Carbon emissions — Cement plant — National allocation plan — Replacement of rule discounting commissioning period with rule discounting first year of operation of installation — Whether discrimination against installations with protracted commissioning period — Whether objective justification for departure from original rule — Claim dismissed
The claimant operated a cement plant in Rugby. It applied for judicial review of the UK national allocation plan for carbon emissions that the defendant had adopted, following consultation, in order to implement the EU Emissions Trading Scheme. The plan fixed the emission allowances for each industry sector and set out the means of calculating the proportion of those allowances to be allocated to each individual installation. Under phase I, described as the pilot phase, that was to be done by reference to the average emissions of the installation over a given period, discounting the year with the lowest emissions. In respect of the power station and cement sectors, in which installations were thought to experience protracted commissioning periods prior to becoming fully operational, a special commissioning rule was also applied under which the period of commissioning was discounted. The claimant’s installation was the only one in the cement sector that benefited from that rule. For phase II, the defendant expressed an intention to improve and simplify the rules. It retained the exclusion for the year of lowest emissions, and replaced the commissioning rule with a rule that was applicable to all sectors, under which emissions in the first year of operation were discounted.
The claimant contended that the new rules infringed the EC principle of equality and non-discrimination, under which like situations should not be treated differently or different situations treated in the same way, unless such treatment was objectively justified. It complained that the new rule put it at an unfair disadvantage since it had experienced commissioning problems that had extended the commissioning period over a number of years. The defendant argued that it had originally treated the cement and power sectors differently from other sectors on the ground that commissioning could often be a significant and protracted event, but that, in the light of the experience gained from phase I, it was no longer satisfied that that was the case. It submitted that the claimant had provided no explanation as to why it experienced commissioning difficulties.
Held: Permission was granted but the claim was dismissed.
Provided that a rule could apply to all installations in a particular sector that justified different treatment, it did not matter that only a limited number of installations would benefit from the rule; that would not justify the abolition of the rule. Moreover, a wish to simplify and to treat all sectors consistently could not justify a rule that treated unlike sectors in the same way. A desire for “administrative tidiness” could not justify discrimination.
A change in policy would require objective justification. However, the level of justification required would depend upon the facts of the particular case. More would be required to justify a change in a long-standing policy, or one that was based upon detailed or extensive technical or economic data. Where, on the other hand, a rule treating two sectors differently had been adopted for a pilot phase of a scheme upon the basis of very limited material by way of objective justification, its revocation would also require commensurately little objective justification. In phase 1, the rules had been developed within a very short timetable and had been “on trial” for a relatively short period, while the commissioning rule had been adopted on limited evidence following a necessarily brief consultation. Phase 1 had attempted to deal fairly with perceived differences between commissioning periods for different sectors based upon the limited information then available. Although the material relied upon by the defendant to justify not continuing with the commissioning rule was not extensive, it was more substantial than the material that had persuaded the defendant to adopt the rule in the first place. Accordingly, the defendant had not breached the principle of non-discrimination: Ruckdeschel v Hauptzollant Hamburg-St Annen [1977] 2 ECR 1753 considered.
Stephen Tromans and Colin Thomann (instructed by Wragge & Co LLP, of Birmingham) appeared for the claimant; Mark Hoskins and Maya Lester (instructed by the legal department of Defra) appeared for the defendant and the first interested party, the Secretary of State for Trade and Industry; Aidan Robertson (instructed by Taylor Wessing) appeared for the second, third and fourth interested parties, Lafarge Cement United Kingdom, Castle Cement Ltd and Buxton Lime Industries Ltd.
Sally Dobson, barrister
