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Independent expert casts doubts on whether the Commission’s GO trade proposal is legally robust

29.05.2008

A legal opinion from the University of Cambridge, commissioned by the European Wind Energy Association (EWEA), confirms doubts on the legal validity of the European Commission’s Guarantees of Origin (GO) mechanism. The GO mechanism is a key part of the Commission’s proposed new directive on renewable energy, currently under discussion in the European Council and by the European Parliament’s ITRE Committee.

In its draft Renewable Energy Directive, the European Commission proposed that Member States and private parties be able to engage in a virtual trade in Guarantees of Origin (GO). This was intended to provide flexibility in reaching the 20% renewables target. To protect Member States’ renewable policies and support systems, the proposal enables Member States to limit GO trade by companies.

However, serious concerns exist as to whether this regulation of GO trade is compatible with the EU Treaty, although the Commission continues to maintain that its proposal is legally sound. The European Wind Energy Association (EWEA) therefore made an official request to the Commission to see its legal opinion on the matter(1). The Commission failed to make its legal opinion available. EWEA has therefore published a legal opinion on the issue from the University of Cambridge, which concludes that “some doubts exist, whether the provisions given in the proposed directive to limit trade at installation level are sufficient and legally robust”(2).

EWEA’s legal opinion argues that the EU Treaty would protect the rights of private parties to trade GO to other private parties – rights “enforceable in a national court” against attempts to restrict such trade.

“For EWEA, it is essential that Member States are able to regulate GO trade in order to protect and maintain control of national support mechanisms and safeguard market stability: crucial conditions for meeting the 20% target”, said Christian Kjaer, EWEA Chief Executive.

EWEA supports the discussions in the Council and European Parliament on replacing the Commission’s ‘opt-out’ GO system with ‘opt-in’ mechanisms such as the statistical transfer of surplus renewable energy between Member States, target accounting certificates, renewables projects shared between Member States and ‘joint target compliance’ agreements. Such mechanisms would improve flexibility and be compatible with the internal market.

Read EWEA’s briefing for MEPs on Flexibility and Guarantees of Origin in the Directive on the Directive on the promotion of the use of renewable energy sources.

For more information on EWEA, please contact Justin Wilkes, Tel: +32 2 400 10 27.

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1: A request was made by EWEA under Regulation 1049/2001 on 10/04/2008, and registered on 21/04/2008 (ref. GESTDEM n° 2178/2008) – initiating the 15 working days deadline which the Commission ignored. EWEA therefore made a ‘confirmatory application’ on 22/05/08.

2: Angus Johnston - University Lecturer in Law, Faculty of Law, University of Cambridge.

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