufficient to cast doubt on the benchmark actually defined, which excludes pellets. Rather, LKAB would have to show that the more narrowly framed benchmark is manifestly inappropriate for attaining the objectives of Directive 2003/87 and, in particular, of the first sentence of the second subparagraph of Article 10a(1).

97.In this regard, it should first be noted that a final decision on how easily pellets can be substituted for sinter when used in the blast furnace cannot be based exclusively on the expert opinion submitted by LKAB and the passage cited from the iron ore report. A much more careful examination of the information presented to the General Court would be required instead. In that examination, the aforementioned iron ore report and the iron-steel report would on the face of it carry more weight than the expert opinion submitted by LKAB. After all, those reports were drawn up independently of the interests of certain producers on behalf of the Commission in preparation for the benchmark. The two reports themselves proposed that pellets should not be included the benchmark.

98.However, such a reassessment of the evidence is unnecessary, the General Court having cited enough other factors to support the Commission’s delimitation of the benchmark.

99.First, according to paragraph 95 of the judgment under appeal, LKAB’s pellets, on the one hand, and sintered ore, on the other, are produced from different ores which are also processed differently. LKAB itself argued before the General Court that its ore is particularly well suited to the production of pellets.

100.The special quality of the Swedish ore is confirmed by information which the iron ore report provides on a pellet production project envisaged in Austria which the General Court does not explicitly mention. According to that information, using the ore mined there would trigger the release of four times more CO2 than producing pellets from LKAB’s Swedish ore.

101.It is true that LKAB takes issue in particular with the proposition that, when it comes to deciding on a common benchmark, account may be taken of the inputs used, and relies on the third subparagraph of Article 10a(1) of Directive 2003/87. According to this provision, the benchmark is to be calculated for products rather than for inputs. However, there is an express reference to the fact that greenhouse gas emission reductions and energy savings must be maximised during all production processes in the sector or subsector concerned. This ensures that all production steps are taken into account in the benchmark. That provision does not, however, rule out the possibility, when the limits of a benchmark are being defined, of also taking into account the inputs of the production processes concerned – in this case the iron ore.

102.Moreover, differences between inputs as regards their properties and availability may also be a reason to treat the processes concerned differently, in accordance with the principle of equality.

103.Secondly, according to paragraphs 96 and 97 of the judgment under appeal, sinter production is an integral part of steel production, since sinter production allows for the processing of a certain form of coke, known as coke breeze, and iron-bearing residues, both of which are present in steel plants. This would not be as readily feasible in the context of the production of pellets.

104.Thirdly, in paragraph 98 of the judgment under appeal, the General Court infers from the fact that the production of sinter generates six to seven times as much CO2 as the production of pellets that a common benchmark might cause a significant imbalance (‘déséquilibre significatif’) between the various installations covered.

105.At first glance, that argument seems contradictory, inasmuch as that imbalance is the very source of the lower emission intensity associated with pellet production. As LKAB and Sweden point out, since the aim of Directive 2003/87 and, in particular, of the second subparagraph of Article 10a(1) is to reduce greenhouse gas emissions, it would seem logical for pellet production to be included in the benchmark as a more efficient technique.

106.However, the concept of ‘imbalance’ expresses other objectives pursued by Directive 2003/87 which the General Court unfortunately does not specify. As the Commission indicates, these are the safeguarding of economic development and employment and the avoidance of carbon leakage to be pursued in accordance with Article 10b.

107.On the basis of those objectives, iron ore mining and the production of basic iron receive free emission allowances at 100% of the quantity determined by the benchmark concerned, in accordance with Article 10b(1) of Directive 2003/87. This is intended to ensure that neither pellet producers nor sinter producers have to purchase emission allowances when using the most efficient methods, and that they do not cease production or relocate it from the European Union to other states on account of the cost of emission allowances. If, however, production were to take place outside the European Union, greenhouse gas emissions, which contribute to climate change, would continue to be released there.

108.A common benchmark for sintered ore and pellets would fall short of the objective of preventing relocation, inasmuch as the production of sinter would henceforth qualify for only a fraction of the emission allowances required. This could ultimately give rise to considerable disadvantages not only for the production of sinter but also for the downstream production of basic iron and steel in the European Union. Whether those disadvantages can be averted by a large-scale or wholesale switch to pellet production remains doubtful, particularly in the light of the significance of the iron ore used.

109.Although LKAB maintains that the aforementioned imbalance can be taken into account not least on the basis of point (b) of the third subparagraph of Article 10a(2) of Directive 2003/87, that provision concerns a quite different scenario. It falls within the context of the reduction of benchmark values on account of the gradual improvement of production processes.

110.In accordance with point (a) of the third subparagraph of Article 10a(2) of Directive 2003/87, such improvements are to be taken into account by a corresponding reduction of the benchmark concerned. Where, however, the improvements are particularly large or particularly small, the extent to which they are taken into account is limited by point (b). Sectors whose improvements are particularly small are not to be rewarded. Instead, the benchmark value is to be reduced by at least 0.2% per year. In the absence of any such improvements, the undertakings concerned must therefore purchase additional emission allowances. Where, on the other hand, the improvements are particularly extensive, the reduction is to be limited to 1.6% per year. Undertakings having achieved greater improvements therefore receive free emission allowances which they do not need and can sell elsewhere.

111.Point (b) of the third subparagraph of Article 10a(2) of Directive 2003/87 does not, however, make it possible to control the risk of an ‘imbalance’ arising from a common benchmark for sinter and pellets.

112.The General Court was therefore right to find ultimately that the refusal to allow a common benchmark for sintered ore and iron ore pellets is not manifestly inappropriate for achieving the objectives of Directive 2003/87 and, in particular, of the first sentence of the second subparagraph of Article 10a(1). The first ground of appeal is therefore unfounded in so far as it is directed against paragraph 166 of the judgment under appeal.

3. Second ground of appeal – the General Court’s own statement of reasons

113.By the second ground of appeal, LKAB claims that, in paragraphs 93 to 99 of the judgment under appeal, the General Court replaced the Commission’s statement of reasons by its own. However, the statement of reasons for the contested decision is not relevant to the legality of the benchmark on which the Commission based the decision. Consequently, this submission is incapable of supporting the success of the incidental challenge and is ineffective in this regard too.

114.The fourth ground of appeal is based on the finding in paragraph 88 of the judgment under appeal that the Commission should have carefully examined the direct substitutability of iron ore pellets for sintered ore when deciding on the application of the benchmark to pellets. However, irrespective of the error of law contained in the finding, it is irrelevant to the examination of whether the benchmark was lawfully defined which examinations the Commission carried out when assessing the applicability of the benchmark. This submission is therefore ineffective in relation to the incidental challenge too.

115.Whether the Commission adequately examined the substitutability of pellets for sinter when defining the benchmark, however, does not form the subject of the present proceedings.

5. Fifth ground of appeal – failure to state the reasons for the contested decision

116.The objections raised against the findings concerning the statement of reasons for the contested decision, contained in paragraphs 157 to 169 of the judgment under appeal, are ineffective in relation to the incidental challenge too. Whether the Commission commented on the substitutability of pellets for sinter in the contested decision has no bearing on the legality of the basis for the decision, that is to say the benchmark.

117.

It should be noted for the sake of completeness that LKAB does not object to the statement of reasons for the benchmark, in particular in the recitals of Decision 2011/278 and in the reports referred to therein.

6. <i><b>Interim conclusion</b></i>

118.Consequently, the appeal is also to be dismissed in so far as it is directed against the General Court’s findings on the legality of the benchmark for sintered iron in paragraph 166 of the judgment under appeal.

119.In accordance with Article 184(2) of the Rules of Procedure, the Court is to make a decision as to the costs where the appeal is well founded and the Court itself gives final judgment in the case. In accordance with Article 138(1), applicable to appeal proceedings pursuant to Article 184(1), the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings.

120.Since LKAB has been entirely unsuccessful in its submissions, and the Commission has applied for costs, LKAB must be ordered to pay its own costs and those incurred by the Commission.

121.In accordance with Article 140(1) of the Rules of Procedure, applicable <i>mutatis mutandis</i> to appeal proceedings pursuant to Article 184(1) of the Rules of Procedure, Member States which have intervened in the proceedings are to bear their own costs. The Kingdom of Sweden must therefore bear its own costs.

VI. <b>Conclusion</b>

122.I therefore propose that the Court should:

(1)Dismiss the appeal;

(2)Order Luossavaara-Kiirunavaara AB to bear its own costs and the costs incurred by the European Commission; and

(3)Order the Kingdom of Sweden to bear its own costs.

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1 Original language: German.

2 Directive of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L 275, p. 32), as amended by Directive (EU) 2018/410 of the European Parliament and of the Council of 14 March 2018 amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, and Decision (EU) 2015/1814 (OJ 2018 L 76, p. 3).

3 Commission Decision of 27 April 2011 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2011 L 130, p. 1).

4 Commission Delegated Regulation of 19 December 2018 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2019 L 59, p. 8).

5 Commission Implementing Regulation (EU) 2021/447 of 12 March 2021 determining revised benchmark values for free allocation of emission allowances for the period from 2021 to 2025 pursuant to Article 10a(2) of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2021 L 87, p. 29).

6 Directive of the European Parliament and of the Council of 23 April 2009 amending Directive 2003/87/EC so as to improve and extend the greenhouse gas emission allowance trading scheme of the Community (OJ 2009 L 140, p. 63).

7 Most recently listed as NACE Codes 0710 and 2410 in point 1 of Annex I to Commission Delegated Decision (EU) 2019/708 of 15 February 2019 supplementing Directive 2003/87/EC of the European Parliament and of the Council concerning the determination of sectors and subsectors deemed at risk of carbon leakage for the period 2021 to 2030 (OJ 2019 L 120, p. 20).

8 Sinter, photo by Borvan53, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons.

9 Pellets, photo by Arnoldius, CC BY-SA 3.0 <https://creativecommons.org/licenses/by-sa/3.0>, via Wikimedia Commons.

10 Paragraph 35 of the application in Case T‑244/21.

11 Ecofys, Fraunhofer and Öko-Institut, November 2009, ‘Sector report for the iron ore industry’, p. 6, cited in paragraph 46 of the judgment under appeal.

12 Paragraph 37 of the application in Case T‑244/21.

13 European Commission, Update of benchmark values for the years 2021 – 2025 of phase 4 of the EU ETS of 12 October 2021 (climate.ec.europa.eu/system/files/2021-10/policy_ets_allowances_bm_curve_factsheets_en.pdf, p. 10, as visited on 26 September 2024).

14 Paragraph 25 of the application in Case T‑244/21.

15 See also to much the same effect paragraph 18 of the application and paragraph 9 of the defence in Case T‑244/21.

16 First in Decision 2011/278, and most recently in Delegated Regulation 2019/331, as updated by Delegated Regulation 2021/447.

17 See judgment of 26 July 2017, <i>ArcelorMittal Atlantique et Lorraine</i> (C‑80/16, EU:C:2017:588, paragraphs 41 and 42).

18 Recital 13 of the contested Commission Decision (EU) 2021/355 of 25 February 2021 concerning national implementation measures for the transitional free allocation of greenhouse gas emission allowances in accordance with Article 11(3) of Directive 2003/87/EC of the European Parliament and of the Council (OJ 2021 L 68, p. 221).

19 Paragraph 25 of the application in Case T‑244/21.

20 lkab.com/en/who-we-are/our-organisation/, as visited on 26 September 2024.

21 Cited in footnote 18.

22 Paragraphs 15 and 18 of the response.

23 See point 20 above.

24 See in this regard point 76 et seq. below.

25 See point 50 above.

26 See point 40 et seq. above.

27 See point 39 above.

28 Judgments of 7 October 2004, <i>Mag Instrument</i> v <i>OHIM</i> (C‑136/02 P, EU:C:2004:592, paragraph 39), and of 10 September 2024, <i>Google and Alphabet</i> v <i>Commission (Google Shopping)</i> (C‑48/22 P, EU:C:2024:726, paragraph 61).

29 Judgments of 18 January 2007, <i>PKK and KNK</i> v <i>Council</i> (C‑229/05 P, EU:C:2007:32, paragraph 37); of 22 November 2007, <i>Sniace</i> v <i>Commission</i> (C‑260/05 P, EU:C:2007:700, paragraph 37); of 17 June 2010, <i>Lafarge</i> v <i>Commission</i> (C‑413/08 P, EU:C:2010:346, paragraph 17); and of 30 May 2024, <i>Hengshi Egypt Fiberglass Fabrics and Jushi Egypt for Fiberglass Industry</i> v <i>Commission</i> (C‑261/23 P, EU:C:2024:440, paragraph 60).

30 Judgments of 4 July 2013, <i>Commission</i> v <i>Aalberts Industries and Others</i> (C‑287/11 P, EU:C:2013:445, paragraph 52), and of 17 October 2019, <i>Alcogroup and Alcodis</i> v <i>Commission</i> (C‑403/18 P, EU:C:2019:870, paragraph 64).

31 Judgment of 22 June 2016, <i>DK Recycling and Roheisen</i> v <i>Commission</i> (C‑540/14 P, EU:C:2016:469, paragraph 49).

32 See judgments of 20 June 2019, <i>ExxonMobil Production Deutschland</i> (C‑682/17, EU:C:2019:518, paragraph 90), and of 3 December 2020, <i>Ingredion Germany</i> (C‑320/19, EU:C:2020:983, paragraph 63).

33 Judgment of 26 July 2017, <i>ArcelorMittal Atlantique et Lorraine</i> (C‑80/16, EU:C:2017:588, paragraph 39).

34 Judgment of 26 July 2017, <i>ArcelorMittal Atlantique et Lorraine</i> (C‑80/16, EU:C:2017:588, paragraph 31 and, in particular on the matter of taking into account the production of pellets, paragraphs 37 and 44).

35 Judgment of 26 July 2017, <i>ArcelorMittal Atlantique et Lorraine</i> (C‑80/16, EU:C:2017:588, paragraph 44).

36 Judgments of 8 September 2016, <i>Borealis and Others</i> (C‑180/15, EU:C:2016:647, paragraph 45), and of 26 July 2017, <i>ArcelorMittal Atlantique et Lorraine</i> (C‑80/16, EU:C:2017:588, paragraph 31).

37 See points 68 to 75 above.

38 Cited in footnote 11, p. 6.

39 Ecofys, Fraunhofer and Öko-Institut, November 2009, ‘Sector report for the iron and steel industry’.

40 Recitals 8 and 9 of Decision 2011/278 and paragraph 41 of the judgment under appeal, as well as the fourth subparagraph of paragraph 1 and the first subparagraph of paragraph 2 of Article 10a of Directive 2003/87.

41 Judgments of 8 September 2016, <i>Borealis and Others</i> (C‑180/15, EU:C:2016:647, paragraph 45), and of 26 July 2017, <i>ArcelorMittal Atlantique et Lorraine</i> (C‑80/16, EU:C:2017:588, paragraph 31).

42 Iron ore report, p. 6, and iron-steel report, p. 10.

43 See also to this effect paragraphs 18 and 21 of the application in Case T‑244/21.

44 Iron ore report, pp. 6 and 7.

45 See judgments of 20 June 2019, <i>ExxonMobil Production Deutschland</i> (C‑682/17, EU:C:2019:518, paragraph 90), and of 3 December 2020, <i>Ingredion Germany</i>

(C‑320/19, EU:C:2020:983, paragraph 63).

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46 Paragraphs 38 and 39 of the response.

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47 See judgment of 22 June 2016, DK Recycling and Roheisen v Commission (C‑540/14 P, EU:C:2016:469, paragraph 49).

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48 See also recitals 24 and 25 of Directive 2009/29.

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49 See points 99 and 100 above.

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50 See point 58 above.

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