OPINION OF ADVOCATE GENERAL
CAMPOS SÁNCHEZ-BORDONA
delivered on 15 November 2016 (1)
Case C‑4/16
J.D.
v
Prezes Urzędu Regulacji Energetyki
(Request for a preliminary ruling
from the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw, Poland))
(Environment — Directive 2009/28/EC — Renewable energy sources — Hydropower — Concept — Energy produced by a hydroelectric power station located at the point of discharge of waste water from another plant)
1. Does ‘energy from renewable sources’, within the meaning of Directive 2009/28/EC, (2) include energy produced by a hydroelectric power station which uses the waste water discharged by a third party not involved in electricity production? That, in essence, is the question put to the Court of Justice by the referring court, which is unsure whether this term is restricted to energy obtained from the ‘natural’ downward flow of surface waters.
2. In this Opinion I will be arguing that it can be inferred from both the terms of Directive 2009/28 and from its objectives that it is immaterial whether the course taken by the water whose downward flow is used in electricity generation is a natural or an artificial one, provided that the water does not come from pumping stations.
I – Legislative framework
A – EU law
1. Directive 2009/28
3. Recital 1 states:
‘The control of European energy consumption and the increased use of energy from renewable sources, together with energy savings and increased energy efficiency, constitute important parts of the package of measures needed to reduce greenhouse gas emissions … Those factors also have an important part to play in promoting the security of energy supply, promoting technological development and innovation and providing opportunities for employment and regional development, especially in rural and isolated areas.’
4. According to recital 30:
‘In calculating the contribution of hydropower and wind power for the purposes of this Directive, the effects of climatic variation should be smoothed through the use of a normalisation rule. Further, electricity produced in pumped storage units from water that has previously been pumped uphill should not be considered to be electricity produced from renewable energy sources.’
5. Article 2 provides:
‘For the purposes of this Directive, the definitions in Directive 2003/54/EC apply’ (3), and ‘(a) “energy from renewable sources” means energy from renewable non-fossil sources, namely wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases;
…’
6. Pursuant to Article 3(1):
‘Each Member State shall ensure that the share of energy from renewable sources, calculated in accordance with Articles 5 to 11, in gross final consumption of energy in 2020 is at least its national overall target for the share of energy from renewable sources in that year, as set out in … Annex I.’
7. Article 5 provides:
‘1. The gross final consumption of energy from renewable sources in each Member State shall be calculated as the sum of:
(a) gross final consumption of electricity from renewable energy sources;
…
3. For the purposes of paragraph 1(a), gross final consumption of electricity from renewable energy sources shall be calculated as the quantity of electricity produced in a Member State from renewable energy sources, excluding the production of electricity in pumped storage units from water that has previously been pumped uphill.
…
The electricity generated by hydropower and wind power shall be accounted for in accordance with the normalisation rules set out in Annex II.
…
7. The methodology and definitions used in the calculation of the share of energy from renewable sources shall be those of Regulation (EC) No 1099/2008 [(4)] …’
2. Directive 2003/54
8. Directive 2003/54 was repealed by Directive 2009/72/EC, (5) Article 48 of which provides that the repeal has effect from 3 March 2011 and that references to the repealed Directive are to be construed as references to Directive 2009/72.
9. Article 2(30) of Directive 2009/72 defines ‘renewable energy sources’ in the same way as Article 2(30) of Directive 2003/54: ‘renewable non-fossil energy sources (wind, solar, geothermal, wave, tidal, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases)’.
3. Regulation No 1099/2008
10. Under heading 5 in Annex B to Regulation No 1099/2008 ‘hydro power’ is defined as ‘potential and kinetic energy of water converted into electricity in hydroelectric plants’, including energy produced using pumped storage.
B – National law
1. Ustawa prawo energetyczne (Law on energy) (6)
11. In the version in force on 6 November 2013, Article 3 provided as follows:
‘For the purposes of this Law:
…
20. “renewable energy source” means a source using, in the conversion process, wind, solar, aerothermal, geothermal, hydrothermal, wave, current and tidal energy, the downward flow of rivers and energy obtained from biomass, biogas from landfill, and also biogas produced from the disposal or treatment of sewage or the decomposition of stored plant and animal remains.
…’
12. In the version in force from 4 May 2015, Article 3(20) defines ‘renewable energy source’ by reference to the Law on renewable energy sources.
2. Ustawa o Odnawialnych Źródłach Energii (Law on renewable energy sources) (7)
13. According to Article 2:
‘…
(12) “hydropower” means energy from the downward flow of inland surface waters, other than energy obtained from pumping in pumped-storage power stations or hydroelectric power stations with a pumping installation;
…
(18) “small-scale installation” means a renewable-energy-source installation with a total installed electrical capacity greater than 40 kW but not greater than 200 kW, connected to the grid, with a rated voltage of less than 110 kV or a combined achievable heat capacity greater than 120 kW and not greater than 600 kW;
…
(22) “renewable energy source” means renewable non-fossil sources of energy, including wind, solar, aerothermal, geothermal, hydrothermal, hydropower, wave, current and tidal energy, energy obtained from biomass, biogas, agricultural biogas and biofluids.
…’
14. Article 7 provides:
‘Economic activity relating to the production of electricity from renewable energy sources in a small-scale installation … shall be a regulated activity within the meaning of the Law on the freedom to carry on an economic activity and shall require entry in the register of producers carrying on economic activity relating to small-scale installations …’
3. Ustawa prawo wodne (Law on water) (8)
15. Article 5(3) reads:
‘Inland surface waters shall be made up of:
(1) flowing water, including water:
(a) in natural water courses, channels and the sources from which the courses originate;
(b) in lakes and other natural water bodies with a continuous or periodic natural inflow or outflow of surface waters;
(c) in artificial water bodies located on flowing waters;
(2) standing water, including waters in lakes and other natural water bodies which are not connected directly, in a natural manner, with flowing surface waters.
…’
II – Facts
16. J.D. held a licence to produce electricity from renewable sources from 20 November 2004 to 20 November 2014. Specifically, the licence covered two biogas power stations and a small-scale hydroelectric power station (with a capacity of 0.160 MW) located at the point of discharge of waste water from another plant (PKN Orlen SA), which was not involved in electricity production.
17. When an extension of the licence was sought, the Prezes Urzędu Regulacji Energetyk (Chairman of the Polish Energy Regulatory Office, ‘ERO’), by a decision of 6 November 2013, refused the application in respect of the hydroelectric power station on the grounds that ‘only hydroelectric power stations using energy obtained from wave, current and tide and the downward flow of rivers could be regarded as producing energy from renewable sources’. (9)
18. On 5 November 2014, the decision of the Chairman of the ERO was upheld by a judgment of the Sąd Okręgowy w Warszawie (Regional Court, Warsaw), which referred to the definition of renewable energy sources in Article 3(20) of the Law on energy, in the version in force at the time when the contested decision was taken.
19. J.D. brought an appeal in the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw, Poland) against the judgment at first instance. In support of its claims, it argued that Article 3(20) of the Law on energy was incompatible with Directive 2009/28.
20. That is the background against which the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw) has referred a question for a preliminary ruling.
III – Question referred for a preliminary ruling
21. The question referred was lodged on 4 January 2016 and is worded as follows:
‘Is the term “hydropower” as a renewable energy source, set out in Article 2(a) of Directive 2009/28 … in conjunction with Article 5(3) thereof and recital 30 in the preamble thereto, to be interpreted as relating only to energy produced by a hydroelectric power station using the downward flow of inland surface waters, including rivers, or as relating also to energy produced in a hydroelectric power station (which is not a pumped-storage power station or a hydroelectric power station with a pumping installation) sited at the point of discharge of industrial waste water from another plant?’
IV – Procedure before the Court of Justice and submissions of the parties
22. J.D., the Polish and Italian Governments and the Commission have presented written observations. In accordance with Article 76(2) of the Rules of Procedure, the Court decided not to hold a hearing.
23. J.D. submits that, under Directive 2009/28, the only energy produced by a hydroelectric power station which is not deemed to be from renewable sources is energy produced in pumped storage units. It argues that energy produced using the water which a third party has discharged upstream after use can be considered energy from renewable sources under Directive 2009/28.
24. The Polish Government maintains that the terms ‘energy from renewable sources’ (Article 2(a) of Directive 2009/28) and ‘renewable energy sources’ (Article 2(30) of Directive 2009/72) refer to non-fossil energy sources which are either renewed naturally, without human intervention, within a relatively short period of time, or which do not run out, the use of which will help to achieve the environmental benefits set out in Directive 2009/28.
25. Consequently, as far as the Polish Government is concerned, the term ‘hydroelectric power produced from renewable sources’ refers to energy from the natural downward flow of inland surface waters, including rivers.
26. Furthermore, the Polish Government points to the fact that energy produced in pumped storage units is not considered electricity from renewable sources under Directive 2009/28. It concludes from this that the operation of hydroelectric power stations which, although not pumped storage units, use water which other units have pumped uphill, is not based on the use of renewable sources which occur naturally in the environment.
27. According to the Italian Government, energy produced using the gravitational flow of water within artificial structures must be covered by the term ‘energy from renewable sources’, as long as those structures were built for purposes which are economically unconnected with the production of electricity.
28. In the Italian Government’s submission, recital 30 of Directive 2009/28 contemplates two scenarios: (a) where hydroelectric power is produced using an artificial downward flow of water which was created precisely for that purpose; or (b) where energy is produced using an artificial downward flow which was created for purposes other than energy production. In the first case, there is no ‘energy from renewable sources’ because –– since other energy is needed in order operate the pump — the energy used as against the energy produced would result in practically no net gain, which would remove the environmental benefit. In the second case, by contrast, structures and facilities already in existence would be used, which would optimise the environmental benefit and the economic investment.
29. Furthermore, the Italian Government argues, given that it is only electricity generation by pumping that is expressly excluded from the notion of ‘electricity from renewable hydropower’ under Directive 2009/28, the exception does not cover the situation where electricity is obtained using discharged water, which is similarly artificial but which has been created for economic purposes other than producing electricity.
30. The Commission submits that, in the absence of a definition of hydroelectric power in Directive 2009/28, it is necessary to refer to the definition of hydroelectricity in point 5.1.1 of Annex B to Regulation No 1099/2008, to which Article 5(7) of Directive 2009/28 refers.
31. Taking that definition and the method of calculating the gross final consumption of electricity from renewable energy sources (Article 5(3) of Directive 2009/28), the Commission goes on to state that the EU legislature considered ‘electricity from renewable energy sources’ to be energy produced in a hydropower plant by converting the potential or kinetic energy of water, except energy generated in pumped storage systems from water that has been pumped uphill. Finally, the Commission notes that the legislature has drawn no distinction based on the type of water used, whether from natural or artificial flows.
V – Assessment
32. This reference for a preliminary ruling is not concerned with explaining, in an abstract way, what ‘renewable sources’ are or in what circumstances it might be said that hydropower is produced using such sources. The question raised by the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw) is much more specific, since what the court would like to know is whether a very particular type of hydropower, namely that produced by a small-scale hydroelectric power station using the water discharged by another plant which has previously used it for purposes unrelated to electricity generation, can be categorised as ‘energy from renewable sources’ within the meaning of Directive 2009/28.
33. I have placed an emphasis on Directive 2009/28 because it is all too easy to be drawn down the path of general, non-legal concepts and forget that it is in the discussion on legal concepts that the courts, including the Court of Justice, have a role to play.
34. My reason for saying this is that it seems to me that we should not be using here a preconceived notion of ‘renewable energy sources’, by which we mean those that are renewed naturally, without human intervention, as the Polish Government is suggesting. (10) If we start from this preconceived notion we will of course find it difficult to see energy produced using artificial water flows, for example, as ‘energy from renewable sources’.
35. In fact, the only concept that matters is the one used in Directive 2009/28 itself, which, for the purposes of its scope, defines ‘energy from renewable sources’ in the following terms: ‘energy from renewable non-fossil sources’ (Article 2(a)). (11) That provision does not give a definition of ‘renewable non-fossil sources’ but it does give a precise list: ‘wind, solar, aerothermal, geothermal, hydrothermal and ocean energy, hydropower, biomass, landfill gas, sewage treatment plant gas and biogases’. So, for the purposes of Article 2(a) of Directive 2009/28, a reference to ‘renewable non-fossil sources’ is equivalent to a reference to the sources which it goes on to mention, hence the use of the word ‘namely’. (12)
36. Consequently, whatever energy from renewable sources may mean in other spheres, and irrespective of whether or not it is correct in those other fields to equate it with energy from ‘renewable non-fossil sources’, the fact is that, in legal terms, and specifically in terms of Directive 2009/28, it includes hydropower. Regulation No 1099/2008, (13) defines this type of energy, for statistical purposes, as ‘potential and kinetic energy of water converted into electricity in hydroelectric plants’, including energy produced using pumped storage.
37. That being the case, in principle, all ‘hydropower’ must be classified, for the purposes of Directive 2009/28, as ‘energy from renewable sources’, whether it originates from the downward flow of water along artificial channels or from the use of natural watercourses. (14) Consequently, national legislation which, for the purposes of determining whether energy should be regarded as energy from renewable sources, makes a distinction between the watercourses used for electricity generation according to whether they are natural or artificial, is not compatible with Directive 2009/28.
38. The sole exception to this rule is that expressly provided for in Directive 2009/28 itself, recital 30 of which states that ‘electricity produced in pumped storage units from water that has previously been pumped uphill should not be considered to be electricity produced from renewable energy sources’. In keeping with this explanation, Article 5(3) of Directive 2009/28 provides that electricity thus obtained is not to be taken into consideration when calculating gross final consumption of electricity from renewable energy sources.
39. According to the information provided by the referring court, (15) the small-scale hydroelectric power station in question ‘is not a pumped-storage power station or a hydroelectric power station with a pumping installation’. (16) If that is the case (which is ultimately a matter for the referring court to determine), the station would not fall within the case mentioned in recital 30 and Article 5(3) of Directive 2009/28 and the hydroelectric power which it produces would therefore qualify as being ‘from renewable sources’.
40. The exception in Directive 2009/28 relating to pumping plants is the result of a decision on the part of the legislature, which has opted, even though other legislation (17) acknowledges (albeit for statistical purposes) that this operating system produces ‘hydro power’, not to designate it electricity from renewable sources. Whatever the reasons for this energy policy decision, (18) the exception in Directive 2009/28 relating to pumping plants is not open to question. However, as I have said, this does not apply to the hydroelectric power station at issue here.
41. The order for reference states that the hydroelectric power station at issue uses the waste water discharged by a third party, which is independent of the operations of the power station and entirely unrelated to electricity generation. It is therefore not a pumping plant (within the meaning already considered) but rather a station which takes water which would otherwise flow away without being put to any subsequent economic or environmental use and uses it to generate electricity.
42. The power station under consideration makes use of waste water which is only destined to flow away, so that putting it to further use to produce electricity is beneficial in environmental terms. Moreover, it could be said that, by means of this process, ‘clean’ electricity is produced, which to some extent offsets any environmental damage which may have been caused either by the manner of obtaining the water in the first place or by the construction of the artificial channel along which it runs.
43. The Commission notes (19) that if, in addition, the water used in the hydroelectric power station comes from an undertaking which carries out waste water treatment, the electricity thus obtained would complete a ‘virtuous’ circle of compensating for environmental damage: the activities of that undertaking not only treat the waste water, but also give rise to a surplus of water which, in turn, allows the production of electricity without the need to use other sources which emit greenhouse gases.
44. In short, in the light of the wording of Article 2(a) and Article 5(3) of Directive 2009/28 and of the objectives of the directive, I take the view that the answer to be given to the referring court should be that the concept of ‘hydropower’ as a renewable energy source includes energy produced by a hydroelectric power station using waste water discharged by a third party which is independent of the operations of the power station and entirely unrelated to electricity generation.
VI – Conclusion
45. In the light of the foregoing considerations, I suggest that the Court reply as follows to the question raised by the Sąd Apelacyjny w Warszawie (Court of Appeal, Warsaw, Poland):
The term ‘hydropower’ as a renewable energy source, set out in Article 2(a) of Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC in conjunction with Article 5(3) and recital 30 thereof, is to be interpreted as including energy produced by a hydroelectric power station using waste water discharged by a third party which is independent of the operations of the power station and entirely unrelated to electricity generation.