European Union: The Impact Of The European NEC Directive On Individual Environmental Permits For Installations Governed By The IPPC Directive

Last Updated: 8 November 2011
Article by Jan Bouckaert and Pieter Vandenheede

Discussion of the judgement pronounced by the Court of Justice on 26 May 2011 (combined cases C-165/09 to C-167/09, inclusive)

As from 2010, national emission ceilings (NECs) based on the European NEC Directive apply for substances including SO2 and NOx. The Dutch government feared it would not be able to meet these emission ceilings, but this did not prevent it from granting a number of permits for the construction and operation of several new power plants, which were subsequently challenged by several environmental groups before the Dutch Council of State.

Consequently, the High Administrative Court ("Afdeling bestuursrechtspraak van de Raad van State") asked the Court of Justice of the European Union whether a permit-issuing authority of an EU Member State may grant a permit for the construction and operation of a new power plant if it involves additional SO2 and NOx emissions (combined cases C-165/09, C-166/09, and C-167/09).

On 16 December 2010 the Attorney-General presented his conclusion to the Court of Justice. Stibbe has already commented this conclusion in a newsletter which can be found here.

On 26 May 2011 the Court of Justice pronounced its judgement. However, the Court did not follow the Attorney-General's conclusion. In particular, the Court of Justice opines that the Member States have a great deal of policy freedom when developing programmes for the gradual reduction of SO2 and NOx emissions, which should allow the national emission ceilings to be met, as envisaged in the NEC Directive. Seemingly, the granting of a permit for the construction and operation of a new power plant cannot seriously jeopardise the meeting of the national emission ceilings. In principle, the national emission ceilings of the NEC Directive do not have any direct effect on a permit level.

  1. The NEC Directive and the IPPC Directive
  2. Preliminary questions
  3. The Court of Justice procedure
  4. Contents of the judgement
  5. Conclusion

1. The NEC Directive and the IPPC Directive

The European Directive on national emission ceilings for certain atmospheric pollutants (the so-called "NEC Directive") sets national emission ceilings for European Member States regarding the emission of several pollutants (sulphur dioxide (SO2), nitrogen oxides (NOx), volatile organic compounds (VOC) and ammonia (NH3)). The national emission ceilings from the NEC Directive are aimed at the Member States and may not be exceeded after 2010. For 2020 and the subsequent years new ceilings will be set. The European Member States must ensure that the national emission ceilings are not exceeded. For this purpose, they must approve and implement national programmes with appropriate and coherent policy options and measures.

In addition, the European Directive on integrated pollution prevention and control (the so-called "IPPC Directive") stipulates that the European Member States, in order to meet a specific environmental quality standard, must include additional conditions in the environmental permits for specific large industrial production installations, if more stringent standards must apply than those feasible with the "best available technologies" (BAT). The IPPC Directive does not expressly stipulate whether the national emission ceilings of the NEC Directive are also covered by the "environmental quality standard" concept and, as such, may cause the environmental permit to impose additional conditions.

2. Preliminary questions

In the Netherlands (and other Member States as well), there was reasonable doubt as to whether the applicable emission ceilings could be met in time (in 2010).

In proceedings before the High Administrative Court a question was asked about the obligation to apply the national emission ceilings on the level of the (individual) environmental permit for electricity production installations. Particularly, within the scope of a dispute concerning the legitimacy of several environmental permits for power plants, it was argued that the Netherlands would not be able to meet the national emission ceilings due to the permits granted. Because the plants would emit SO2 and NOx pollutants, the appellants' position was that the Dutch permit-issuing authority should have refused the environmental permits for the plants or should have at least imposed the most stringent emission standards possible. The appellants' position was that these requirements should go further than the BAT in accordance with the IPPC Directive.

As the proper scope of the obligations from the NEC Directive was unclear, the High Administrative Court submitted questions about the interpretation of this Directive to the Court of Justice. In summary, the questions asked were: (i) which obligations based on the NEC Directive do Member States have when issuing environmental permits in the event of an (impending) risk of the national emission ceilings for SO2 and NOx being exceeded, and (ii) what rights can private persons derive from the NEC Directive if the national emission ceilings for SO2 and NOx are exceeded or are at risk of being exceeded?

3. The Court of Justice procedure

After the parties had argued their positions in their pleadings, the Attorney-General (AG) of the Court of Justice delivered his opinion on 16 December 2010. The AG's opinion is available here. The case was tried on 14 October 2010 and was subsequently deliberated.

On 26 May 2011 the Court of Justice pronounced its judgement, which went against the AG's opinion. The judgement pronounced by the Court of Justice on 26 May 2011 can be found here.

4. Contents of the judgement

The judgement pronounced by the Court of Justice on 26 May 2011 is particularly interesting in several respects, and will undoubtedly generate many comments in legal jurisprudence. The following aspects are of particular importance in practice:

In principle, and also in light of the IPPC Directive, the NEC Directive is not a frame of reference when assessing individual environmental permits

The Court of Justice opines that, when deciding on an environmental permit for an installation in the sense of the IPPC Directive, the national emission ceilings from the NEC Directive must not be taken into consideration. Not only does the IPPC Directive not refer to the national emission ceilings, but the emission ceilings are not covered by the "environmental quality standard" either. The IPPC Directive describes "environmental quality standards" as "all the requirements which must be met at a given time in a specific environmental compartment or a specific part thereof, in accordance with community laws", and have a bearing on the quality properties of the protected elements. This does not include the national emission ceilings because they only refer to the total amount of pollutants which may be emitted into the atmosphere.

In this regard, the Court of Justice also refers to the various objectives of both Directives. On the one hand, the IPPC Directive sets the principles for permits for and the supervision of large industrial installations, based on an integrated approach and the application of the BAT. On the other hand, the NEC Directive is aimed at limiting emissions from any source of acidifying and eutrophying pollutants and of ozone precursors to protect the environment and improve human health, with the final objective of not exceeding the critical levels and the critical loads. The NEC Directive applies a programme-based approach. It gives the Member States significant room to assess the means to be used.

No obligation to refuse an environmental permit, not even if national emission ceilings are exceeded or threatened to be exceeded

The NEC Directive applies only a programme-based approach. That is why the Member States could only make it difficult to achieve the result intended by the NEC Directive if they were to define and implement a set of policy options tolerating or creating a situation which is critical from the viewpoint of the total amount of emissions into the atmosphere by all pollutant sources, and which necessarily jeopardises the compliance with national emission ceilings at the end of 2010. It is the national court's task to make a general assessment, taking into consideration all the policy options and measures defined within the corresponding Member State, in order to determine whether a single source of SO2 and NOx seriously jeopardises the achievement of the result intended by the NEC Directive.

The Court points out that a single source of SO2 and NOx, such as a permit for a power plant, does not seem to seriously jeopardise the result intended by the NEC Directive, i.e. meeting the ceilings. This would certainly apply if the installation in question, as in the present case, were not put into operation before 2012.

The significant margin of appreciation allowed by the NEC Directive to Member States keeps them from encountering restrictions when developing such programmes and thus being obliged to define or refrain from taking specific measures or initiatives for reasons which have no bearing on strategic considerations, in globo weighing the factual circumstances of the case and the private and public interests at stake. Any other conclusion would conflict with the proportionality principle expressly mentioned in the considerations of the NEC Directive.

For that matter, during the transitional period from 27 November 2002 to 31 December 2010, the NEC Directive did not oblige Member States to restrict the granting of permits, let alone to impose specific compensatory measures when granting permits, not even if the national emission ceilings for SO2 and NOx had been exceeded or had been at risk of being exceeded.

Can private persons invoke the NEC Directive in proceedings before the national court?

According to the Court, affected individuals derive from the NEC Directive the right to demand before a national court that a Member State define or plan appropriate and coherent policy options and measures within the scope of national programmes during the transitional period from 27 November 2002 through 31 December 2010. These policy options and measures should suffice in limiting the emissions of the aforesaid pollutants so that the national emission ceilings are met by the end of 2010 at the latest. In addition, the Member States must make the national programmes available to the public and the relevant organisations by means of clear, understandable and easy-to-access information. This can also be enforced before the national court.

Contrary to the AG's opinion, however, the Court does not infer that private persons, based on the stipulations of the NEC Directive, can argue in national proceedings against an environmental permit for an IPPC installation that this permit should not have been granted or should have been limited. Nor do they derive from this Directive the right to demand that the permit is issued in combination with compensatory measures for national emission ceilings which are exceeded or are at risk of being exceeded.

5. Conclusion

The above-mentioned judgement is important for the industry because the AG's opinion was not followed. If it had been followed, it would have significantly hindered the granting of environmental permits for industrial installations governed by the IPPC Directive if the Member State had not met the applicable emission ceiling for one or more pollutants.

With wording that cannot be disputed, the Court concludes that a national emission ceiling that has been exceeded or is at risk of being exceeded does not prevent an environmental permit from being granted for an individual IPPC installation, insofar as this installation, in accordance with the IPPC Directive, meets all the "best practices" (BAT) and does not seriously jeopardise the meeting of the emission ceiling in question.

With this decision, the Court gives the green light for the market introduction of environmentally efficient industrial operators. They should not have to pay the price for the environmental inefficiency of other industries which (may) significantly contribute to the applicable emission ceilings being exceeded, by one or more pollutants (e.g., car traffic). This is not only a good thing for the industry, but also for air quality.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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