NewGround Law ESG newsletter: key developments regarding Air Pollution

NewGround Law ESG newsletter: key developments regarding Air Pollution
By: Harry Swindin and Erwin Noordover

At NewGround Law, we recognise the importance of Environmental, Social and Governance (ESG), both to our firm and our clients. We are not the only ones who think this. The values and principles relating to the three aspects of ESG are already significantly altering capital flows, stakeholder engagement as well as national and international regulation. We vow to stay ahead of these trends. We believe that doing so will place us in an optimum position to capitalise on these changes as they materialise. Hence, the experts at NewGround Law have created a weekly newsletter to help those around us stay on top of the: key developments shaping the ESG landscape across Europe

EU Citizens may soon be able to sue Governments over Air Pollution
Advocate General Juliane Kokott, in a case regarding a French citizen suing the state over rising air pollution, has stated that national governments may be liable if air pollution levels exceed EU limits and harm citizens health.^[1] … Continue reading The relevant limits are set out within the EU Air Quality Directives.^[2]https://ec.europa.eu/environment/air/quality/existing_leg.htm

The case was brought to a French court by a resident of Paris who sought compensation amounting to   €21 million. The plaintiff claimed the French government had failed to adhere to EU limits on air pollution. The Administrative Court of Appeal of Versailles has asked the European Court of Justice (ECJ) to determine whether citizens can claim compensation from the state and if so, under what conditions.

The Advocate General, whose opinion is advisory to the ECJ’s final decision, stated that citizens may bring claims against governments on the basis of the three conditions of state liability being met. Firstly, the requirement that EU law must confer rights upon the individual can be satisfied by virtue of the EU Air Quality Directives. Secondly, that the breach must be sufficiently serious, AG Kokott suggested that this must be determined by national courts based on the nature and span of the breach. Finally, the existence of a direct causal link between the breach and the resulting damage can be satisfied if the plaintiff has remained in an area for a significant period where EU limits have been seriously violated, the plaintiff’s ill health must be a result of the air pollution and there must be a causal link. AG Kokott noted that this final requirement will be the most difficult stage for the plaintiffs to prove.

In October 2019, the ECJ found that the French government had systematically and persistently exceeded annual nitrogen dioxide limits since January 2010.^[3]https://curia.europa.eu/jcms/upload/docs/application/pdf/2019-10/cp190132en.pdf Other EU countries such as Poland, Italy and Romania have also been found guilty in the past of illegal air pollution levels. The difference between these cases and the present, however, is that they were brought by the EU Commission and not an individual citizen. The opinion in this case has gained significant attention as the standard to bring a case is significantly higher for a citizen than the Commission.

EU signs Joint Declaration with Hydrogen Industry to Rapidly Upscale Hydrogen Production
The EU commissioner for the internal market, Thierry Breton, has announced plans to rapidly upscale hydrogen power capacity in Europe.^[4]https://ec.europa.eu/commission/presscorner/detail/en/ip_22_2829 This is part of a joint declaration between the Commission and 20 industry CEOs in which the electrolyser manufacturing industry committed to a tenfold increase of its capacities by 2025 (17.5 GW per year). The announcement stated that this action was required to secure Europe’s energy supply and reduce reliance on Russian oil and gas.

Various actions were announced by the Commission, to address the key barriers which currently stand in the way of clean hydrogen. This includes; ensuring regulation and legislation supports clean hydrogen projects as well as the market, assessing state aid notification for hydrogen projects, increasing the standard of commitments from electrolyser manufacturers for project proposals, collaboration with the European Investment Bank to facilitate the financing of electrolyser manufacturing and projects, increasing communication across the supply chain through the establishment of an ‘Electrolyser Partnership’ and a joint commitment to deal with issues with key raw materials and chemicals within the framework of the EU industrial strategy.

The aid provided by the Commission is targeted directly towards clean hydrogen and not conventional hydrogen. Hydrogen power is created in three ways. Firstly, hydrogen power can be produced by burning fossil fuels (usually natural gas). This process releases considerable CO2 into the atmosphere and is not renewable. Thus, the process has been labelled as ‘grey hydrogen’. Grey hydrogen is currently the primary source of hydrogen power in the EU. The second type of hydrogen is made through an identical process to grey hydrogen with the exception that CO2 is not released from the process as it is instead sequestered using carbon capture storage technology. This is known as ‘blue hydrogen’. Finally, hydrogen can be created through the process of electrolysis. Using electrolysers (a key focus of the EU’s announcement) water and renewable energy are combined to create hydrogen and oxygen. As no fossil fuels are required and no CO2 is released into the atmosphere, this is known as ‘green hydrogen’ or ‘clean hydrogen’. Less than 4% of hydrogen power in the EU is green due to various barriers which the Commission’s joint venture aims to address.

The conflict in Ukraine has increased the costs of both grey and blue hydrogen due to the reduced availability of the fossil fuels required for the process. Notably, the cost of green hydrogen remains largely unchanged and, in fact, many industry experts predict that it’s price will decrease in the coming decade as the technology continually improves.^[5]https://ieefa.org/europe-electrolyser-pipeline-estimated-at-142-gigawatts-by-2030/ Thus, it is logical that the Commission elected to focus on this technology within its energy strategy.

EU begins revising the EU Green Public Procurement Criteria for Buildings
The European Commission is in the process of revising the Green Public Procurement (GPP) criteria for buildings purchased and/or maintained by public authorities.^[6]https://circulareconomy.europa.eu/platform/en/news-and-events/all-news/consultation-first-draft-revised-eu-green-public-procurement-criteria-buildings The GPP criteria facilitates the inclusion of green requirements in public tender contracts. While the criteria aim to provide a balance between environmental performance, cost considerations, market availability and ease of verification, authorities may choose to include all or only certain requirements. The current GPP for in-scope activities can be found in the link provided.^[7]https://ec.europa.eu/environment/gpp/eu_gpp_criteria_en.htm

The main criteria involved are; “selection criteria (what requirements a tenderer must meet to be allowed to bid); technical specifications (what requirements must be met be all bids received); award criteria (additional optional requirements that, if met, will make a bid more competitive) and contract performance clauses (specific measures that are taken to ensure that certain aspects of the winning bid have been met during the project or after the project is completed)”.^[8]https://susproc.jrc.ec.europa.eu/product-bureau/product-groups/408/home

The ongoing revision process for buildings is looking to expand the scope of the GPP criteria to other types of buildings. In particular, the Commission wishes to receive feedback from industry stakeholders on schools and social housing. The process will also consider ways to update the existing criteria for buildings in light of recent policy developments including the Renovation Wave, the Level(s) common framework and the EU Taxonomy.

The EU stresses that stakeholder input is crucial to the process. The initial consultation for the next draft technical report has now closed. However, it is expected that the Commission will once again ask for comments once the next draft has been published. For parties wishing to provide input or receive updates regarding developments in the process, you can register as a stakeholder in the link provided.^[9]https://susproc.jrc.ec.europa.eu/product-bureau/contact/register The final outcome of the revision process is expected in 2023.

---