EU May Win Challenge Over Latvia Carbon Cap, EU Court Aide Says

Latvia’s court victory against stricter European Union limits on 2008-2012 carbon-dioxide emissions should be overturned, an adviser to the EU’s highest court said.

The earlier ruling in favor of Latvia should be re-examined because it’s legally incorrect, Juliane Kokott, an advocate general at the EU Court of Justice in Luxembourg, said in a non-binding opinion today. The court follows such advice in a majority of cases.

The European Commission is appealing a ruling by the EU’s second-highest court, which overturned the regulator’s 2007 decision on the carbon limits because it missed a three-month deadline to respond to Latvia’s own plan. The Baltic country challenged the commission decision to cut the average annual limit for carbon-dioxide emissions in Latvia to 3.43 million metric tons from the 6.25 million tons proposed by the government.

The lower EU court in March 2011 backed Latvia’s argument that the changes to the plan submitted by the country became valid after the commission failed to respond within a three-month time limit. Kokott, one of the EU top court’s legal advisers, said today that a country “can’t just assume” that its plan is valid without having received the commission’s agreement.

“If a member state refuses to challenge an initial decision rejecting its plan, and then presents a new plan which is clearly incompatible with the first decision, it can’t just assume the commission will back this plan without objections,” said Kokott. In such a case, a deadline of three months can be “too tight.”

Permit Glut

The price of EU carbon allowances slumped to a record low of 2.81 euros last week, losing 91 percent from its highest level in April 2006, amid a glut of permits caused by an economic crisis. Under EU law, unused allowances from the trading period that lasted through last year can be carried over to the current phase in the carbon market, which started this year and will end in 2020.

The Luxembourg-based EU General Court, the bloc’s second-highest, in 2009 ruled in favor of similar appeals by Poland and Estonia in the first of a series of challenges to commission decisions on national emissions plans.

The EU’s top court last year rejected the regulator’s appeals in those cases, upholding the lower court’s decision that the commission had “exceeded its powers by imposing on Poland and Estonia a ceiling on greenhouse gas allowances.”

The case is: C-267/11 P, Commission v Latvia.

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