EU member states are not obliged to pay renewable energy subsidies to foreign suppliers, the European Court of Justice has decided, backing Sweden in a dispute with EU
Sweden’s victory in the dispute, which started in 2009 after the country refused to pay subsidies to a Finnish wind energy supplier, deals a blow to the European Commission’s effort to harmonise renewable energy subsidies across the bloc. The commission is pushing for improved trans-border movement of power in the framework of the European single energy market, which, it believes, would improve competitiveness.
In 2009, Sweden's government refused to pay renewable energy subsidies to a wind energy company Alands Vindkraft based on the Aland archipelago. Though part of Finland, the territory is connected to the Swedish grid and most of its inhabitants speak Swedish.
Alands Vindkraft appealed Sweden's decision on subsidies to the Swedish courts, saying the support scheme violated principles on the free movement of goods. The case was eventually referred to the European Court of Justice (ECJ).
Today’s announcement comes as a surprise as in January this year the court’s advocate general Yves Bot said that member states should be given up to two years to restructure their support schemes to make them compatible with EU law, which would have paved the way for an integrated EU renewable energy market.
The actual ECJ ruling went against the opinion expressed by Bot, which is highly unusual.
Unlike its top official, the court believes Sweden's renewable energy support scheme is in line with the EU law.
The ruling means EU member states can continue to limit renewables support schemes to within their national borders and don’t need to overhaul their renewable energy policy.
"The Swedish support scheme promoting green energy production in the national territory is compatible with EU law," the Luxembourg-based ECJ said in Tuesday's ruling.
EU states that support the production of green energy, such as wind and solar power, through subsidies or incentives are not required to support the use of green energy which is produced in another EU country, it said.
The case has political resonance as Europe struggles to wean itself off green energy subsidies, which are blamed for inflating costs and making the European Union less competitive.
The ruling will put less pressure on Germany - which is at odds with the European Commission over its energy subsidies - to reach a compromise with the Commission.