EU member states could sue the European Commission over the MSR’s effect on national energy mixes or heavy industries, according to Freshfields lawyer Wolf Friedrich Spieth.
In an article published in EU Observer, Spieth said the MSR raised several potential legal issues.
Governments meet on Wednesday aiming to get a unified MSR position to begin final talks with the EU Parliament and Commission. Poland claims the support of at least seven other member states in opposing moves by other lawmakers to start the MSR earlier than 2021.
“Hopefully, the EU institutions will heed these legal concerns before they vote for an instrument that clearly conflicts with established EU principles,” Spieth said.
“If not, the measure could be subject to legal action – in particular by member states, whose energy mixes or domestic industries would heavily be affected by the market stability reserve.”
According to Spieth, the MSR raises significant concerns over member states’ competencies over EU measures that affect their energy mixes.
The bloc’s centralised climate change policy is often divisive because it overlaps with energy and spending, areas where EU members have agreed much can be determined at national level.
In particular, Speith said the MSR raised concerns if applied before the current ETS trading period expires in 2020 because market participants “will have developed legitimate expectations regarding their release in the last two years of the ongoing period.”
He said it could be interpreted as a decrease in the ETS cap and the overall 2020 EU emissions target agreed by EU leaders in 2007.
He added that the MSR could go against with the EU principle of ‘proportionality’ because it is not proven it will eliminate the market surplus or include potentially less restrictive ways of meeting the EU’s climate objectives.