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Subsidizing carbon capture and storage demonstration through the EU ETS new entrants reserve: A proportionality test

1st January 2010

Topic(s): Carbon capture, use and storage (CCUS), Project financing

Upon its adoption in the Directive revising the European Greenhouse Gas Emission Trading Scheme (Directive 2009/29), Article 10(a)8 was heavily criticized by a number of environmental organizations and legal scholars for disturbing the EU ETS’ market mechanism. Article 10(a)8 provides for the possibility to co-finance the up to 12 planned European Carbon Capture and Storage (CCS) demonstration projects as well as innovative renewable energy demonstration projects through the EU ETS new entrants reserve. The criticism of Article 10(a)8 raises doubts as to the article’s consistency with the EU ETS (and its overarching goals) as such and, in essence, questions the measure’s proportionality. It is not unthinkable that the EU law principle of proportionality will in future be used to challenge the validity of Article 10a(8). This article argues that it is in that case unlikely that the Court of Justice of the European Union would declare Article 10a(8) to infringe the principle of proportionality.

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Subsidizing carbon capture and storage demonstration through the EU ETS new entrants reserve: A proportionality test

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