INEOS operates a petrochemical plant that incorporates an industrial thermal power plant to provide steam through the combustion of liquid and gaseous waste materials stemming from the manufacturing processes of the site's chemical production facilities.
On January 23, 2012, INEOS applied to the German Emissions Trading Authority for a free allocation of emission allowances, including for process emissions from the combustion of incompletely oxidized carbon from chemical reactions in which the carbon-bearing material participates in the reaction but the primary purpose of which is not heat generation. By decision of February 19, 2014, the German Authority refused to allocate allowances free of charge for process emissions stemming from the combustion of liquid waste, claiming that only gaseous waste is entitled to such emissions according to the German legislation transposing Directive 2003/87/CE, which establishes a scheme for greenhouse gas emission allowance trading within the European Community.
On September 29, 2015, INEOS brought an action against that decision before the Berlin Administrative Court. The company claimed that Article 3(h) of Decision 2011/278 supplementing the Directive does not refer to the physical state of incompletely oxidised carbon and that there is nothing to suggest that the provisions apply solely to waste gases. The Administrative Court of Berlin referred to the European Court of Justice (ECJ) a question regarding the interpretation of Article 3(h) of Commission Decision 2011/278/EU: must it be interpreted as precluding national legislation, such as that at issue in the main proceedings, which excludes greenhouse gas emissions from the combustion of incompletely oxidized carbon in a liquid state from the category of "process emissions sub-installation" which is eligible to the allocation of free allowances?
The ECJ ruled that Article 3(h) of Commission Decision 2011/278/EU does not preclude national legislation that excludes greenhouse gas emissions from the combustion of incompletely oxidized carbon in a liquid state from the concept of "process emissions sub-installation."