C-379/98

PREUSSENELEKTRA

OPINION OF ADVOCATE GENERAL JACOBS delivered on 26 October 2000 1

Table of contents

I — Introduction I-2104 II — The German Stromeinspeisungsgesetz in its successive versions and the Commis- sion's attitude towards that Law I-2105 1.The structure of electricity supply in Germany and the purchase obligation for electricity from renewable sources before entry into force of the Stromeinspei- sungsgesetz 1990 I-2105 2. The Stromeinspeisungsgesetz 1990 I-2106 3.The Stromeinspeisungsgesetz 1998 I-2109 4.Developments after the order for reference was made 1-2112 III — The main proceedings and the questions referred 1-2113 IV — Procedure before the Court I-2117 V —Admissibility I-2119 1. Contrived dispute I-2119 2. Lacunae and errors in the presentation of the factual and legal background . .. I-2122 3. Relevance of the questions I-2123 VI — Question 1: The Stromeinspeisungsgesetz 1998 as State aid I - 2127 1. Financing through State resources as a constitutive element of the concept of State aid under the Court's case-law I - 2129 2. Should the Court reconsider its case-law? I-2134 3. Can the advantages conferred by the StrEG 1998 be regarded as being financed through State resources? I-2139 (a) Potential loss in tax revenue I - 2140 (b) Conversion of private resources into State resources I-2140 (c) Reduced earnings of publicly owned undertakings as State resources I-2142 4. Is the StrEG 1998 a measure equivalent to State aid prohibited by Article 5(2) of the Treaty? I-2145

1 — Original language: English.

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Community law and national constitu- 6. At the first level, a few large undertak- tional law. ings produce the major part of the electri- city consumed in Germany and operate high-voltage networks (320, 220 or 110 kilovolts). The main function of those networks is the transmission of electricity over long distances, the exchange of elec- 4. The main issues in this case are whether tricity with neighbouring networks and the the national proceedings are of a contrived supply of electricity to regional distribu- nature within the meaning of Foglia v tors. Imports and exports of electricity also Novello, 2whether only measures financed take place at that level but in general the through State resources can constitute State supply of electricity to final customers does aid and whether a national measure which not. treats domestic products more favourably than imported products can be justified on environmental grounds.

7. At the second level, around 60 regional electricity distribution undertakings oper- II — The German Stromeinspeisungsge- ate medium-voltage networks (20, 10 or 6 setz in its successive versions and the kilovolts). Those networks serve to take in Commission's attitude towards that Law electricity from the first level, distribute electricity throughout the whole national territory and supply electricity either directly to mainly industrial customers or through low-voltage networks to consu- mers. Some electricity is also produced at that level. 1. The structure of electricity supply in Germany and the purchase obligation for electricity from renewable sources before entry hito force of the Stromeinspeisungs- gesetz 1990

13. That Law obliged public electricity supply undertakings 11. It was considered necessary to support demand in parallel with taking supply-side measures such as subsidies for research and development. Before 1990 the German authorities relied in that regard on national competition law in order to oblige electri- — to purchase all the electricity produced city distributors (monopolists in a given within their area of supply from renew- territory) to purchase electricity from able sources such as wind, water and renewable sources produced in their area sun (hereinafter 'the purchase obliga- of supply. The purchase price to be paid for tion'); 5 that electricity was determined according to the principle of avoidable costs (vermie- dene Kosten).3 Depending on whether the electricity distributor concerned itself pro- duced electricity, the purchase price for — to pay for that electricity a fixed electricity from renewable sources thus minimum purchase price calculated

3 — That policy had been endorsed by Council Recommenda- 4 — BGBL 1990 I, p. 633; the StrEG 1990 entered into force on tion 88/611/EEC of 8 November 1988 to promote coopera- tion between public utilities and auto-producers of 1 January 1991. electricity, OJ 1988 L 335, p. 29. 5 — Paragraph 2 of the StrEG 1990.

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on the basis of the average nationwide Article 93(3) of the EC Treaty (now Arti- sales price for electricity;6 as regards cle 88(3) EC) by letter of 14 August 1990 wind-generated electricity the purchase and thus before its adoption. price was fixed at 90% of the average sales price of electricity supplied by electricity suppliers to final customers 7 (hereinafter 'the minimum price rule').

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previously set at 75%, was raised to 80% ber States. A mere change of the hardship of the average sales price per kilowatthour. clause, as envisaged by the German Parlia- The minimum price for electricity produced ment, 10 would not terminate the distortion from wind remained unchanged at 90%. of competition caused by the Law, since it would merely redistribute the extra costs.

19. In a letter to the German Government of 25 October 1996 following complaints by electricity supply undertakings the Com- mission expressed doubts about the con- tinued compatibility of the Stromeinspei- 21. The Commission therefore proposed a sungsgesetz with the Community State aid number of alternative amendments which rules. The greatest concern was caused by would make the Law compatible with the the calculation of the minimum purchase State aid rules. The German legislature price for electricity generated from wind. could reduce the minimum purchase price for electricity from wind to 75% of the average sales price; it could limit the support mechanism in time and/or accord- ing to electricity production; or it could adopt a rule according to which the pur- chase price was calculated on the basis of avoidable costs.

24. That reform Law contained — among 27. The first sentence of Paragraph 2 lays other important legislative changes — in down the central rule, namely the purchase Paragraph 3(2) the modifications of the obligation at a fixed minimum price: Stromeinspeisungsgesetz 1990 which are the subject-matter of the present proceed- ings. The relevant rules of the Stromein- speisungsgesetz in its amended form (here- inafter 'the Stromeinspeisungsgesetz 1998' or 'the StrEG 1998') may be summarised as follows. 'Electricity supply undertakings which operate a general supply network must purchase the electricity produced within their area of supply from renewable sources and pay for the electricity supplied the price determined according to Paragraph 3.'

25. Paragraph 1 of the StrEG 1998 states under the heading 'scope of application' that the Stromeinspeisungsgesetz governs the purchase and the purchase price of electricity produced from certain specified renewable sources (e.g. water, wind, sun 28. The second, sentence of Paragraph 2 and biomass). A first new element in lays down a new rule concerning so-called comparison with the StrEG 1990 is that off-shore installations ('off-shore Anla- gen'). Electricity produced in an installa- tion situated outside the area of supply of 11 — BGBl. 1998 I, p. 730. an electricity supply undertaking must be 12 — OJ 1997 L 27, p. 20. purchased by a distribution or supply

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30. Paragraph 3 of the StrEG 1998 con- tains unchanged rules for the calculation of the minimum purchase price for electricity from renewable energy sources. As already stated, the minimum price per kilowatthour for electricity produced from wind energy is fixed at 90% of the average sales price per kilowatthour of electricity supplied to final customers. 33. It follows from the first and the second sentence of Paragraph 4(1) that a similar 5% rule applies in favour of the upstream network operator (the so-called 'second 5% ceiling', 'zweiter 5% Deckel'). Where the amount of electricity purchased for 31. Paragraph 4 states in its heading (as which that operator had to pay compensa- before) 'hardship clause'. tion exceeds 5% of its own output, it is itself entitled to ask for compensation from a network operator situated further upstream. Where such an upstream opera- tor does not exist (as will normally be the case) the purchase obligation under Para- 32. Paragraph 4(1) contains a new com- graph 2 will not apply to electricity pro- pensation mechanism, which plays a cen- duced in installations the construction of tral role in the main proceedings. In so far which was not completed before the end of

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the year in which the second 5% ceiling 4(1) of the StrEG 1998). In the Commis- was reached. sion's view it was the German authorities' responsibility to decide whether to notify. The undertakings affected by the StrEG 1998 could defend their interests in 'other appropriate ways'.

34. It appears from documents submitted to the Court that before the adoption of the StrEG 1998 the Commission had asked the German authorities to supply information on the legal and political background to the 37. As regards the minimum purchase price adoption of the amendments to the Stro- for electricity produced from wind, the meinspeisungsgesetz. Commission stated that it was continuing to examine the unchanged rules under the procedural regime for 'existing aid' and that it still did not exclude the possibility of proposing in that respect appropriate mea- sures to the German Government.

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tion of the electricity directive and propo- increase in the purchase price for electricity sals for harmonised rules on electricity from renewable sources under the StrEG from renewable sources. The Commis- 1998, which the German authorities omit- sioner therefore refrained from proposing ted to notify in violation of the Treaty. to his colleagues a formal decision before Since the Commission had doubts whether the German Government established a the increase could be held compatible with report for the German Bundestag on the the common market, it informed the Ger- operation of the Stromeinspeisungsgesetz. man authorities by letter of 17 August As regards the drafting of that report the 1999 of its decision to open the procedure German Government was invited to coop- provided for by the State aid rules of the erate closely with the Commission and to Treaty. 14 discuss extensively in the report the amount of the aid for electricity from renewable sources.

42. On 1 April 2000 the new Gesetz für den Vorrang Erneuerbarer Energien (Law for the priority of renewable energy sources) 15 replaced the Stromeinspeisungs- 4. Developments after the order for refer- gesetz 1998 in its entirety. That new Law is ence was made again based on a purchase obligation at a fixed minimum price, but contains many new features. Most notably the purchase price is no longer linked to the (apparently falling) electricity sales prices but fixed by 39. In response to a written question of the law for each of the different energy sources. Court the Commission gave the following The price for wind-generated electricity for information about developments after the example is fixed at DEM 0.178 per kilo- national court referred its questions to the watthour. Court.

45. The plaintiff in the main proceedings PreussenElektra is one of the undertakings at the first level of the German electricity sector. It operates more than 20 power plants, conventional and nuclear, as well as a maximum-voltage and high-voltage net- work for the transmission of electricity. It 49. The additional costs accruing to Schles- supplies electricity over that system to wag on account of the purchase obligation regional electricity distributors, major town and the minimum price requirement rose utility companies and large industrial from DEM 5.8 million in 1991 to an undertakings. estimated DEM 111.5 million in 1998. Taking into account the sums to be paid by PreussenElektra to Schleswag by virtue of the new compensation mechanism under Paragraph 4(1) of the StrEG 1998 (see next paragraph) Schleswag's additional costs for 1998 are DEM 38 million.

46. The defendant Schleswag Aktienge- sellschaft ('Schleswag') is a regional elec- tricity distributor at the second level. It obtains the electricity needed for its custo- mers in Schleswig-Holstein almost exclu- sively from PreussenElektra. 50. At the end of April 1998 Schleswag's purchases of electricity produced from renewable energy sources reached 5% of 17 —COM(2000) 279 final. the total volume of electricity it had sold

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over the previous year. Pursuant to Para- tra and Schleswag of the facts before it, are graph 4(1) of the StrEG 1998 Schleswag strongly contested by the interveners. 18 invoiced PreussenElektra for the additional costs entailed by the purchase of electricity from renewable energy sources, claiming monthly instalments of DEM 10 million.

55. Schleswag maintains that the payment 53. According to the national court neither had a sound legal basis in Paragraph 4(1) of PreussenElektra nor Schleswag may pass on the StrEG and does not have to be reim- the additional costs created by the Stro- bursed. It agrees with PreussenElektra that meinspeisungsgesetz to final customers. We the StrEG 1998 must be analysed as an are told that it is in law and in fact altered aid scheme within the meaning of impossible to charge higher prices for the first sentence of Article 93(3) of the electricity supplied to final customers. That Treaty. However, the compensation is because the Land Schleswig-Holstein has mechanism in Paragraph 4(1) of the StrEG refused to authorise higher tariffs for 1998 as such cannot be classified as an aid electricity supplied to consumers and measure within the meaning of Article 92. because competitive pressures have It is merely a mechanism to share the increased owing to the ongoing liberalisa- burdens caused by the purchase obligation tion of the electricity market. Those state- ments of the national court, which were based on the presentation by PreussenElek- 18 — See below at paragraphs 85 and 86.

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58. The Landgericht is not sure whether the Stromeinspeisungsgesetz 1998 with its pur­ chase obligation at a fixed minimum price 56. The referring court states in the order and its compensation mechanism can be for reference that if in adopting the Law in classified as State aid within the meaning of issue the German legislature infringed Article 92 of the Treaty. It refers, on the either its obligations in respect of the one hand, to judgments such as Van alteration of existing State aid under Arti­ Tiggele20 and Sloman Neptun,11 which cle 93(3) of the Treaty or the prohibition of suggest that the StrEG 1998 does not measures having equivalent effect to quan­ contain State aid since the economic advan­ titative restrictions on imports under Arti­ tages for producers of electricity from cle 30, the StrEG 1998 must be disapplied renewable sources are financed exclusively and PreussenElektra must be reimbursed. by electricity distributors and upstream network operators and not through State resources. On the other hand, such a narrow interpretation of the concept of State aid would allow Member States easily to circumvent the control mechanisms of

19— Tiiat statement is again strongly contested by the inter­ veners; see below at paragraphs 85 and 87. 57. According to the referring court, as 20 — Case 82/77 Openbaare Ministerie of the Netherlands v regards, first, Article 93(3), the German Vm Tiggele |1978] ECR 25. 21 — Joined Cases C-72/91 and C-73/91 Sloman Neptun v Both authorities notified the StrEG 1990 as State Ziesemer Į1993Į ECR I-887.

'(1) Do the rules on payment and compen- 60. The Landgericht has a further doubt sation for supplies of electricity, laid with regard to the compensation mechan- down in Paragraph 2 or 3 or 4 or in ism contained in Paragraph 4(1) of the Paragraphs 2 to 4 of the [Stromeinspei- StrEG 1998. Even if the purchase obliga- sungsgesetz 1998]... constitute State tion at an elevated minimum price (Para- aid for the purposes of Article 92 of graphs 2 and 3 of the StrEG 1998) con- the EC Treaty? stitutes State aid in favour of the producers of electricity from renewable sources it might be argued that Paragraph 4(1) itself cannot be classified as aid. In that event the Landgericht wishes to know whether the restrictive effects of Article 93(3) apply not only to the aid itself but also to implement- Is Article 92 of the EC Treaty to be ing rules such as Paragraph 4 of the StrEG interpreted as meaning that the under- 1998. lying concept of aid also covers national rules for the benefit of the recipient of the payment, under which the costs entailed are not met, either directly or indirectly, from the public budget but are borne by individual undertakings in a sector, which have a 61. As regards Article 30 of the Treaty, the statutory obligation to purchase at Landgericht considers that the duty to fixed minimum prices, and which are precluded by law and circumstance from passing those costs on to the final 22 — The arguments of the Landgericht will be presented in more detail in paragraph 109 below. consumer?

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Is Article 92 of the EC Treaty to be produced from renewable energy interpreted as meaning that the under- sources at minimum prices and requires lying concept of aid also covers network operators to meet costs national rules which merely govern entailed for no consideration?' the apportionment of the costs between undertakings at the various production levels which have arisen through pur- chasing obligations and minimum prices, where the legislature's approach creates in practice a permanent burden for which the undertakings affected obtain no consideration? IV — Procedure before the Court

69. As regards the question what categories of actors are 'parties' to the main proceed- 67. PreussenElektra maintains that the ings within the meaning of Article 20 of the Land Schleswig-Holstein and Windpark Statute, it must, first, be kept in mind that Reussenköge III were not entitled to submit the legal orders of the Member States name observations to the Court since they were and classify the various participants in only interveners (Nebenintervenienten) in procedures before the national courts in the main proceedings and thus not covered different ways (terminology and classifica- by the concept of 'parties' in Article 20 of tion may also vary within one legal order the Statute. PreussenElektra relies, first, on depending for example on the branch of the the fact that under German law the concept judiciary involved). The opportunity to of 'party' (Partei) to the proceedings does submit observations to the Court should not encompass interveners and, secondly, not however depend on those terminologi- on the Court's case-law.23 cal and formal differences.

1. Contrived dispute

72. It follows a contrario that the Land Schleswig-Holstein and Windpark Reus- senköge III, which have both successfully intervened before the national court, are 'parties' to the main proceedings within the 74. The German Government and the meaning of Article 20 of the Statute and interveners claim that PreussenElektra and were entitled to submit observations to the Schleswag are in agreement over the Court. desired result of the reference, namely a declaration by the Court that the StrEG 1998 is contrary to Community law. That is evidenced by the fact that both parties have lodged several challenges to the StrEG before the German constitutional court. Furthermore, Schleswag is a subsidiary of PreussenElektra. Consequently, PreussenE- lektra could have recovered the sums in V — Admissibility issue by internal measures without litiga- tion before the courts. It follows also that the legal viewpoints adopted by the defen- dant in the main proceedings are ultimately determined by the plaintiff. Finally, Preus- 73. The German Government and the senElektra paid compensation to Schleswag interveners contest the admissibility of the in spite of being convinced of the illegality reference on three grounds. First, the dis- of the Law in issue. Those elements taken pute is contrived and hence, on the basis of together show that PreussenElektra's claim for partial reimbursement of the compen-

25 — Case 181/95, cited in note 23. 26 — Paragraph 6 of the order. 27 — Cases C-104/79 and C-244/80, both cited in note 2.

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75. The Court has held that it may in certain circumstances declare a reference 77. There is admittedly some similarity for a preliminary ruling inadmissible on the between Foglia v Novello and the case ground that Article 177 of the EC Treaty is now before the Court. In the first place, used as a 'procedural device' 29 or an PreussenElektra and Schleswag are in 'artificial expedient' 30 by parties who agreement that the StrEG 1998 violates engage in contrived litigation. The Court Community law. Moreover, in the particu- considered that that was the case where the lar procedural situation of the main action parties to the main proceedings tried to interested third parties such as producers of obtain a ruling that a French tax system for wind-generated electricity were initially liqueur wines was invalid by the expedient precluded from putting forward their legal of proceedings before an Italian court arguments and their version of the factual between two private individuals who were and economic background. in agreement as to the result to be attained and who had inserted a clause in a contract in order to induce the Italian court to give a ruling on the point. 31

78. It follows however from the judgment in Leclerc-Siplec 34 where the parties agreed that the French Law prohibiting the dis- tribution sector from advertising on televi- sion was contrary to Community law and where the main beneficiary of the contested 76. One concern underlying that case-law Law (the French regional press) was not is that it is not the Court's task to deliver involved in the proceedings35 that those advisory opinions on general or hypothe- elements alone do not suffice to make the tical questions, but to assist in the admin- reference inadmissible. It has also to be istration of justice in the Member States in recalled that PreussenElektra and Schles- situations where answers to the questions wag disagree on the consequences for the

main proceedings of a ruling by the Court has already accepted references in cases indicating that the purchase obligation at a where the action was between a parent minimum price is incompatible with Com- company and a subsidiary.38 The degree of munity law. 36 Interested third parties, control which PreussenElektra has over namely the Land Schleswig-Holstein and Schleswag is disputed, but even if it enjoys Windpark Reussenköge III, have in the the degree of control alleged by the inter- meantime intervened in the main proceed- veners, nothing before the Court in the ings and had the opportunity to submit present case suggests that PreussenElektra observations to the Court. 37 made use of its alleged power to determine Schleswag's course of action in order to arrange the present dispute. On the con- trary we are told that PreussenElektra has brought a similar action against a second regional electricity distributor, over which 79. There are, furthermore, two decisive it has no control, and that those parallel differences between the present proceedings proceedings have been suspended pending and Foglia v Novello. On the one hand, judgment in the present proceedings. PreussenElektra and Schleswag contest the validity of a German Law before a German court. Consequently, a central preoccupa- tion of Foglia v Novello, namely to prevent situations in which the courts of one State decide on the validity of the laws of another State and to grant the Member State concerned an adequate forum to defend its law, does not arise in the present case. On the other hand, and perhaps even more importantly, the conflict of interests between PreussenElektra and Schleswag in 81. Finally, I cannot see anything wrong the main proceedings is not the result of the with PreussenElektra's decision to pay the parties' will and of elaborate contractual full May instalment of DEM 10 million arrangements, but the automatic and objec- and to claim back only the comparatively tive consequence of the statutory obligation small sum of DEM 500 000. An undertak- laid down in Paragraph 4(1) of the StrEG ing which is convinced of the incompat- 1998. ibility of a national measure with Commu- nity law may freely decide on its litigation strategy and bring a test-case if it wishes to do so. 3 9 Such a choice is particularly understandable where legal costs are calcu- lated by reference to the sums involved in 80. I accept that the danger of contrived the proceedings. litigation is more acute where one party to the proceedings owns a majority of the shares of the other. None the less the Court 38 — See for example Case 244/78 Umon Lattière Normande v French Dairy Farmers [1979] ECR 2663. 39 — Case 112/80 Diirheck v Hauptzollamt Frankfurt am Mam- Flughafen [1981] ECR 1095, p. 1127 of the Opinion of 36 — Sec above at paragraphs 54 and 55. Advocate General Raschi, and Joined Cases C-332/92, C-333/92 and C-335/92 Eurico Italia and Others (19941 37 — Sec above at paragraphs 64 to 72. ECR I-711, paragraphs 16 and 17 of the itidgment.

85. The interveners also challenge the cor- rectness of two factual statements made by the national court. They claim that, con- trary to what is stated in the order for reference, electricity producers and distri- butors are from both a legal and an economic viewpoint perfectly able to pass 2. Lacunae and errors in the presentation on the additional costs caused by the StrEG of the factual and legal background 1998 to final customers. Furthermore, the Commission has been sufficiently well 'informed' within the meaning of the first sentence of Article 93(3) about all the relevant modifications before the adoption of the StrEG 1998 and Germany has there- fore correctly notified the amendments in 83. The interveners and the German Gov- issue. ernment contend, first, that the referring court has not sufficiently explained on what ground of German civil law Preusse- nElektra can claim reimbursement of the money paid to Schleswag. 86. It appears from replies to written questions put by the Court that there are indeed serious doubts whether Preussen- Elektra and Schleswag are prevented from passing on the supplementary costs to final customers.41 The refusals by the authori- ties of the Land Schleswig-Holstein to 84. It is however for the national court authorise higher tariffs for electricity sup- before which the main action is brought, plied to final consumers, which were and which must bear the responsibility for invoked in order to prove that there were the subsequent judicial decision, to deter- legal impediments to passing on supple- mine in the light of the provisions of its mentary costs, seem to be based on other legal order and the special features of the reasons and do not imply that those case before it the need for a preliminary authorities failed to recognise those supple- ruling in order to deliver judgment. In this case the referring court has set out the reasons why it would be helpful to have the 40 — See, for example, Case C-318/98 Vornasar and Others, judgment of 22 June 2000 ECR I-4785, at paragraphs 27 Court's replies to resolve the reimburse- and 28 of the judgment. ment claim before it and it is not apparent 41 — See also the judgment by the Bundesgerichtshof of 22 October 1996, reproduced in NJW 1997, p. 574, at why those replies would have no bearing p. 578.

87. As regards the issue whether the Ger- man authorities 'informed' the Commission 89. It follows that the alleged lacunae and within the meaning of the first sentence of errors in the order for reference cannot Article 93(3) of the Treaty in 1998 before affect the admissibility of the reference. the planned modifications of the Stromein- speisungsgesetz, the Commission correctly stated at the hearing that the notification under Directive 83/189/EC of 28 March 1983 laying down a procedure for the provision of information in the field of technical standards and regulations, 43 made by the German authorities before 3. Relevance of the questions adoption of the amendments in 1998, cannot replace the specific notification under the first sentence of Article 93(3) of the Treaty. Furthermore it is in my view also questionable whether simple prelimin- 90. As regards the questions on the inter- ary consultations between a government pretation of Articles 92 and 93 of the and the Commission can be analysed as Treaty, the interveners claim that, indepen- containing a proper notification of an dently of the issue whether the StrEG 1998 contains State aid, the standstill obligation under the third sentence of Article 93(3) 42 — StrEG 1998, third sentence of Paragraph 2, above at does not apply and PreussenElektra cannot paragraph 29. 43 — OJ 1983 L 109, p. 8. After several amendments that Directive has in the meantime been replaced by Directive 98/34/EC of 22 June 1998 laying down a procedure for the provision of information in tne field of technical standards 44 — See, for example, Case C-435/97 World Wildhfe Fund and and regulations and of rules on Information Society Others v Autonome Provinz Bozen and Others [1999] services, OJ 1998 L 204, p. 37. ECR I-5613, paragraphs 31 and 32 of the judgment.

96. The German Government claims that 93. As regards the interveners' first argu- the classification of the purchase obligation ment, I consider that it is indeed not yet as State aid cannot influence the main established — supposing the scheme at proceedings since the dispute between issue is to be classified as State aid — PreussenElektra and Schleswag concerns whether the amendments of 1998 were substantial enough to trigger the obliga- tions to notify and to refrain from imple- 45 — See paragraphs 87 and 88.

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not the support mechanism itself but the (around half as expensive as electricity apportionment of the costs of that mechan- from wind under the StrEG 1998) and that ism. it could not accept that offer owing to its obligation to purchase all electricity pro- duced from wind within its area of supply.

102. I continue to believe that the concerns 99. At the hearing Schleswag stated how- which I there expressed are valid where the ever that it had received an offer to purchase electricity from renewable sources produced in Sweden at a purchase price of 46 — Joined Cases C-321/94, C-322/94, C-323/94 and C-324/94 around DEM 0.08 per kilowatthour Pistreand Others [1997] I-2343.

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national measure in issue is applicable products, independently of whether alter- without distinction to domestic and native imports are actually envisaged. Since imported products and where the case the interpretation of Article 30 is in such before the national court concerns not cases relevant for the main proceedings, the imported but domestic products. As Court should reply to the national court's regards such a measure, Article 30 has questions. effects only in so far as it applies to imports, and does not affect the measure in so far as it applies to national pro- ducts. 47 Consequently an interpretation by the Court of Article 30 in a case involving only domestic products is either irrelevant for the outcome of the main proceedings or relevant only by virtue of a national rule prohibiting reverse discrimination. In both cases the Court would be answering a hypothetical question on imported pro- ducts outside its factual context. 104. In any event, even as regards measures applicable without distinction 48 and in other situations where the relevance of the questions for the main proceedings was doubtful, 49 the Court has replied to the questions referred. In doing so it argued mainly that it is solely for the national court before which the dispute has been brought to determine both the need for a preliminary ruling and the relevance of the questions which it submits to the Court. 50

VI — Question 1: The Stromeinspeisungs- through State resources cannot be classified gesetz 1998 as State aid as State aid. A different and therefore wider definition of State aid would bring practi- cally all national legislation regulating the relationship between enterprises within the 106. By its first question the national court scope of the State aid rules and would upset wishes essentially to know whether the the division of competences between the scheme established by the StrEG 1998 Member States and the Community as laid constitutes State aid within the meaning down in the Treaty. The StrEG 1998 merely of Article 92(1) of the Treaty in favour of contains a price-fixing mechanism and the the producers of electricity from renewable ensuing advantages for the producers of energy sources. By splitting its first question electricity from renewable sources are thus into three subquestions the Landgericht financed exclusively through private may have intended to draw the Court's resources. Since the StrEG 1998 has no attention to the special features of the impact on the State budget, it cannot be national measure at issue. considered to be State aid within the meaning of Article 92(1).

107. Under Article 92(1) '... any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort com- petition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the common market'.

compared to the measures under scrutiny in be forgotten that the promotion of produc- Van der Kooy 54 and Ecotrade, 55 on the tion of electricity from renewable sources is one hand, and Commission v France 56 and one of the most important environmental Steinike und Weinlig, 57 on the other hand, objectives of the European Union. 59 where the Court found that State aid was involved. It follows moreover from the function of the State aid rules, the wording of Article 92(1) and certain statements made by the Court that financing through State resources is not an essential element of the concept of aid. If the opposite were to follow from the case-law, the Court 111. At issue in the present case is therefore should reconsider its position in order to only the scope of application of the regime exclude the possibility of Member States for the control of State aid. In other words, circumventing the State aid regime. In any is a Member State which wishes to adopt a event the StrEG 1998 should be caught as a law such as the StrEG 1998 obliged to circumvention measure by Article 5(2) of comply with the procedural obligations of the EC Treaty (now Article 10(2) EC) read Article 93 of the Treaty (e.g. notification in conjunction with Article 92. and standstill), or does that type of legisla- tion fall entirely outside that control regime?

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observations has argued that another con- — Is the StrEG 1998 a measure equivalent stitutive element of the concept of State aid to State aid prohibited by Article 5(2) is lacking. There can indeed be little doubt of the Treaty? that the elevated minimum price for elec- tricity produced from renewable sources combined with the purchase obligation confers a considerable and specific eco- nomic advantage on producers of that type of electricity, thereby distorts competition between the different categories of produ- cers and ultimately affects trade in electri- 1. Financing through State resources as a city between Member States. constitutive element of the concept of State aid under the Court's case-law

114. The phrase 'granted by a Member 113. In the light of those preliminary State or through State resources' in Arti- considerations and the arguments of the cle 92(1) might be read in two different parties I will discuss the following ques- ways. tions:

115. On the one hand, it might be argued that the second alternative aid granted — Is financing through State resources a 'through State resources' covers measures constitutive element of the concept of State aid under the Court's existing financed through public funds, whilst the case-law? first alternative 'aid granted by a Member State' covers all remaining measures which are not financed through State resources. Under that extensive interpretation of Arti- cle 92(1) any measure which confers eco- nomic advantages on specific undertakings, and which is the result of conduct attribu- — Should the Court reconsider that case- table to the State, constitutes State aid law? independently of whether it involves any financial burden for the State.

118. That formula was used for the first time in Van Tiggele 60 which concerned a measure fixing a minimum retail price for gin. The Court followed the Opinion of 119. That principle was arguably con- Advocate General Capotorti and held: firmed in Norddeutsches Vieh- und Fleisch- kontor 62 which concerned the allocation of special tariff quotas for the importation of frozen beef and veal from non-member countries. German legislation determined the allocation of the national quota share between domestic traders. Three traders challenged that legislation inter alia on the 'Whatever definition must be placed on the ground that it constituted State aid in concept of an "aid"... it is clear from the favour of certain other traders. wording [of Article 92(1)] that... a measure characterised by the fixing of minimum 61 — Paragraphs 24 and 25 of the judgment. 62—Joined Cases 213/81, 214/81 and 215/81 norddeutsches 60 — Case 82/77, cited in note 20. Vieh- und Fleischkmitor v Balm [1982] ECR 3583.

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125. The Court did not examine whether or not the grant was in fact financed from State resources. It nevertheless held that the grant constituted State aid and made the following statements:

122. The subsequent judgment in Commis- sion v France 65 caused some uncertainty. In that case a special aid to poor farmers was financed by the operating surplus accumu- 'By virtue of the generality of the terms employed in [Article 92(1)]... any State

63 — Point 5 of the Opinion. 64 — Paragraphs 22 and 24 of the judgment. 66 — Paragraphs 6 to 9 of the judgment. 65 — Case 290/83, cited in note 56. 67 — Under point 3 of the Opinion.

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measure, in so far as it has the effect of 128. Advocate General Darmon suggested according aid in any form whatsoever, may after a thorough discussion of the issue that be assessed on the basis of Article 92.... the origin of the financing of an aid measure was irrelevant. In his view, Arti- cle 92(1) required only that the aid measure was the result of conduct for which a Member State was responsible. 72

127. The law as it currently stands was then formulated in Sloman Neptun. 71 In issue was a measure enabling certain ship- 130. As regards the question whether or ping undertakings flying the German flag to not the advantages arising from the mea- subject seafarers who were nationals of sure in issue were to be viewed as being non-member countries to working condi- granted through State resources, the Court tions and rates of pay less favourable than held that the measure sought not to create those applicable to German nationals. an advantage, which would constitute an additional burden for the State, but only to alter in favour of shipping undertakings the 68 — Paragraphs 13 and 14 of the judgment. framework within which contractual rela- 69 — Cited in note 53, paragraphs 28 and 32 to 38 of the judgment. 70 —Case 57/86 [1988] ECR 2855. paragraph 12 of the judgment and the Opinion of Advocate General Slynn at p. 2867. 72 — See in particular paragraphs 40 to 43 of the Opinion. 71 — Cited in note 21. 73 — Paragraph 19 of the judgment.

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132. Recently, in Ladbroke 79 the Commu- nity Courts examined legislation defining the range of uses to which the French Pari mutuel urbain ('PMU') could put

74 — Paragraphs 20 to 22 of the judgment. 75 — C-189/91, cited in note 51. 76 — Joined Cases C-52/97, C-53/97 and C-54/97, cited in note 133. It follows that under the law as it 51. stands financing through State resources is 77 — Case C-200/97, cited in note 55. a constitutive element of the concept of 78 —Case C-295/97 Piaggio v IFITALIA and Others [19991 State aid. ECR I-3735. 79 — Case C-83/98 P France v Ladbroke Racing and Commis- sion, judgment of 16 May 2000, confirming the judgment of the Court of First Instance in Case T-67/94 Ladbroke Racing v Commission [1998] ECR II-1. 80 — See paragraphs 45 to 51 of the Court's judgment.

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2. Should the Court reconsider its case- That phrase suggests an extensive interpre- law? tation of the concept of aid.

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140. The present case is a perfect illustra- competition between the different cate- tion of such a potentially harmful situation. gories of electricity producers to a greater The StrEG 1998 affects producers of elec- extent than would a simple State subsidy tricity from conventional sources in two financed from the general budget. ways.

143. Thirdly, it has also to be kept in mind that all State revenue is ultimately provided by private individuals through taxes. What- ever the nature and the number of inter- mediate entities, the financial burden of an 141. As competitors they must live with the economic advantage conferred by the State fact that the StrEG 1998 guarantees the on specific undertakings is thus in any producers of electricity from renewable event always borne by individuals and sources a considerable amount of operating traders. 84 aid (the most harmful form of aid). More- over the amount of that operating aid is determined on the basis of the amount of electricity produced and of average sales prices of the previous year (not on the basis of production costs). Producers of electri- 144. It is therefore formalistic to apply the city from renewable sources can thus State aid rules in cases where certain unilaterally increase the aid to which they undertakings are required to pay money are entitled by increasing production and into a State fund whence it is redistributed by reducing production costs. And owing to competitors, 85 and not to apply those to the purchase obligation the producers of rules in cases such as the present where electricity from renewable sources do not affected undertakings have to make direct run the usual risks of overcapacity or price payments to their competitors. fluctuations.

148. In Van Tiggele the measure in issue, fixing a minimum retail price for gin, had different effects because consumers were 146. The Commission expressly invites the free to buy or not to buy gin and could also Court to reconsider its existing case-law in choose between different brands. The view of recent developments in the Com- financial burden was on final consumers. munity legal order and in the light of the The intention was to protect domestic mechanism established by the StrEG 1998. producers against lower cost imports. After the completion of the internal market Therefore the measure infringed Article 30 and with the beginning of monetary Union, of the Treaty. By contrast, under the regime selectively applied aid measures are the last established by the StrEG 1998 the advan- remaining instrument which the Member tage for producers of electricity from States can use to confer competitive advan- renewable sources is financed by competi- tages on their domestic undertakings. On tors and not by the general public. 86 The examination by the Commission those aid undertakings affected are obliged to pur- measures may well be found compatible chase all the electricity produced from with the common market. It is however of renewable sources within their area and paramount importance to subject them to cannot take a free purchase decision. the control mechanisms contained in Arti- Upstream suppliers are also automatically cle 93 of the Treaty which guarantee the obliged to pay compensation. They pay necessary discipline and transparency. In even without receiving anything in return. defining the concept of State aid the Court The purpose of the StrEG 1998 is primarily should thus give more weight to the not to impede imports but to improve the objective of the State aid rules and their competitive position of the producers of overall effectiveness. electricity from renewable sources.

150. I accept that there is some force in the above arguments in favour of an extensive understanding of the concept of State aid. I am none the less of the opinion that financing through State resources is a necessary element of the concept of State 153. Under the alternative reading sug- aid and that the Court should adhere to its gested by the supporters of an extensive current case-law. interpretation of Article 92(1), the second alternative (aid granted through State resources) covers measures financed through public funds, whilst the first alter- native (aid granted by a Member State) covers all remaining measures which are not financed through State resources. Such an understanding of Article 92(1) presup- 151. That is, first, because, even if the poses that the authors of the Treaty put a phrase 'granted by a Member State or concept covering a residual category of through State resources' can be interpreted cases (aid not financed through State in different ways, the reading suggested by resources) before the concept covering the the Court in Sloman Neptun, Kirsammer- normal category of cases. That is neither Hack and Viscido is more natural and the natural nor the usual way to proceed raises fewer consequential problems. when drafting legislation.

152. According to the Court's understand- ing, the first alternative, 'aid granted by a 154. Moreover, in a systematic interpreta- Member State', covers normal aid measures tion of the Treaty, the heading of the financed from public funds and granted section 'Aids granted by States' must be directly by the State. The second alternative intended to cover both alternatives in (aid granted through State resources) cov- Article 92(1) namely 'aid granted by a ers the rarer and residual category of aid Member State' and aid granted 'through

State resources'. Since the wording of the sion protects the interests of the competi- first alternative is almost identical 87 with tors of the aided undertaking and the the wording of that heading, it seems Member States in which those competitors difficult to argue (as the supporters of an are established, 88 the interests of the extensive interpretation must do) that the Member State granting the aid and of the first alternative 'aid granted by a Member aided undertaking who both want the aid State' covers only the residual category of to be implemented as rapidly as possible, 89 State measures which are financed through and the interests of the Member States in private resources. their entirety. 90 By contrast, no rule in the system established by Article 93 addresses the specific problems of undertakings which have to finance the aid granted to other undertakings. If however Arti- cle 92(1) systematically covered measures financed from private resources, one would expect to find in Article 93 rules dealing 155. Secondly, there is a fundamental pro- with their procedural rights and obliga- blem with the teleologicai argument devel- tions. Furthermore, it is difficult to see how oped by the supporters of an extensive a decision by the Commission ordering the reading of Article 92(1). When defining the recovery of unlawful State aid could be objective of the State aid rules they run the implemented where that aid has been paid risk of assuming what has to be proved, by one group of undertakings to another namely that the rules are intended to apply group of undertakings. to all State measures. In the light of the heading of the relevant section and the wording of Article 92(1) it could equally be argued that the State aid rules are intended to protect competition only from State measures which are financed through pub- lic funds and not from all types of State measures. If that is the objective of Arti- cle 92 et seq., 'aid granted by a Member State or through State resources' cannot be 157. A fourth argument in favour of the interpreted as extensively as suggested. Court's solution is that it provides more legal certainty. I do not agree with the interveners and the German Government who claim that the more extensive inter- pretation of Article 92(1) would bring practically all national legislation regulat- ing the relationship between enterprises within the scope of the State aid rules. 156. Thirdly, a systematic argument in Most national legislation of that type favour of the Court's interpretation can be would in any event not constitute State made in connection with the procedural aid because it does not satisfy the require- rules contained in Article 93. That provi-

158. Finally, the danger of the Member States adopting on a large scale support measures for certain domestic undertakings which are financed through private resources, have the same anticompetitive effects as normal State aid and escape the 160. The referring court, PreussenElektra Commission's control, should not be exag- and the Commission argue that the advan- gerated. The undertakings required to tages conferred by the StrEG 1998 on finance such measures will use all legal producers of electricity from renewable and political means at their disposal to sources should be regarded as financed combat the measures in question. In the through State resources. They reach that present case PreussenElektra and Schleswag conclusion on the basis of three alternative have challenged the StrEG 1998 in a lines of reasoning. number of proceedings before the German constitutional court. Moreover a measure which has the same negative effects on 91 — For example Article 30 of the Treaty; see Case 82/77 Openbaar Ministerie of lhe Netherlands v Van Tiggele, competition and intra-Community trade as cited in note 20.

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92 — See Joined Cases C-72/91 and C-73/91 Soman Neptun, cited in note 21, paragraph 21 of the judgment; Case 94 — See, for example, Case C-72/92 Herbert Scharbatke v C-200/97 Ecotrade v AFS, cited in note 55, paragraph 36. Germany [1993] ECR 1-5509, paragraph 18. 93 — Case C-83/98 P France v Ladbroke Racing and Commis- 95 — Case C-83/98 P, cited in note 79, paragraphs 45 to 51 of sion, cited in note 79. the judgment.

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from the accounts of the French Caisse des be accepted then all sums which one person depots et consignations, which the Caisse owes another by virtue of a given law was able to use as if the funds represented would have to be considered to be State were permanently at its disposal, was resources. That seems an impossibly wide therefore covered by the concept of State understanding of the notion. It follows that resources. 96 the private resources to be transferred under the StrEG 1998 are at no time State resources within the meaning of Arti- cle 92(1) of the Treaty.

165. The common denominator of all the relevant cases is however that in one way or another the State exercised control over the resources in question. In the case of para- fiscal charges the money becomes the property of the State before it is redistrib- uted to the aided undertakings. In the case of a waiver of revenue the State renounces sums which it was in principle entitled to claim. State resources within the meaning of Article 92(1) of the Treaty are therefore only resources which are at the disposal of public authorities. 97

168. According to the Commission it fol- lows from the judgments in Ecotrade 98 and Van der Kooy 99 that an aid measure financed by undertakings which are par- tially or entirely owned by the State must be viewed as being financed through State resources within the meaning of Arti- 170. Advocate General Slynn discussed not cle 92(1). The Commission relies on data only whether the tariff had been imposed published in 1996 100and contends that a by the State but also whether State majority of the capital of six of the nine big resources were involved. The Commission undertakings at the first level of the Ger- had held in the contested decision that the man electricity market is owned by the aid was financed through State resources State and that 60% of the shares of all and the applicants had contested that regional electricity suppliers are equally finding. 101 In the Advocate General's view owned by public authorities (in most cases the aid in question was financed through by cities and communes). It follows, in the public funds since the State surrendered its Commission's view, that the purchase obli- share of the profits which would have been gation and the compensation mechanism made by Nederlandse Gasunie had prices established by the StrEG 1998 constitute been higher. 102 State aid at least in so far as they affect undertakings owned by the State. Since the StrEG 1998 does not differentiate between publicly and privately owned undertakings, the Law in its entirety should have been notified.

171. The Court however did not examine whether State resources were involved. It asked only whether the State was respon- sible for fixing the tariff in question. That might be explained by the uncertainty at the time about the state of the law caused 169. In Van der Kooy the Court had to by Commission v France. 103 Whatever the decide whether a preferential tariff apply- reasons, since the Court apparently did not ing to natural gas sold by Nederlandse view financing through State resources as a constitutive element of the concept of State

173. I must confess that I am not entirely sure how to interpret the judgments in those two cases. 106 It is for example not clear whether the Law under examination as such or only its application in a parti- cular case might constitute State aid. Fur- thermore, contrary to what the Commis- 172. Ecotrade 104 and Piaggio 105 both con- sion seems to assume, the Court did not cerned an Italian Law which allowed expressly state that financing of an aid certain insolvent industrial undertakings measure through reduced earnings of State- to be placed under extraordinary adminis- owned undertakings might be viewed as tration and to be granted special protection financing through State resources within from execution by creditors by way of the meaning of Article 92( 1 ) of the Treaty. derogation from the ordinary rules of In order to explain why State resources insolvency. The Court held that the expres- might be involved, the Court mentioned as sion 'aid' necessarily implied advantages potentially affected creditors merely 'public granted directly or indirectly through State classes of creditors', 107 'the State or public resources or constituting an additional bodies' 108 and 'public authorities'. 109 In charge for the State or for bodies desig- my view, therefore the judgments in those nated or established by the State for that cases again provide no clear authority. purpose. In the Court's view, the Italian Law under examination was intended to apply selectively for the benefit of certain undertakings which owed particularly large debts to certain, mainly public, classes of creditors. It was highly likely that the State or public bodies would be among the principal creditors of the undertakings in question. Moreover several other features 174. If Ecotrade and Piaggio are none the of the system established by the Law could less to be interpreted as suggesting that entail an additional burden for the State, financing of a measure through reduced compared to the situation that would have arisen had the usual insolvency rules been applied. On the basis of those indications 106 — See also the comments of Advocate General Ruiz-Jarabo, Opinion in Piaggio, paragraph 30. 107 — Case C-200/97 Ecotrade, cited in note 54, paragraph 38 of the judgment. 104 — Case C-200/97, cited in note 55. 108 — Paragraphs 38 and 41 of the judemennt. 105 — Case C-295/97, cited in note 78. 109 — Paragraphs 41 and 43 of the judgment.

176. In the present case the German Gov- ernment stated, in its reply to a written question of the Court, that currently only two out of eight undertakings at the first 179. It follows that the Commission's argu- level of the German electricity market are ment relying on financing of the aid

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through reduced earnings of publicly tion with Articles 92 and 93 is therefore owned undertakings must be rejected. best dealt with by a teleological extension of the notion of State aid in Article 92(1).

110 — Sec for example Case C-2/91 Meng [19931 ECR I-5751, 111 — Case 290/83, cited in note 56. paragraph 14 of the judgment. 112 — Paragraphs 6 to 9 of the judgment.

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183. It is clear from that judgment that the the reasons indicated above I am not in idea of 'measures equivalent to aid' which favour of such an extensive interpretation. infringe Article 5(2) and can be sanctioned under Article 169 of the Treaty has no foundation in the Treaty.

186. I accordingly conclude that the mechanism established by the StrEG 1998 does not contain State aid within the meaning of Article 92(1) of the Treaty. 184. In the present case the Commission suggests, if I understand its arguments correctly, something slightly different, namely that the StrEG 1998 as a 'measure equivalent to aid' infringes Article 5(2) of the Treaty and that it should be sanctioned under Article 93 by virtue of an extensive interpretation of the concept of aid under Article 92(1). VII — Question 2: The reach of the stand- still obligation in Article 93(3) of the Treaty

189. Given the reply to the first question 192. Both PreussenElektra and Schleswag the second question does not therefore consider that the StrEG 1998 is incompa- arise. tible with Article 30 of the Treaty. In their view, the obligation to purchase a certain amount of electricity produced from renew- able sources in Germany affects their ability to import electricity from other Member States. That restriction on imports cannot, as a directly discriminatory mea- sure within the meaning of the Court's case- law, 113 be justified on environmental VIII — Question 3: The Stromeinspei- grounds. It cannot be justified under Arti- sungsgesetz 1998 as a measure having cle 36 of the Treaty either since the protec- equivalent effect to a quantitative restric- tion of the environment is not included tion on imports among the interests protected by that article. In any event, the StrEG 1998 infringes the principle of proportionality.

1. Preliminary considerations

193. The interveners, the German Govern- ment and the Commission argue essentially 190. By its third question the referring that the measure in issue either does not court wishes to know whether a mechanism restrict intra-Community trade to an appre- such as that established by the StrEG 1998 ciable extent or is justified on grounds of constitutes a quantitative restriction on the protection of the environment or of imports or a measure having equivalent security of electricity supply. effect within the meaning of Article 30 of the Treaty.

191. In the referring court's view, the 194. In view of the suggested reply to the obligation on German network operators first two questions the Court's answer to to purchase electricity produced from the national court's third question may be renewable sources within their area of decisive for the outcome of the main supply might reduce demand for electricity proceedings. Moreover the legal issues produced in other Member States and is therefore to be classified as a measure having equivalent effect to a quantitative 113 —Case 113/80 Commission v Ireland [1981] ECR 1625, restriction on imports. paragraph 11 of the judgment.

195. Unfortunately, however, the issues have not been fully discussed by the parties, and the Court is not fully informed of the facts. Until now the litigation about the validity of the Stromeinspeisungsgesetz has concentrated on its effects either on the undertakings which have to finance the mechanism 114 or on the undertakings competing with the producers of electricity from renewable sources. 115 The national 2. Article 30 of the Treaty court's third question deals by contrast with a third effect of the StrEG 1998, but one hitherto largely neglected, namely its impact on cross-border trade in electricity. Moreover, it is not clear precisely how and to what extent imports of electricity from other Member States are in practice affected by the operation of the StrEG 197. The first point to be made is that the 1998, and in particular for example whe- rules on the free movement of goods apply. ther imports of electricity from renewable Electricity constitutes goods for the pur- resources are technically feasible at all and poses of Title I in Part Three of the EC whether such electricity can be distin- Treaty and thus also for Article 30 which is guished from electricity generated from part of that Title. 116 Furthermore the conventional sources. mechanism established by the StrEG 1998 does not in my view constitute State aid within the meaning of Article 92(1) of the Treaty. On that view the difficult question whether a measure which falls under the State aid rules might nevertheless also be caught by Article 30 of the Treaty 117 does 196. Owing to that lack of argument and not arise. background information the Court might find it necessary to reopen the oral proce- dure in respect of the third question. In the 116 — Case C-393/92 Almelo [1994] ECR1-1477, paragraph 28 of the judgment; Case C-158/94 Commission v Italy alternative it might merely indicate in [1997] ECR 1-5789, paragraphs 14 to 20. 117 — See, on the one hand, Case 74/76 Iannelli v Meroni [1977] ECR 557, paragraphs 10 to 17 of the judgment, Case C-225/91 Matra v Commission [1993] ECR I-3203, paragraph 41; see, on the other hand, Case 249/81 114 — As already stated, PreussenElektra and Schleswag have Commission v Ireland [1982] ECR 4005, paragraph 18, challenged the constitutionality of the Stromeinspeisungs- Case 18/84 Commission v France [1985] ECR 1339, gesetz before the German constitutional court. paragraph 13, Case 103/84 Commission v Italy [1986] 115 — That is the logic behind the referring court's first and ECR 1759, paragraph 19 and Case C-21/88 Du Pont de second question. Nemours Italiana [1990] ECR 889, paragraph 20.

199. I consider however that the purchase obligation at a minimum price as laid down in the StrEG 1998 is to be regarded as a measure having effect equivalent to a 201. According to the Court's case-law quantitative restriction on imports. Article 30 covers all trading rules enacted by Member States which are capable of hindering, directly or indirectly, actually or potentially, intra-Community trade. 119 Any obligation to purchase a certain amount of products from national suppliers limits to that extent the possibility of importing the same product. 120 Even the 200. PreussenElektra and Schleswag con- mere encouragement by the legislature to tend in that respect that the mechanism purchase domestic products must be regar- established by the StrEG 1998 restricts ded as a measure having an effect equiva- imports of electricity in two ways. In the lent to a quantitative restriction on first place, the purchase obligation obliges imports. 121 the network operators in Germany to purchase a certain proportion of their electricity supplies from national producers of electricity from renewable sources and to that extent limits the possibility of import- ing electricity for example from Scandina- via. In that connection Schleswag claims, as already mentioned, 118 that it was offered electricity produced from renewable 202. In the present case Paragraph 1 of the sources in Sweden at a relatively low price StrEG 1998 expressly limits the purchase and that in fact it could not accept that offer owing to its obligation to purchase all the wind-generated electricity produced 119 — Case 8/74 Procurem du Roi v Dassonviìle |1974| ECR 837, paragraph 5 of the judgment. within its area of supply. PreussenElektra 120 — Case 72/83 Campus Oil v Munster for Industry and claims, secondly, that the operation of the Energy [ 1984] ECR 2727, paragraph 16 of the judgment; see also Case C-21/88 Du Pont de Nemours Italiana, cited in note 117, paragraphs 11. 121 — C a s e 249/81 Commission v Ireland, cited in note 117, paragraphs 27 to 29 of the judgment, and Case 103/84 118 — See above at paragraph 99. Commission v Italy, cited in note 117, paragraph 24.

203. The interveners and the German Gov- ernment argue that the electricity from renewable sources which falls under the StrEG 1998 corresponds to only 1% of German electricity consumption. Since the purchase obligation affects only an insig- 3. justification nificant part of the electricity market, intra- Community trade is, in their view, not really affected. 206. The referring court asks only whether a mechanism such as that established by the

124 — See, on the one hand, for example, Case 16/83 Franti [1984] ECR 1299, paragraph 20 of the judgment, Joined Cases 177/82 and 178/82 Van de Haar and Kaveka de Meern [1984] ECR 1797, paragraph 13, Case 269/83 Commission v France [1985] ECR 837, paragraph 10, 204. Under the Court's current case-law it Case 103/84 Commission v Italy, cited in note 117, paragraph 18; see, on the other hand, for example, Case is not clear whether there is a de minimis C-266/96 Corsica Ferries France v Gruppo Antichi Ormeggiatori del Porto di Genova and Others [1998] ECR I-3949, paragraph 31, Case C-44/98 BASF v Präsident des Deutschen Patentamts [1999] ECR I-6269, and by implication Case C-254/98 Schutzverband 122 — See above at paragraph 25. gegen unlauteren Wettbeiverb v TK-Heimdienst Sass, 123 — See above at paragraph 28. judgment of 13 January 2000, paragraph 30.

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'A Member State may, for reasons of security of supply, direct that priority be given to the dispatch of generating installa- tions using indigenous primary energy fuel sources to an extent not exceeding in any 209. In my view, Article 36 cannot be calendar year 15% of the overall primary relied on either in respect of security of energy necessary to produce the electricity supply. The Court admittedly held in consumed in the Member State concerned.' Campus Oil that the aim of ensuring a minimum supply of petroleum products at all times is to be regarded as capable of 125 — Cited in note1 2 . constituting an objective covered by the

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213. Under Article 3(2) of the directive Member States may impose on undertak- ings operating in the electricity sector, in 210. In any event, the measure as it stands the general economic interest, public ser- might be found incompatible with the vice obligations which may relate among second sentence of Article 36 of the Treaty other things to environmental protection. It and the principle of proportionality. It is is however expressly stated that those not clear that the exclusion from the scope obligations must be non-discriminatory. In of the StrEG 1998 of electricity from the present case the purchase obligation renewable sources produced in other Mem- imposed on network operators applies only ber States contributes to the achievement of to electricity produced in Germany. the objective of security of supply. It might therefore constitute arbitrary discrimina- tion against electricity from renewable sources from other Member States.

214. Articles 8(3) and 11(3) entitle Mem- 126 — Case 72/83, cited in note 120, paragraph 35 of the ber States to require transmission system judgment. 127 — Paragraph 27 of the judgment. operators and distribution system operators 128 — Paragraph 34 of the judgment. when dispatching generation installations

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129 — Case 120/78 Reire v Bundesinonopolverwaltung fur 130 — Case 302/86 Commission v Denmark [1988] ECR 4607, Branntwein [1979] ECR 649, paragraph 8 of the paragraph 9 of the judgment. judgment. 131 — See above at paragraph 20.

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energy sources in the internal market are 222. The Commission seeks to rely on the currently being discussed but have not yet Walloon Waste case. 134 It suggests that a been adopted, 132 which means that the similar approach should be followed in the Member States continue to enjoy a degree present case in order to rely on grounds of of freedom in that field. environmental protection.

223. That case concerned a measure which prohibited the storage, tipping, or dumping 220. The second problem is that, as Pre- in Wallonia of waste originating in another ussenElektra correctly contends, it was Member State or in a region of Belgium until recently well-established case-law that other than Wallonia. On the issue whether imperative requirements could not be relied the measure could be justified by impera- on to justify national measures which were tive requirements of environmental protec- not applicable to domestic products and tion the Court reasoned essentially as imported products without distinction. 133 follows.

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connection of waste with its place of be considered as applying without distinc- production the measure in issue could not tion. 136 In Dusseldorp the Court expressly be regarded as discriminatory. 135 left open whether a discriminatory restric- tion of exports could in principle be justified on environmental grounds. 137 Perhaps the most striking case is Aher- Waggon. 138 That case concerned a Ger- man measure making registration of air- craft in Germany conditional upon com- 225. In my view, the reasoning in Walloon pliance with noise limits. That measure did, Waste is flawed and should not be relied on it seems to me, directly discriminate in the present case. The question whether between domestic aircraft and imported or not a measure applies without distinc- aircraft in that aircraft previously registered tion to domestic and imported products is in another Member State could not be from a logical point of view a preliminary registered in Germany even though aircraft and neutral one. Its only function under the of the same construction which had already Court's case-law is to determine which obtained German registration before the grounds of justification are available. I German measure was adopted could retain consider therefore that in assessing whether that registration. The Court held however a measure is directly discriminatory regard without assessing whether the measure was cannot be had to whether the measure is directly discriminatory that a barrier of that appropriate. type could be justified by considerations of public health and environmental protec- tion. 139

229. In view of the fundamental impor- tance for the analysis of Article 30 of the Treaty of the question whether directly discriminatory measures can be justified by imperative requirements, the Court should, 232. Special account must therefore be in my view, clarify its position in order to taken of environmental concerns in inter- provide the necessary legal certainty. preting the Treaty provisions on the free movement of goods. Moreover harm to the environment, even where it does not imme- diately threaten — as it often does — the health and life of humans, animals and plants protected by Article 36 of the Treaty, may pose a more substantial, if longer- term, threat to the ecosystem as a whole. It would be hard to justify, in these circum- stances, giving a lesser degree of protection 230. Two specific reasons might be to the environment than to the interests invoked in favour of a more flexible recognised in trade treaties concluded many approach in respect of the imperative decades ago and taken over into the text of requirement of environmental protection. Article 36 of the EC Treaty, itself In the first place the amendments to the unchanged since it was adopted in 1957. Treaties agreed in Amsterdam show a heightened concern for the environment even though Article 36 itself was not amended. 141

140 — Jan H. Jans, European Environmental Law 2nd ed., 2000, p. 251; see also Peter Oliver, 'Some further reflections on the scope of Articles 28-30 (30-36) EC', Common Market Law Review 1999, p. 783, at pp. 804 to 806. 141 — See, for example, the preamble to the EU Treaty, Article 2 233. Secondly, to hold that environmental EU, Article 2 EC, Article 6 EC, Article 95 EC, Arti- cle 174 EC and Article 175 EC. measures can be justified only where they

235. The Commission contends that the mechanism established by the StrEG 1998 is proportionate since it rectifies environ- 238. I accordingly conclude that a mechan- mental damage, namely the damage caused ism such as that established by the Stro- by gas emissions resulting from conven- meinspeisungsgesetz 1998 must be regar- tional generation of electricity, at source in ded as a measure having effects equivalent accordance with Article 130r(2) of the to a quantitative restriction on imports Treaty. Furthermore, by feeding electricity within the meaning of Article 30 of the from renewable sources into local networks Treaty and is therefore prohibited unless it less electricity is lost through transmission can be justified on the facts on grounds of over long distances. environmental protection.

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OPINION OF MR JACOBS — CASE C-379/98

IX — Conclusion

239. For the above reasons the questions referred should in my opinion be answered as follows:

(1) A measure such as the Stromeinspeisungsgesetz 1998, in obliging privately owned electricity undertakings to purchase electricity from renewable energy sources at a minimum price, does not constitute State aid within the meaning of Article 92(1) of the EC Treaty (now Article 87(1) EC);