Europe’s top court has upheld a lower court ruling that backed the German government’s decision to fine a now-closed brick factory and its liquidator more than €332,000 for failing to return EU carbon allowances in 2011.

The European Court of Justice (ECJ) on Dec. 17 ruled against Sandra Bitter, a lawyer appointed as liquidator for Hoxter GmbH who first brought the case to Berlin’s Administrative Court, arguing that the size of the penalty, enshrined in the EU’s ETS Directive, breached the bloc’s principle of proportionality.

The principle is one of the core tenets of the EU, aiming to regulate the exercise of powers by the bloc while attempting to prevent unnecessary overreach.

Under the EU ETS rules, installations that fail to surrender enough carbon units to cover their emissions output face fines of at least €100 per tonne of CO2e.

The Berlin court issued its initial decision in favour of the German government in late 2014, and the matter was later referred to the ECJ by Bitter.

According to its ruling, the Hoxter brick plant in North Rhine-Westphalia ceased operations in Sep. 2011.

It was found to have emitted just over 3,300 tonnes of CO2e in 2011, but it failed to return a corresponding number of EU Allowances that it had received for free that year from the German government.

“[Bitter] was regarded by German authorities as the operator of the installation and therefore responsible for compliance … [She] estimated that, since Hoxter had ceased trading before the opening of insolvency proceedings, this business was no longer required to report or return its [EUA] quota equivalent to the carbon dioxide it emitted in 2011,” the ruling said.

It added that Bitter saw the EU ETS compliance obligation as “contingent liabilities to be recorded as liabilities of bankruptcy.”

By Mike Szabo – mike@carbon-pulse.com