Case C-848/19 P: Germany v Poland and its outcomes for EU energy sector: an extended case note on the European Court of Justice judgment in the OPAL case: Judgment of the Court (Grand Chamber) of 15 July 2021, C-848/19 P, Germany v Poland, ECLI:EU:C:2021:

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Rinnakkaistallenteet Yhteiskuntatieteiden ja kauppatieteiden tiedekunta

2021

Case C-848/19 P: Germany v Poland and its outcomes for EU energy sector:

an extended case note on the

European Court of Justice judgment in the OPAL case: Judgment of the Court (Grand Chamber) of 15 July 2021,

C-848/19 P, Germany v Poland, ECLI:EU:C:2021:598

Iakovenko, Mykola

Oxford University Press (OUP)

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Case C-848/19 P: Germany v Poland and its outcomes for EU energy sector: an extended

case note on the European Court of Justice judgment in the OPAL case

Judgment of the Court (Grand Chamber) of 15 July 2021, C-848/

19 P, Germany v Poland, ECLI:EU:C:2021:598

Mykola Iakovenko*

A B S T R A C T

The European Court of Justice (ECJ) judgment in the so-called Ostsee-Pipeline-Anbindungsleitung (OPAL) case on 15 July 2021 dismissed Germany’s appeal on the previous European Union (EU) General Court’s decision, which focused on the need for considering national interests of EU Member States and the interests of the Union itself in the decisions by the EU institutions in energy sector to acknowledge the solidarity principle provided in the Treaty on the Functioning of the European Union. This decision found a signiﬁcant interest among academicians and legal practi- tioners and raised numerous discussions, since it is still not clear what are the exact criteria on application of this principle, especially in relation to such ambiguous energy notions as ‘security of supply’. The presence of the geopolitical context and direct impact of the decision on the volumes of Russian gas transported via the Nord Stream pipeline also makes this case extremely complex and raises some additional questions regarding the impact on external gas supply to the EU. Moreover, the statement of the Advocate General on the applicability of the solidarity principle to all the other objectives of EU energy policy (not limiting to the scope of security of gas supply), which was also supported by the Court, brings many additional aspects to be considered with regards to the impact of the OPAL case on EU energy sector. Therefore, this case note article undertakes a critical analysis of the recent ECJ judgment and Advocate General’s opinion to identify some gaps that are still not clariﬁed and to estimate the possible outcomes of the judgment on the future of EU energy sector development.

*University of Eastern Finland, School of Law, Finland

Mykola Iakovenko is a PhD researcher at the School of Law of the University of Eastern Finland. Email: mykolaiyakovenko@gmail.com. This case note was prepared within the PhD research conducted by the author at the School of Law of the University of Eastern Finland. All the statements and assumptions in the case note belong to the author and cannot be considered as the opinion of any other project, company or organization where the author has been employed or affiliated to besides his PhD research.

VCThe Author(s) 2021. Published by Oxford University Press on behalf of the AIPN.

This is an Open Access article distributed under the terms of the Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/), which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited.

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1 . I N T R O D U C T I O N

The so-called Ostsee-Pipeline-Anbindungsleitung (OPAL) case explicitly demonstrates how tight, but still ambiguous is the interrelation between the national perspectives on energy security of some Member States and application of European Union (EU) energy and, particularly, gasacquis. The final decision in this case was issued by the European Court of Justice (ECJ) on 15 July 2021, when the ECJ dismissed the appeal made by Germany on the previous judgment of the General Court (GC) of the Court of Justice of the EU from September 2019.¹Considering the heated and long-lasting debates on application of the solidarity principle to acknowledge interests of different EU Member States in taking decisions by the EU institutions and national authorities, as well as the existence of many ambiguities in the recent judgment, it does not seem that the OPAL case would result in full clarity regarding further application of this principle in EU energy sector.

The presence of the conflict of national perspectives on energy security in EU gas sector, which is also extremely contingent on geopolitical contexts, makes the OPAL case extremely complex and brings many additional aspects to be considered by analysing its further impact on the development of EU energy law. In particular, some of the traditional concerns regarding growing Gazprom’s market power, possibility to utilize gas supplies as a ‘geopolitical weapon’ by Russia and fears of a significant decrease of transit revenues, which are usually raised by the Eastern EU countries, namely Poland and Baltics,²came into the conflict with rather a politically neutral approach³seeking to maximize benefits for the Western EU market areas (eg additional volumes and growth in liquidity). Given the later approach, the OPAL’s case had been criticized from the point of view of ‘politicisation’ of EU legislation,⁴controversies with the World Trade Organization (WTO) rules⁵and possible negative impact on the overall credibility of the EU energyacquis.⁶On the other hand, it seems that the importance of consideration of the solidarity as a legal principle to be applied in energy has significantly increased after the 2019 GC judgment in the OPAL case. This, however, brings some additional questions to the table regarding the way how the solidarity principle may be applied in the future. A clear statement of the judgment regarding the applicability of the solidarity principle to all the other objectives of EU energy policy mentioned in Article 194 Treaty on the Functioning of the European Union (TFEU) (eg promoting energy efficiency and the development of renewable energy; promoting interconnectivity; and development of EU internal energy market) leads to another significant discussion, where many additional questions on the nexus between the national and EU-wide approaches can be raised.⁷

In their early analysis of the GC judgment, Kim Talus and Dirk Buschle identified several possible gaps in understanding the application of the solidarity principle in energy matters, which would require further in- corporation of the solidarity considerations in particular energy law instruments to lower the ambiguity of such tests in the future.⁸Similarly, Anatole Boute argues on the potentially broad understanding of the solidarity principle in national and EU-wide decisions in energy, which seems to be especially problematic

1 Judgment of the General Court of 10 September 2019, T-883/16,Poland v Commission, ECLI:EU:T:2019:567.

2 See, for instance, in Matu´s Misı´k,External Energy Security in the European Union(Routledge 2019) 10; Csaba Weiner, ‘Diversifying Away from Russian Gas: The Case of Poland’ (2019) 12(2) Outlines G Trans Pol Econ L 144; Jerzy Go´rski, ‘The Baltic Pipe in Context: The Geopolitical and Normative Analysis’ (2019) 17(5) OGEL 1–85.

3 Andrei Belyi,Transnational Gas Markets and Euro-Russian Energy Relations(Palgrave Macmillan 2015) 98.

4 Katja Yafimava, ‘The OPAL Exemption Decision: Past, Present, and Future’ (2017) 117 Oxford Inst En Stud NG 30.

5 Vitaliy Pogoretskyy and Kim Talus, ‘The WTO Panel Report in EU–Energy Package and Its Implications for the EU’s Gas Market and Energy Security’ (2019) 19(4) World T R 531–549.

6 Leigh Hancher, Kim Talus and Moritz Wu¨stenberg ‘Retrospective Application of Legal Rules in the European Union: Recent Practice in the Energy Sector’ (2021) 39(1) J Ener Nat Res Law 16.

7 This was, for instance, raised in the discussion by Kim Talus, Dirk Buschle and Leigh Hancher with the moderation and questions by Max Mu¨nchmeyer. See the summary of the discussion: Max Munchmeyer, ‘Worth the Wait? Energy Solidarity before the Court of Justice in Case C-848/19 P – Germany v Poland’ Florence School of Regulation, 2021.<https://fsr.eui.eu/worth-the-wait-energy-solidarity-before- the-court-of-justice-in-case-c-848-19-p-germany-v-poland/>accessed 10 October 2021.

8 Dirk Buschle and Kim Talus, ‘One for All and All for One? The General Court Ruling in the OPAL Case’ (2019) 17(5) OGEL 9.

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without any clear guidelines on how the conflicting interests shall be balanced to comply with the principle.⁹ Given this ambiguity in the application of the solidarity principle, Katja Yafimava also questions whether the solidarity is a legal principle or a sort of a ‘policy guidance’ to be developed later by the Commission, especially if no clear criteria of its application are pointed out in the ECJ’s final judgment.¹⁰ In his updated research paper based on the Advocate General’s Opinion on the OPAL case, Kim Talus also raises concerns on the possibility to define such criteria in relation to the present case, as it is directly connected to the notion of ‘security of supply’, which is known to be a very broad concept where a high risk of misinterpretation exists.¹¹

My personal approach on defining the criteria for application of the solidarity principle in energy was provided in the previous article on this topic.¹²The basic idea behind this approach relates to the need to elaborate the EU’s measurable goals in the development of the natural gas sector, including the security of supply aspects, which may then serve as a sort of reliable ‘benchmark’ for assessing the impact of decisions at EU and national levels. This idea was also based on the study of application of the solidarity principle in previous EU case law in cases concerning a wide range of spheres: common industrial policy, migration, economic and monetary policy, etc.¹³This case note aims at undertaking a comprehensive overview of the OPAL case on further implications for EU gas sector having regard to the fact that the recent ECJ judgment still left some questions on the further application of the solidarity principle open and, in particular, did not elaborate some clear criteria for the ‘solidarity tests’ in the future. Besides that, considering the possibility to apply the solidarity principle in other areas of EU energy policy, including the ones where such clear national and all- Union goals already exist, the article also attempts to project the possible practical outcomes of application of the suggested approach taking into account the specific aspects of national perspectives of some Member States and existing relevant case law.

2 . T H E L E G A L C O N T E X T O F T H E O P A L C A S E

It is worth mentioning briefly that the case itself concerns exemptions for the onshore continuation of the Nord Stream 1 gas pipeline¹⁴—‘the OPAL’ from some of the Directive’s 2009/73/EC (hereinafter—‘Gas Market Directive’) provisions on third-party access and tariff regulation.¹⁵ The exemptions were initially granted by the German National Regulatory Authority based on Article 22 of the previous edition of the Gas Market Directive (Directive 2003/55/EC later repealed by the Directive 2009/73/EC, where Article 36 provides for the relevant exemptions now), which establishes the possibility to exempt new infrastructure that complies with some necessary preconditions from some of the Directive’s provisions: that is a risky invest- ment enhancing competition and security of supply and complying with some other technical and legal conditions, whereas the exemptions themselves are not likely to result in hindering competition on internal EU

9 Anatole Boute, ‘The Principle of Solidarity and the Geopolitics of Energy:Poland v Commission(OPAL pipeline)’ (2020) 57 Common Mark L Rev 907.

10 Katja Yafimava, ‘The OPAL Exemption Decision: A Comment on the Advocate General’s Opinion on Its Annulment and Its Implications for the Court of Justice Judgment and OPAL Regulatory Treatment’ (2021) 87 Oxford Inst En Stud 6.

11 Kim Talus, ‘The Interpretation of the Principle of Energy Solidarity: A Critical Comment on the Opinion of the Advocate General in OPAL’ (2021) 89 Oxford Inst En Stud 8.

12 Mykola Iakovenko, ‘A Need for Clarification of the Energy Solidarity Principle: What Can Be Learned from the General Court’s Judgment in the OPAL Case’? (2021) 14 J World Energy Law Bus 38–48.

13 See, for instance, Judgment of the Court of 16 February 1982, C-276/80,Ferriera Padana SpA v CommissionECLI:EU:C:1982:57;

Judgment of 14 December 1983, C-263/82,Klo¨ckner-Werke v Commission, ECLI:EU:C:1983:373; Judgment of 20 September 1988, C- 203/86, Spain v Council, ECLI:EU:C:1988:420; Judgment of 12 September 2017, C-589/15 P, Anagnostakis v Commission, ECLI:EU:C:2017:66; Judgment of the Court (Grand Chamber) of 6 September 2017, JoinedCasesC-643/15 and C-647/15,Slovak Republic and Hungary v Council of the European Union, ECLI:EU:C:2017:631.

14 The pipeline transporting gas from Russia to Germany by the Baltic Sea.

15 Commission Decision of 12 July 2009 on the exemption of the Ostseepipeline-Anbindungsleitung from the requirements on third-party access and tariff regulation granted under Directive 2003/55/EC–C (2009) 4694, 12 July 2009.

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gas market.¹⁶ The Commission questioned whether there is indeed no risk for hindering competition and provided for some additional measures: that is, 50 per cent cap on booking OPAL’s capacities by a single en- tity in the course of its mandatory review (2009).¹⁷In practical terms, this also meant some capacity cap on the offshore part of the system—the Nord Stream 1 pipeline, where only Russian Gazpromde factohas an access.

In its updated decision (2016),¹⁸the Commission reached a conclusion to remove the 50 per cent capacity cap (leaving only a 20 per cent cap), which faced protest from Poland, supported by Lithuania and Latvia, who complained to the GC claiming that the updated decision violates Article 194 of the TFEU, namely the ‘solidarity provision’,¹⁹read in conjunction with Article 36 of the Gas Market Directive. The GC supported this claim mainly by concluding that the Commission’s decision (2016) did not include a separate analysis of the impact on Poland’s security of gas supply and rejecting Commission’s arguments that the solidarity principle cannot be considered as a legal requirement, but instead is just a political notion to be taken into account in developing legislation.²⁰The recent ECJ judgment on Germany’s appeal also supported these GC findings.²¹

3 . T H E E C J J U D G M E N T A N D A D V O C A T E G E N E R A L ’ S O P I N I O N : A C R I T I C A L O V E R V I E W

Present ECJ judgment in the OPAL case concerned Germany’s appeal to the previous GC’s decision on dis- missal of Commission’s approval of the updated OPAL’s exemptions to remove 50 per cent capacity cap.

The analysis of the GC judgment’s impact on EU energyacquiswas provided in the previous article on this topic mentioned above.²²Some critical thoughts regarding the positions of both parties and findings of the Court itself were also provided there. In particular, the exact impact of capacity cap removal on some of the security aspects mentioned in Poland’s pleas may seem to be controversial without undertaking a separate detailed analysis: eg the threats of interruption of supply to the national protected customers in case the capacity cap on the entry to Czech gas-transmission system is removed. On the other hand, the Commission’s insistence on the absence of legal validity of the solidarity principle may have seemed to be no less controversial considering the existing Treaty’s provisions and EU case law on the application of the solidarity principle in some disputes since the European Economic Community (EEC) era. Eventually, the approach taken by the GC, which is based on a very broad reading of the solidarity principle with no clear criteria of its application, may risk resulting in a misunderstanding leading to prioritization of the national Member States’ interests over the common EU priorities.

Many questions that remained open even after issuing of Advocate General’s Manuel Campos Sa´nchez- Bordona’s Opinion and later ECJ judgment prompt the need for undertaking a more detailed and critical review of both documents.

16 art 36 of the Directive 2009/73/EC of the European Parliament and of the Council of 13 July 2009 concerning common rules for the internal market in natural gas and repealing Directive 2003/55/EC (OJ L 211, 14 August 2009, 209–11.

17 Commission Decision of 12 July 2009 on the exemption of the Ostseepipeline-Anbindungsleitung from the requirements on third-party access and tariff regulation granted under Directive 2003/55/EC–C (2009) 4694, 12 July 2009.

18 Commission Decision of 28 October 2016 on review of the exemption of the Ostseepipeline-Anbindungsleitung from the requirements on third-party access and tariff regulation granted under Directive 2003/55/EC, C (2016), 6950 final, 28 October 2016.

19 art 194 TFEU states in the first para ‘In the context of the establishment and functioning of the internal market and with regard for the need to preserve and improve the environment, Union policy on energy shall aim, in a spirit ofsolidaritybetween Member States, to: (a) ensure the functioning of the energy market; (b) ensure security of energy supply in the Union; (c) promote energy efficiency and energy saving and the development of new and renewable forms of energy; and (d) promote the interconnection of energy networks’ (the em- phasis added).

20 Judgment of the General Court of 10 September 2019, T-883/16,Poland v Commission, ECLI:EU:T:2019:567.

21 Judgment of the Court (Grand Chamber) of 15 July 2021, C-848/19 P,Germany v Poland, ECLI:EU:C:2021:598.

22 Iakovenko (n 12) 43–45.

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Thus, the first question raised in Germany’s appeal concerned the overall legal validity of the solidarity principle. Germany’s argumentation hardly differed from the previous arguments by the Commission on the solidarity principle as ‘a political notion’ applicable to analysing secondary legislature, but not decisions apply- ing these secondary legal provisions, that is, regulatory decisions.²³ Generally, this argumentation derives from the idea of the limited role of primary legislation in practical application (eg creating some enforceable legal criteria), which is rather important for setting some political frameworks and objectives of the EU’s activity, which was also mentioned by Germany.²⁴Obviously, this position was countered by Poland and countries supporting it. Thus, Poland emphasized the legally binding nature and the highest hierarchy of the primary law principles for the activity of the EU institutions and Member States, where the principle of solidarity creates a sort of ‘criterion’ for acknowledging Member States’ security of supply needs and other objectives in the energy sphere.²⁵Latvia and Lithuania also claimed that reducing the scope of application of the solidarity principle is inadmissible, as the principle is interlinked with some other fundamental EU principles, for example, the principle of sincere cooperation. Thus, the assessment of the compliance with this principle is to be provided in the context of review of legality of Commission’s decisions pursuant to Article 263 TFEU.²⁶

The position of the ECJ regarding this aspect was clear and in line with the findings of the previous GC’s judgment. The Court explicitly stated on the legally binding nature of the solidarity principle as the one that:

‘entails rights and obligations both for the European Union and for the Member States.’²⁷The fact that this principle was not directly mentioned in Article 36 of the Gas Market Directive also does not preclude it from being applied in this case, as the ECJ confirmed that such a primary law principle may be directly applied in the course of judicial review and shall be considered by the Commission.²⁸Here the ECJ also followed the logic provided in Advocate General’s Opinion, where a similar conclusion was reached based on the previous EU cases where the Court referred to the solidarity principle reviewing the decisions by the national governments and the EU institutions.²⁹Similarly, both the ECJ and Advocate General agreed that ensuring compliance with the solidarity principle cannot be limited only to a general impact assessment on security of supply provided in Article 36 of the Directive³⁰and a more comprehensive approach on case-by-case basis and with a regard to situation in different Member States is to be considered:

that principle cannot, moreover, be regarded as being synonymous with or limited to the requirement to ensure security of supply, referred to in Article 36(1) of Directive 2009/73, which is merely one of the manifestations of the principle of energy solidarity, since Article 194(1) TFEU sets out, in points (a) to (d), four different objectives which, in a spirit of solidarity between Member States, EU energy policy aims to achieve.³¹

Such an intensive debate on the legality of the solidarity principle and its binding effect in this particular case may seem to be a bit surprising, considering that judicial assessment of the decisions of EU institutions against some of the primary law principles is definitely not a unique case. For instance, numerous decisions by EU bodies and national governments of EU Member States have been assessed against the principle of

23 Judgment of the Court (Grand Chamber) (n 21) para 31.

24 ibid para 27.

25 ibid para 33.

26 ibid paras 34–35.

27 ibid para 49.

28 ibid para 42.

29 Opinion of Advocate General Campos Sa´nchez-Bordona delivered on 18 March 2021, Case C-848/19 P, Germany v Poland, ECLI:EU:C:2021:218, paras 74–86.

30 ibid para 104.

31 Judgment of the Court (n 21) para 47.

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sincere cooperation,³²which has a common background with the principle of solidarity. Besides that, a certain degree of interrelation between the EU legal principles and policy is another aspect that is typical for many of them and do not result in deprivation of legal validity. Nevertheless, some light on the debates around this particular question may be shed, if one looks in more detail into the background of the ‘energy solidarity’ principle provided in Article 194 (1) TFEU.

Thus, the application of the principle of solidarity has a sort of a 2-fold nature in this area: on the one hand, it shares common roots with the solidarity principle mentioned in other parts of the Treaties (eg asy- lum and migration, economic and monetary policy, etc) and on the other hand, placing this provision to the

‘energy article’ of the TFEU, which was included only after the Lisbon Treaty, was basically related to the concerns of Poland on possible disruptions of gas transportation (in the light of 2009 gas supply crisis) and provided for a kind of a ‘corrective mechanism’ for such cases of emergency.³³Consequently, its perception had been for a long time limited only to the paradigm of enabling necessary emergency actions by the Member States and the Union itself. However, the increase of importance of the solidarity principle after some recent EU crises (migration; Eurozone crises) has probably led to shifting of the perception on the application of this principle in all spheres of EU policy and aligned it with a more conservative approach taken by the Commission and Court back in the EEC era.³⁴However, the absence of clear criteria in application of this principle together with the fact that it provides for assessment of an extremely ambiguous sphere—the security of supply—where no clear and measurable criteria can be pointed out in the long-run, leads to quite a specific situation, which is different from most of the previous cases.

The analysis of the Court’s findings in the first Germany’s plea is also interesting from the point of view of considering the solidarity principle beyond the scope of security of supply, covering all the other three objectives of EU energy policy mentioned in Article 194, namely the functioning of the energy market; promotion of energy efficiency and energy saving and the development of new and renewable forms of energy; and promotion of the interconnection of energy networks. Besides the above-mentioned reference of the Court,³⁵ this was also mentioned by the Advocate General, who largely understands solidarity in terms of the ‘safe- guards’ the Treaty provides for a more effective securing of Member States’ sovereignty in opposition to the development of the EU’s powers in energy matters³⁶and as an important aspect in terms of implementation of the Energy Union strategy.³⁷ Notwithstanding the role of the solidarity in the process of building the Energy Union, one may also notice that a lack of clarity in application of the solidarity principle is likely to impact this process in a different way, that is by limiting the role of the common approaches to the formation of the Energy Union in favour of the national priorities of the Member States.

Considering the early perception of the solidarity principle in energy, it does not seem surprising that the second plea by Germany concerned non-applicability of this principle to the current case, as the solidarity principle, Germany claimed, can be utilized only in cases of emergency in gas supply.³⁸ Germany even referred to Article 222 TFEU, where the principle of solidarity is mentioned in the context of emergency as- sistance in cases of terrorist attacks and man-made disasters. Moreover, in its reading of the Regulation

32 For instance, in some earlier cases, eg, Judgment of the Court of 24 June 1992,Commission v Greece, C137/91, EU:C:1992:272) and more recent ones, eg, Judgment of the Court (Grand Chamber) of 14 June 2016,Parliament v Council, C263/14, EU:C:2016:435; Judgment of the Court of 13 March 2019. C-128/17, Republic of Poland v European Parliament and Council of the European Union, ECLI:EU:C:2019:194.

33 Kim Talus,EU Energy Law and Policy: A Critical Account(OUP 2013) 281.

34 Such an approach was rather based on utilizing the principle of solidarity for maintaining Member States’ discipline in achieving common EU goals in certain areas: for instance, C-276/80Ferriera Padana SpA v CommissionECLI:EU:C:1982:57; Judgment of 14 December 1983, C-263/82,Klockner-Werke v Commission, ECLI:EU:C:1983:373; Judgment of 20 September 1988, C-203/86,Spain v Council, ECLI:EU:C:1988:420.

36 Opinion of Advocate General Campos Sa´nchez-Bordona (n 29) para 79.

37 ibid para 81.

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2017/1938 (hereinafter ‘Security of Gas Supply Regulation’), Germany also mentioned that solidarity measures are usually considered as the measures of last resort.³⁹Poland supported by Lithuania and Latvia countered this position by arguing on the different context between Articles 222 and 194 TFEU and existence of both measures of prevention and emergency measures in the Security of Gas Supply Regulation.⁴⁰Similar ideas were also present in Advocate General’s Opinion⁴¹ and, eventually, ECJ fully supported this argumentation.⁴²

Thus, the judgment made another important clarification in this part: stating that the security of supply measures may have at least two different dimensions in terms of timeframe necessary to implement them. In fact, this clarification may play an important role for further elaboration of a clearer framework for understanding security of supply notion, which is known to be extremely broad and ambiguous. It may be con- cluded that both types of measures (the measures of prevention and the measures of emergency actions) are unified by the idea of combating limitations of the market which jeopardize consumers’ security. A great var- iety of possible risks to supply of gas ranging from the ones related to the physical integrity of the system and up to the risks related to environmental, socio-economic or even geopolitical issues may be included to the security of supply assessments. However, it seems to be reasonable to assess the ability to efficiently cope with all these threats by the market itself before any precautionary measures may be considered. In this regard, some of Poland’s previous arguments on the possibly negative impact of the Commission’s exemption decision on the security of gas supply of this country may have been needed to be assessed in more detail.

This, however, was not included in the scope of judicial review of the decision.

The final pleas that Germany made in support of the appeal, mostly, endeavoured to prove the formalistic error in the previous GC’s judgment, claiming that, in fact, the Commission properly tested the compliance with the solidarity principle in the decision by virtue of examination of the impact of the variation of the re- gime governing the operation of the OPAL pipeline. For instance, the Commission considered some of the Poland’s written comments, undertook a comprehensive study, communicated about the possible conse- quence of the decision for EU gas market and, finally, provided a separate assessment in terms of the impact on security of supply.⁴³ Moreover, some arguments regarding possibly better outcomes the decision may have for Poland in comparison to the initial Commission’s decision (2009), as well as generally better outcomes for the internal gas market, were provided by Germany.⁴⁴

Both Advocate General’s assessment and ECJ’s judgment rejected this plea by finding the lack of competence in analysing factual side of the arguments. It was established that the ECJ’s review is limited to the points of law only, which excludes the appraisal of the facts by the General Court, unless these facts are dis- torted. The judicial review also acknowledged the established fact of a limited assessment of the OPAL decision’s impact on Poland’s energy sector, which was already established in the GC’s judgment.⁴⁵In particular, referring to the issues of the limited assessment, Advocate General mentioned that

the General Court’s criticism of the contested decision went beyond security of energy supply in Poland. The General Court censured in this regard the fact that the Commission had not addressed the ‘wider aspects of the principle of energy policy.⁴⁶

39 ibid para 58.

40 ibid paras 61, 64, 65.

43 ibid para 77.

44 ibid para 80.

45 ibid para 85.

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Having established that the decision in question infringed the principle of energy solidarity not simply in non-making a formal reference to it, but also on more substantial matters, the ECJ also easily rejected two other Germany’s pleas on non-obligation for the Commission to mention the principle of energy solidarity (as the issue was not in the formal non-mentioning of the principle, as established above) and on infringe- ment of the second paragraph of Article 263 TFEU, as, again, the scope of review was not only limited to the formal issues, but also concerned the material aspect of the decision in question.⁴⁷

Leaving the procedural issues aside, it may be argued that the material aspects of the assessment of impact of such decisions on the national energy sectors of other Member States remained pretty blur even after this ECJ’s judgment and Advocate General’s opinion. Thus, the criteria of compliance with the solidarity principle in energy are still not pointed out, for instance, regarding the particular ‘wider aspects’ of such assessments.

This seems to only bring more ambiguity in understanding of the solidarity principle’s application in the future, especially taking into account the aims of the EU in building of the Energy Union based on the ambitious low-carbon agenda, considering the Court’s acknowledgement of application of the solidarity principle for achieving all the energy policy goals of the EU.

Concluding, it may be argued that the ECJ judgment, which was mainly in line with the Advocate General’s Opinion, is likely to have a positive role in bringing more clarity to the question of the legal validity of the solidarity principle in energy. However, a lot of issues remain unsolved, basically the ones that concern the lack of clarity in further practical application of this principle, that is, what criteria shall be applied to test the impact of such decisions on other Member States and in which way the national priorities are to be assessed against the all-Union’s ones. This issue is getting even more complex with regard to some of the extremely ambiguous notions to be assessed in similar cases, particularly, security of supply. The applicability of the solidarity principle to a wider scope of issues, for example, energy efficiency or renewable energy development as recognized by the Court, is likely to bring additional complexity.

4 . T H E W A Y F O R W A R D : P O S S I B L E O U T C O M E S O F T H E O P A L C A S E F O R E U E N E R G Y A N D G A S S E C T O R

Based on the OPAL case outcomes, it may be argued that the judgment is likely to have a significant impact on the development of EU natural gas market and also other areas of EU energy sector, which is examined in this section.

The impact on gas market

Considering a high level of attention to the OPAL case, especially in some of the Eastern EU Member States involved in transportation of Russian gas, it may be argued that the ECJ judgment is likely to have a significant impact on future energy policy. For example, it may encourage Poland and other countries that trad- itionally support the idea of limiting Gazprom’s presence on EU market to take further actions for promoting their traditional gas supply routes and for increasing importance of the projects aimed at diversification of supply sources to the EU (eg Baltic Pipe). Moreover, acknowledging a cross-cutting effect of the judgment in energy sphere, it is also likely to have some impact on the position of other EU countries and the EU institutions. One of the possible scenarios of this may be utilization of ‘solidarity tests’ by the Commission for assessing Member States’ discipline in achieving common goal in energy, for example, in the context of the emerging Energy Union.⁴⁸

A present low level of clarity of the practical application of the solidarity principle may also lead to increasing discrepancy in understanding of common EU energy policy. For instance, the ECJ judgment may be interpreted as a sort of opportunity to prioritize national policy goals over the EU ones or to prioritize certain

47 Judgment of the Court (n 21) paras 97–99, 106–10.

48 Meaning the aims and goals in the five main dimensions of the Energy Union enacted in the Regulation 2018/1999 on the Governance of the Energy Union and Climate Action.

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dimensions of energy policy over the others. A more detailed overview of gaps in common EU goals in natural gas sector, which create some additional risks regarding improper application of the solidarity principle, was already provided in the previous article analysing the GC judgment in the OPAL case.⁴⁹ The above- provided analysis of the recent ECJ judgment allowed identifying some additional potential problematic aspects: that is, a potentially problematic understating of the hierarchy between market development and security of supply goals in EU natural gas sector. Thus, this ECJ judgment firmly stated that provision of the solidarity in security of supply measures is not to be limited to prevention of emergencies, but also includes measures for prevention of energy crises, which may need a long period for implementation. This, in fact, may mean that EU institutions and Member States may take into account national security of supply objectives and special conditions for market functioning in other EU countries when taking important decisions.

It could be argued that very often such special conditions that are designed to support the national security of supply policies also include extensive governmental interventions impeding the development of gas market, for example, special rights for the national energy companies performing public service obligations or additional requirements for all market participants. Besides that, it is sometimes questionable, whether such special regimes for market functioning in some countries are indeed proportional and able to secure gas supply more efficiently than free-market mechanisms. Therefore, the ECJ judgment may be utilized by some governments to preserve these inefficiencies of their national security of supply regimes instead of moving towards contributing to completion of internal EU gas market.

The OPAL case impact on EU energy sector in general

Considering the statement of the Court and Advocate General’s Opinion on the broader implications of the solidarity principles beyond the security of supply issues, some additional efforts in elaborating the approach to its application in other dimensions of EU energy policy are needed. This aspect is especially relevant considering the increasing efforts of the EU institutions in elaborating ambitious climate and energy transition goals, which are to concern all the Member States and impact their individual approaches to energy sector’s development (eg recently proposed ‘Fit for 55’ package).⁵⁰Such ambitious goals directly relate to the issues, where a search for a well-balanced approach is especially relevant given to the existing differences in Member States’ energy mixes and different needs in terms of the ‘just’ energy transition. A certain conflict in understanding of the solidarity principles in terms of the different national approaches to achieving individual tar- gets contributing to the all-Union goals is, thus, another possible problematic outcome of the case.

Many controversies are likely to occur in the spheres, where the all-EU measures may have a cross-cutting effect on the whole sector; for instance, the development of renewable energy and phasing-out carbon-intensive types of energy supply. The balance between the Union institutions’ legitimate powers to adopt binding decisions on the matters affecting Member States’ energy supply structure in terms of environmental goals (guaranteed by Article 192(2)(c) TFEU) and Member States’ discretion for determining the conditions for exploiting their energy sources, the choice between different energy sources and the general structure of its energy supply, may be triggered in this context. Some of the recent ECJ judgments have already dealt with the issue of determining of Member State’s competence in developing the measures to support certain types of energy supply in the context of possible conflict with the all-Union approach.⁵¹The complexity of national energy systems and importance of some traditional types of energy supply in individual approaches to maintaining the security in the course of energy transition may also be a potential source for controversies with

49 Iakovenko (n 12) 45–47.

50 See more details, In: Fit for 55: the EU’s Plan for a Green Transition, Council of the European Union, 2021.<https://www.consilium.eur opa.eu/en/policies/eu-plan-for-a-green-transition/>accessed 10 October 2021.

51 For instance, this concerned the measures in developing nuclear energy, which was also mentioned as an example by the Advocate General in the OPAL case, see: Judgment of the Court (Grand Chamber) of 22 September 2020, Case C-594/18,Republic of Austria v European Commission, ECLI:EU:C:2020:742, paras 48–49.

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regards to the specificities of some Member States (eg maintain carbon-intensive power generation to ensure balancing of electricity grid and covering peak loads in conditions of increasing renewable energy installations leading to a growing unpredictability of the market). In particular, this may complicate the negotiations within the decision-making process under Article 192(2) TFEU in the Council where Member States have their representation. Besides that, it may lead to further claims on the need for bringing the majority of decisions concerning environmental protection adopted under ordinary legislative procedure that may anyhow relate to the energy sector to the scope of Article 192(2) TFEU, which provides a special legislative procedure and Council’s central role in the process: a certain case law and tendency for such claims already exists in some EU Member States.⁵² Eventually, the different approaches in supporting renewable energy sources in between the interconnected Member States may be another potential area for such controversies.

Apparently, the application of the solidarity principle is likely to have two main dimensions in all the controversies: the consideration of individual Member States’ approach versus the approach of the EU institutions, mainly the Commission, in enforcing the policy and goals, and other EU institutions (ie the Parliament and the Council) in adopting all-Union policies and measures, and the potential conflicts between the different Member States themselves having a different approach to ensuring the transformation of their energy sectors (by analogy with the OPAL case and different approaches regarding security of gas supply between several EU Member States). These controversial implications of the OPAL case have already attracted certain attention from the academic community and some concerns regarding the shift towards a more complex consideration of Member States’ interests have been also raised in the recent discussions.⁵³

The ‘Member States versus the EU institutions’ dimension seems to be slightly clearer in terms of the way the solidarity principle may be applied. Besides the ‘solidarity tests’, which are likely to be more widespread in the post-OPAL case decisions of the EU institutions, the EU legislation had already provided a certain degree of clarity with regards to the solidarity principle in the decision-making in the context of EU energy transition. For instance, the Regulation 2018/1999 on the Governance of the Energy Union and Climate Action mentions the solidarity provision in obliging Member States to take due account to Commission’s recom- mendations regarding achieving the Energy Union goals. Such an approach may be understood in line with the general idea provided in this article, which considers the solidarity principle as an important aspect in pro- viding discipline in achieving measurable and explicit common EU goals.

However, the ‘Member State versus Member State’ dimension is getting trickier in the context of the application of the solidarity principle in the areas where the clear EU goals are already established (eg the development of renewable energy). The previous ECJ case law often considered the priority of the individual Member State’s approach in meeting the national goals (even those that had been adopted as a part of general EU frameworks) over the consideration of other EU countries interests. This was, for instance, provided in the famousA˚lands vindkraftcase, where the Court interpreted the limitations of the Swedish ‘green certifi- cates’ allocation to the non-Swedish renewable energy producers resulting in a restriction of free movement of goods as legitimate, since it was proportionate to achieving Sweden’s national target in terms of the Directive 2009/28 on the promotion of the use of energy from renewable sources given to the specificity of support of renewable generation.⁵⁴It is worth noting that such an interpretation was different from the approach taken by the Advocate General Bot in this case, who did not find the arguments supporting territorial

52 This in particular relates to the active position of Poland in contesting the decisions on environmental protection adopted by the EU institutions claiming the importance of bringing them to the scope of the legal basis provided in the art 192(2)(C) due to their impact on energy sector. See eg Judgment of The Court (Second Chamber) of 21 June 2018, Case C-5/16,Republic of Poland v European Parliament and Council of the European Union, ECLI:EU:C:2018:483 or Judgment of the Court (Sixth Chamber) of 13 March 2019, Case C-128/17, Republic of Poland v European Parliament and Council of the European Union, ECLI:EU:C:2019:194.

53 See, for instance, the discussion referred in the recital 8.

54 Judgment of the Court (Grand Chamber) of 1 July 2014, C-573/12,A˚lands vindkraft AB v Energimyndigheten-Request for a Preliminary Ruling from the Fo¨rvaltningsra¨tten i Linko¨ping, ECLI:EU:C:2014:2037, para 104.

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restrictions persuasive in the context of achieving the common goal of environmental protection.⁵⁵ Some similar controversies in dealing with the issues of prioritization of individual approaches in achieving common EU goals may remain relevant in the course of further EU energy transitions, especially in the situations with the lack of harmonization of the measures in question. Unfortunately, the OPAL case is not likely to bring more clarity to these issues with regards to their interrelation with the principle of solidarity, as it also leaves many gaps in understanding of application of the principle and further risks of prioritizing of certain Member State’s approach over the common interest.

All these remaining controversies indicate the need for better elaborating the criteria of the application of the solidarity principle. I still believe that the solidarity principle has a potential to serve as an important

‘benchmark’ for assessing individual measures versus common EU goals in energy, which is to result in a compromise and mutual understanding between the EU Member States themselves and EU Member States and the EU institutions. However, this would require making a clear statement on the priority of common efforts and interests in dealing with the Union’s goals in a similar way as the solidarity principle has been applied in other spheres since the EEC era, which, unfortunately was not present in the OPAL case. Whereas the tendency for utilizing this principle to preserve individual interests may factually limit the cooperation between the Member States and lead to further mismatches and failure to achieve important compromises in terms of the approach towards the common goals of the EU in energy.

55 Opinion of Advocate General Bot delivered on 28 January 2014, C-573/12,A˚lands vindkraft AB v Energimyndigheten - Request for a preliminary ruling from the fo¨rvaltningsra¨tten i Linko¨ping, ECLI:EU:C:2014:2037, para 111.