EuGH · C-505/23

Provisional text

JUDGMENT OF THE COURT (Second Chamber)

12 November 2026 (*)

( Application for annulment – Directive (EU) 2023/959 – Amendment of Directive 2003/87/EC – System for greenhouse gas emission allowance trading within the European Union – Legal basis of that directive – Determination – Account taken of the effects of that directive – Article 192(1) TFEU – Points (a) and (c) of the first subparagraph of Article 192(2) TFEU – Provisions primarily of a fiscal nature – Measures significantly affecting a Member State’s choice between different energy sources and the general structure of its energy supply – Principles of energy solidarity, subsidiarity, proportionality, non-discrimination and sincere cooperation )

In Case C‑505/23,

ACTION for annulment under Article 263 TFEU, brought on 8 August 2023,

Republic of Poland, represented by B. Majczyna, acting as Agent,

applicant,

supported by:

Hungary, represented by M.Z. Fehér and K. Szíjjártó, acting as Agents,

intervener,

v

European Parliament, represented by O. Denkov and W.D. Kuzmienko, acting as Agents,

Council of the European Union, represented initially by R. Boucquey, A. Maceroni, M. Moore and A. Sikora-Kalėda, acting as Agents, and subsequently by R. Boucquey, A. Maceroni and M. Moore, acting as Agents, and lastly by A. Maceroni, M. Moore and K. Pleśniak, acting as Agents,

defendants,

supported by:

European Commission, represented by B. De Meester, D. Milanowska, M. Owsiany-Hornung and G. Wils, acting as Agents,

intervener,

THE COURT (Second Chamber),

composed of K. Jürimäe, President of Chamber, K. Lenaerts, President of the Court, acting as a judge of the Second Chamber, Z. Csehi, M. Gavalec (Rapporteur) and F. Schalin, Judges,

Advocate General: T. Ćapeta,

Registrar: V. Di Bucci,

having regard to the written procedure,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1        By its application, the Republic of Poland asks the Court to annul Directive (EU) 2023/959 of the European Parliament and of the Council of 10 May 2023 amending Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union and Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading system (OJ 2023 L 130, p. 134 and corrigendum OJ L, 2024/90176) (‘the contested directive’).

 Legal context

 The EU Treaty

2        Article 4(3) TEU provides:

‘Pursuant to the principle of sincere cooperation, the [European] Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties.

…’

3        Article 5(3) and (4) TEU reads as follows:

‘3.      Under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.

…

4.      Under the principle of proportionality, the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties.

…’

 The FEU Treaty

4        Article 191(2) TFEU states that:

‘Union policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Union. It shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage should as a priority be rectified at source and that the polluter should pay.

In this context, harmonisation measures answering environmental protection requirements shall include, where appropriate, a safeguard clause allowing Member States to take provisional measures, for non-economic environmental reasons, subject to a procedure of inspection by the Union.’

5        Article 192(1) TFEU and points (a) and (c) of the first subparagraph of Article 192(2) TFEU provide:

‘1.      The European Parliament and the [Council of the European Union], acting in accordance with the ordinary legislative procedure and after consulting the [European Economic and Social Committee (EESC)] and the [European Committee of the Regions (CoR)], shall decide what action is to be taken by the Union in order to achieve the objectives referred to in Article 191.

2.      By way of derogation from the decision-making procedure provided for in paragraph 1 and without prejudice to Article 114, the Council acting unanimously in accordance with a special legislative procedure and after consulting the [Parliament], the [EESC] and the [CoR], shall adopt:

(a)      provisions primarily of a fiscal nature;

…

(c)      measures significantly affecting a Member State's choice between different energy sources and the general structure of its energy supply.’

6        Article 194(1)(b) TFEU provides:

‘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 of solidarity between Member States, to:

…

(b)      ensure security of energy supply in the Union’.

 Directive 2003/87/EC

7        Recital 5 of Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ 2003 L 275, p. 32), as amended by the contested directive (‘Directive 2003/87’), states:

‘The Community and its Member States have agreed to fulfil their commitments to reduce anthropogenic greenhouse gas emissions under the Kyoto Protocol jointly, in accordance with [Council Decision 2002/358/EC of 25 April 2002 concerning the approval, on behalf of the European Community, of the Kyoto Protocol to the United Nations Framework Convention on Climate Change and the joint fulfilment of commitments thereunder (OJ 2002 L 130, p. 1)]. This Directive aims to contribute to fulfilling the commitments of the European Community and its Member States more effectively, through an efficient European market in greenhouse gas emission allowances, with the least possible diminution of economic development and employment.’

8        Article 1 of that directive, entitled ‘Subject matter’, is worded as follows:

‘This Directive establishes a system for greenhouse gas emission allowance trading within the Union (hereinafter referred to as the “EU ETS”) in order to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient manner.

This Directive also provides for the reductions of greenhouse gas emissions to be increased so as to contribute to the levels of reductions that are considered scientifically necessary to avoid dangerous climate change. It contributes to the achievement of the Union’s climate-neutrality objective and its climate targets as laid down in Regulation (EU) 2021/1119 of the European Parliament and of the Council [of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (“European Climate Law”) (OJ 2021 L 243, p. 1),] and thereby to the objectives of the Paris Agreement[, adopted on 12 December 2015 under the United Nations Framework Convention on Climate Change (OJ 2016 L 282, p. 4; “the Paris Agreement”), approved on behalf of the Union by Council Decision (EU) 2016/1841 of 5 October 2016 (OJ 2016 L 282, p. 1)].

…’

9        Article 3 of that directive, entitled ‘Definitions’, defines in point (ae) the concept of ‘regulated entity’ for the purposes of Chapter IVa as being, in essence, any natural or legal person, except for any final consumer of the fuels, that engages in the activity referred to in Annex III to that directive and which is liable to pay the excise duty which has become chargeable pursuant to Article 7 of Council Directive (EU) 2020/262 of 19 December 2019 laying down the general arrangements for excise duty (OJ 2020 L 58, p. 4).

10      Article 9 of Directive 2003/87, entitled ‘Union-wide quantity of allowances’, provides as follows in the third and fourth paragraphs thereof:

‘In 2024, the Union-wide quantity of allowances shall be decreased by 90 million allowances. In 2026, the Union-wide quantity of allowances shall be decreased by 27 million allowances. In 2024, the Union-wide quantity of allowances shall be increased by 78.4 million allowances for maritime transport. The linear factor shall be 4.3% from 2024 to 2027 and 4.4% from 2028. … The [European] Commission shall publish the Union-wide quantity of allowances by 6 September 2023.

From 1 January 2026 and 1 January 2027 respectively, the quantity of allowances shall be increased to take into account the coverage of greenhouse gas emissions other than [carbon dioxide (CO2)] emissions from maritime transport activities and the coverage of emissions of offshore ships, based on their emissions for the most recent year for which data are available. Notwithstanding Article 10(1), the allowances resulting from that increase shall be made available to support innovation in accordance with Article 10a(8).’

11      Article 10 of that directive, entitled ‘Auctioning of allowances’, provides as follows:

‘1.      …

2% of the total quantity of allowances between 2021 and 2030 shall be auctioned to establish a fund to improve energy efficiency and modernise the energy systems of certain Member States (the “beneficiary Member States”) as set out in Article 10d (the “Modernisation Fund”). The beneficiary Member States for that amount of allowances shall be the Member States with a [gross domestic product (GDP)] per capita at market prices below 60% of the Union average in 2013. The funds corresponding to that amount of allowances shall be distributed in accordance with Part A of Annex IIb.

In addition, 2,5% of the total quantity of allowances between 2024 and 2030 shall be auctioned for the Modernisation Fund. The beneficiary Member States for that amount of allowances shall be the Member States with a GDP per capita at market prices below 75% of the Union average during the period from 2016 to 2018. The funds corresponding to that amount of allowances shall be distributed in accordance with Part B of Annex IIb.

The total remaining quantity of allowances to be auctioned by Member States shall be distributed in accordance with paragraph 2.

…

3.      Member States shall determine the use of revenues generated from the auctioning of allowances referred to in paragraph 2 of this Article, except for the revenues established as own resources in accordance with Article 311, third paragraph, TFEU and entered in the Union budget. Member States shall use those revenues, with the exception of the revenues used for the compensation of indirect carbon costs referred to in Article 10a(6) of this Directive, or the equivalent in financial value of those revenues, for one or more of the following:

…

(ha)      to provide financial support to address social aspects in lower- and middle-income households, including by reducing distortive taxes, and targeted reductions of duties and charges for renewable electricity;

…

(k)      to promote skill formation and reallocation of labour in order to contribute to a just transition to a climate-neutral economy, in particular in regions most affected by the transition of jobs, in close coordination with the social partners, and to invest in upskilling and reskilling of workers potentially affected by the transition, including workers in maritime transport;

…’

12      Article 10a of that directive, entitled ‘Transitional Union-wide rules for harmonised free allocation’, provides, in paragraphs 8 and 8b thereof:

‘8.      345 million allowances from the quantity which could otherwise be allocated for free pursuant to this Article, and 80 million allowances from the quantity which could otherwise be auctioned pursuant to Article 10, as well as the allowances resulting from the reduction of free allocation referred to in paragraph 1a of this Article, shall be made available to a fund (the “Innovation Fund”) with the objective of supporting innovation in low- and zero-carbon techniques, processes and technologies that contribute significantly to the decarbonisation of the sectors covered by this Directive and contribute to zero pollution and circularity objectives, including projects aimed at scaling up such techniques, processes and technologies with a view to their broad roll-out across the Union. Such projects shall possess significant greenhouse gas emissions abatement potential and contribute to energy and resource savings in line with the Union’s climate and energy targets for 2030.

…

Moreover, 5 million allowances from the quantity referred to in Article 3c(5) and (7) relating to aviation allocations for 2026 shall be made available for innovation support as referred to in the first subparagraph of this paragraph.

In addition, 50 million unallocated allowances from the market stability reserve shall supplement any remaining revenues from the 300 million allowances available in the period from 2013 to 2020 … and shall be used in a timely manner for innovation support as referred to in the first subparagraph of this paragraph.

…

8b.      40 million allowances from the quantity which could otherwise be allocated for free pursuant to this Article, and 10 million allowances from the quantity which could otherwise be auctioned pursuant to Article 10 of this Directive shall be made available for the Social Climate Fund established by Regulation (EU) 2023/955 of the European Parliament and of the Council [of 10 May 2023 establishing a Social Climate Fund and amending Regulation (EU) 2021/1060 (OJ 2023 L 130, p. 1)]. The Commission shall ensure that the allowances destined for the Social Climate Fund are auctioned in 2025 …’

13      Article 10b of Directive 2003/87, entitled ‘Transitional measures to support certain energy intensive industries in the event of carbon leakage’, provides, in the second subparagraph of paragraph 4 thereof:

‘In a Member State where, on average in the years from 2014 to 2018, its share of emissions from district heating of the Union total of such emissions, divided by that Member State’s share of GDP of the Union’s total GDP, is greater than five, an additional free allocation of 30% of the quantity determined pursuant to Article 10a shall be given to district heating for the period from 2026 to 2030, provided that an investment volume equivalent to the value of that additional free allocation is invested to significantly reduce emissions before 2030 in accordance with climate-neutrality plans referred to in the third subparagraph of this paragraph and that the achievement of the targets and milestones referred to in point (b) of that subparagraph is confirmed by the verification carried out in accordance with the fourth subparagraph of this paragraph.’

14      Article 10d of that directive, entitled ‘Modernisation Fund’, provides, in paragraphs 1, 2 and 4 thereof:

‘1.      A [Modernisation fund] to support investments proposed by the beneficiary Member States, including the financing of small-scale investment projects, to modernise energy systems and improve energy efficiency shall be established for the period from 2021 to 2030 … The Modernisation Fund shall be financed through the auctioning of allowances as set out in Article 10, for the beneficiary Member States set out therein.

The investments supported shall be consistent with the aims of this Directive, as well as the objectives of the communication of the Commission of 11 December 2019 on “The European Green Deal” and [the objectives of the European Climate Law] and the long-term objectives as expressed in the Paris Agreement. … No support from the Modernisation Fund shall be provided to energy generation facilities that use fossil fuels. However, revenue from allowances covered by a notification pursuant to paragraph 4 of this Article may be used for investments involving gaseous fossil fuels.

…

2.      At least 80% of the revenue from allowances referred to in Article 10(1), third subparagraph, and from allowances covered by a notification pursuant to paragraph 4 of this Article, and at least 90% of the revenue from allowances referred to in Article 10(1), fourth subparagraph, shall be used to support investments in the following:

…

(e)      support for low-income households, including in rural and remote areas, to address energy poverty and to modernise their heating systems; and

(f)      a just transition in carbon-dependent regions in the beneficiary Member States, so as to support the redeployment, reskilling and up-skilling of workers, education, job-seeking initiatives and start-ups, in dialogue with civil society and social partners, in a manner that is consistent with and contributes to the relevant actions included by the Member States in their territorial just transition plans in accordance with Article 8(2), first subparagraph, point (k), of Regulation (EU) 2021/1056 [of the European Parliament and of the Council of 24 June 2021 establishing the Just Transition Fund (OJ 2021 L 231, p. 1)], where relevant.

…

4.      Any Member State concerned may use the total free allocation granted pursuant to Article 10c(4), or part of that allocation, and the amount of allowances distributed for the purposes of solidarity, growth and interconnections within the Union in accordance with Article 10(2)(b), or part of that amount, in accordance with Article 10d, to support investments within the framework of the Modernisation Fund, thereby increasing the resources distributed to that Member State. …’

15      Article 10e of that directive, entitled ‘Recovery and Resilience Facility’, provides, in paragraphs 1 and 4 thereof:

‘1.      As an extraordinary and one-time measure, until 31 August 2026, the allowances auctioned pursuant to paragraphs 2 and 3 of this Article shall be auctioned until the total amount of revenue obtained from such auctioning has reached EUR 20 billion. That revenue shall be made available to the Recovery and Resilience Facility established by Regulation (EU) 2021/241 of the Parliament and of the Council [of 12 February 2021 establishing the Recovery and Resilience Facility (OJ 2021 L 57, p. 17)] and shall be implemented in accordance with the provisions of that Regulation.

…

4.      By way of derogation from Article 1(5a) of Decision (EU) 2015/1814 [of the European Parliament and of the Council of 6 October 2015 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and amending Directive 2003/87/EC (OJ 2015 L 264, p. 1)] 27 million unallocated allowances in the market stability reserve from the total quantity which would otherwise be invalidated over that period shall be used to support innovation, as referred to in Article 10a(8), first subparagraph, of this Directive.’

16      Article 16 of Directive 2003/87, headed ‘Penalties’, provides:

‘1.      Member States shall lay down the rules on penalties applicable to infringements of the national provisions adopted pursuant to this Directive and shall take all measures necessary to ensure that such rules are implemented. The penalties provided for must be effective, proportionate and dissuasive. Member States shall notify these provisions to the Commission and shall notify it without delay of any subsequent amendment affecting them.

2.      Member States shall ensure the publication of the names of operators, aircraft operators and shipping companies that are in breach of requirements to surrender sufficient allowances under this Directive.

…’

17      Article 30 of that directive, entitled ‘Review in the light of the implementation of the Paris Agreement and the development of carbon markets in other major economies’, provides in paragraph 1:

‘This Directive shall be kept under review in the light of international developments and efforts undertaken to achieve the long-term objectives of the Paris Agreement, and of any relevant commitments resulting from the Conferences of the Parties to the United Nations Framework Convention on Climate Change [(UNFCCC)].’

18      Chapter IVa of that directive, entitled ‘Emissions trading system for buildings, road transport and additional sectors [“the ETS 2”]’, comprises paragraphs 30a to 30k thereof.

19      Article 30a of Directive 2003/87, entitled ‘Scope’, provides:

‘The provisions of this Chapter shall apply to emissions, greenhouse gas emissions permits, the issue and surrender of allowances, monitoring, reporting and verification in respect of the activity referred to in Annex III. This Chapter shall not apply to any emissions covered by Chapters II and III.’

20      Article 30b of that directive, entitled ‘Greenhouse gas emissions permits’, provides, in paragraph 1:

‘Member States shall ensure that, from 1 January 2025, no regulated entity carries out the activity referred to in Annex III unless that regulated entity holds a permit issued by a competent authority in accordance with paragraphs 2 and 3 of this Article.’

21      Article 30c of that directive, entitled ‘Union-wide quantity of allowances’, provides, in paragraphs 1 and 2:

‘1.      The Union-wide quantity of allowances issued under this Chapter each year from 2027 shall decrease in a linear manner beginning in 2024. The 2024 value shall be defined as the 2024 emission limits, calculated on the basis of the reference emissions under Article 4(2) of Regulation (EU) 2018/842 of the European Parliament and of the Council [of 30 May 2018 on binding annual greenhouse gas emission reductions by Member States from 2021 to 2030 contributing to climate action to meet commitments under the Paris Agreement and amending Regulation (EU) No 525/2013 (OJ 2018 L 156, p. 26)] for the sectors covered by this Chapter and applying the linear reduction trajectory for all emissions within the scope of that Regulation. The quantity shall decrease each year after 2024 by a linear reduction factor of 5,10%. By 1 January 2025, the Commission shall publish the Union-wide quantity of allowances for the year 2027.

2.      The Union-wide quantity of allowances issued under this Chapter each year from 2028 shall decrease in a linear manner beginning from 2025 on the basis of the average emissions reported under this Chapter for the years 2024 to 2026. The quantity of allowances shall decrease by a linear reduction factor of 5,38%, except if the conditions set out in point 1 of Annex IIIa apply, in which case the quantity shall decrease by a linear reduction factor adjusted in accordance with the rules set out in point 2 of Annex IIIa. By 30 June 2027, the Commission shall publish the Union-wide quantity of allowances for 2028 and, if required, the adjusted linear reduction factor.’

22      Article 30d of Directive 2003/87, entitled ‘Auctioning of allowances for the activity referred to in Annex III’, provides:

‘1.      From 2027, allowances covered by this Chapter shall be auctioned, unless they are placed in the market stability reserve established by Decision [2015/1814]. The allowances covered by this Chapter shall be auctioned separately from the allowances covered by Chapters II and III of this Directive.

…

3.      150 million allowances issued under this Chapter shall be auctioned and all revenues from those auctions made available for the Social Climate Fund established by Regulation [2023/955] until 2032.

4.      From the remaining amount of allowances and in order to generate, together with the revenue from the allowances referred to in paragraph 3 of this Article and Article 10a(8b) of this Directive, a maximum amount of EUR 65 000 000 000, the Commission shall ensure that an additional amount of allowances covered by this Chapter is auctioned and the revenues from those auctions are made available for the Social Climate Fund established by Regulation [2023/955] until 2032.

…

6.      Member States shall determine the use of revenues generated from the auctioning of allowances referred to in paragraph 5 of this Article, except for the revenues constituting external assigned revenue in accordance with paragraph 4 of this Article or the revenues established as own resources in accordance with Article 311, third paragraph, TFEU and entered in the Union budget. Member States shall use their revenues or the equivalent in financial value of those revenues for one or more of the purposes referred to in Article 10(3) of this Directive, giving priority to activities that can contribute to addressing social aspects of the emissions trading under this Chapter, or for one or more of the following:

(a)      measures intended to contribute to the decarbonisation of heating and cooling of buildings or to the reduction of the energy needs of buildings, including the integration of renewable energies and related measures in accordance with Article 7(11) and Articles 12 and 20 of Directive 2012/27/EU [of the European Parliament and of the Council of 25 October 2012 on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC (OJ 2012 L 315, p. 1)] as well as measures to provide financial support for low-income households in worst-performing buildings;

(b)      measures intended to accelerate the uptake of zero-emission vehicles or to provide financial support for the deployment of fully interoperable refuelling and recharging infrastructure for zero-emission vehicles, or measures to encourage a shift to public transport and improve multimodality, or to provide financial support in order to address social aspects concerning low- and middle-income transport users;

…’

23      Article 30e of Directive 2003/87, entitled ‘Transfer, surrender and cancellation of allowances’, provides in its paragraph 3:

‘Until 31 December 2030, by way of derogation from paragraphs 1 and 2 of this Article, where a regulated entity established in a given Member State is subject to a national carbon tax in force for the years 2027 to 2030, covering the activity referred to in Annex III, the competent authority of the Member State concerned may exempt that regulated entity from the obligation to surrender allowances under paragraph 2 of this Article for a given reference year, provided that:

(a)      the Member State concerned notifies the Commission of that national carbon tax by 31 December 2023, and the national law setting the tax rates applicable for the years 2027 to 2030 has, by that date, entered into force; the Member State concerned shall notify the Commission of any subsequent change to the national carbon tax;

(b)      for the reference year, the national carbon tax of the Member State concerned effectively paid by that regulated entity is higher than the average auction clearing price of the emissions trading system established under this Chapter;

(c)      the regulated entity fully complies with the obligations under Article 30b on greenhouse emissions permits and Article 30f on monitoring, reporting and verification of its emissions;

(d)      the Member State concerned notifies the Commission of the application of any such exemption and the corresponding amount of allowances to be cancelled in accordance with point (g) of this subparagraph and the delegated acts adopted pursuant to Article 10(4), by 31 May of the year after the reference year;

(e)      the Commission does not raise an objection to the application of the derogation on the ground that the measure notified is not in conformity with the conditions set out in this paragraph, within three months of a notification under point (a) of this subparagraph or within one month of the notification for the relevant year under point (d) of this subparagraph;

…’

24      Article 30f of that directive, entitled ‘Monitoring, reporting, verification of emissions and accreditation’, provides, in paragraph 4:

‘Member States shall ensure that each regulated entity holding a permit in accordance with Article 30b on 1 January 2025 reports its historical emissions for the year 2024 by 30 April 2025.’

25      Article 30h of that directive, entitled ‘Measures in the event of an excessive price increase’, provides, in paragraphs 1 to 3:

‘1.      Where, for more than three consecutive months, the average price of allowances in the auctions carried out in accordance with the delegated acts adopted pursuant to Article 10(4) of this Directive is more than twice the average price of allowances during the six preceding consecutive months in the auctions for the allowances covered by this Chapter, 50 million allowances covered by this Chapter shall be released from the market stability reserve in accordance with Article 1a(7) of Decision [2015/1814].

For the years 2027 and 2028, the condition referred to in the first subparagraph shall be met where, for more than three consecutive months, the average price of allowances is more than 1,5 times the average price of allowances during the reference period of the six preceding consecutive months.

2.      Where the average price of allowances referred to in paragraph 1 of this Article exceeds a price of EUR 45 for a period of two consecutive months, 20 million allowances covered by this Chapter shall be released from the market stability reserve in accordance with Article 1a(7) of Decision [2015/1814]. Indexation based on the European index of consumer prices for 2020 shall apply. Allowances shall be released through the mechanism provided for in this paragraph up to 31 December 2029.

3.      Where the average price of allowances referred to in paragraph 1 of this Article is more than three times the average price of allowances during the six preceding consecutive months, 150 million allowances covered by this Chapter shall be released from the market stability reserve in accordance with Article 1a(7) of Decision [2015/1814].’

26      Part A of Annex IIb to Directive 2003/87, entitled ‘Distribution of funds from the modernisation fund corresponding to article 10(1), third subparagraph’, provides that the share of the Republic of Poland is 43.41% of those funds. Part B of that annex, entitled ‘Distribution of funds from the modernisation fund corresponding to Article 10(1), fourth subparagraph’, provides that the share of the Republic of Poland is 34.20% of those funds.

 Regulation (EU) 2018/842

27      Article 4 of Regulation 2018/842, as amended by Regulation (EU) 2023/857 of the European Parliament and of the Council of 19 April 2023 (OJ 2023 L 111, p. 1) (‘Regulation 2018/842’), entitled ‘Annual emission levels for the period from 2021 to 2030’, provides in paragraph 1:

‘Each Member State shall, in 2030, limit its greenhouse gas emissions at least by the percentage set for that Member State in column 2 of Annex I in relation to its greenhouse gas emissions in 2005, determined pursuant to paragraph 3 of this Article.’

28      The adoption of Regulation 2023/857 had the consequence of bringing the reduction of greenhouse gas emissions required of the Republic of Poland in 2030, compared with their levels in 2005, from 7% to 17.7%.

 European Climate Law

29      Article 2 of the European Climate Law, entitled ‘Climate-neutrality objective’, is worded as follows:

‘1.      Union-wide greenhouse gas emissions and removals regulated in Union law shall be balanced within the Union at the latest by 2050, thus reducing emissions to net zero by that date, and the Union shall aim to achieve negative emissions thereafter.

2.      The relevant Union institutions and the Member States shall take the necessary measures at Union and national level, respectively, to enable the collective achievement of the climate-neutrality objective set out in paragraph 1, taking into account the importance of promoting both fairness and solidarity among Member States and cost-effectiveness in achieving this objective.’

30      Article 4 of the European Climate Law, entitled ‘Intermediate Union climate targets’, provides in paragraph 1:

‘In order to reach the climate-neutrality objective set out in Article 2(1), the binding Union 2030 climate target shall be a domestic reduction of net greenhouse gas emissions (emissions after deduction of removals) by at least 55% compared to 1990 levels by 2030.

When implementing the target referred to in the first subparagraph, the relevant Union institutions and the Member States shall prioritise swift and predictable emission reductions and, at the same time, enhance removals by natural sinks.

…’

 Regulation (EU) 2023/435

31      Recital 1 of Regulation (EU) 2023/435 of the European Parliament and of the Council of 27 February 2023 amending Regulation 2021/241 as regards REPowerEU chapters in recovery and resilience plans and amending Regulations (EU) No 1303/2013, (EU) 2021/1060 and (EU) 2021/1755, and Directive 2003/87 (OJ 2023 L 63, p. 1) states:

‘Since the adoption of Regulation [2021/241], which established the Recovery and Resilience Facility … unprecedented geopolitical events triggered by Russia’s war of aggression against Ukraine and their direct and indirect aggravation of the consequences of the COVID-19 crisis have considerably affected the Union’s society and economy, its people and its economic, social and territorial cohesion. In particular, it is clearer than ever that the Union’s energy security and energy independence are indispensable for a successful, sustainable and inclusive recovery from the COVID-19 crisis, as they are also major factors contributing to the resilience of the Union’s economy.’

 Decision (EU) 2023/852

32      Recital 9 of Decision (EU) 2023/852 of the European Parliament and of the Council of 19 April 2023 amending Decision 2015/1814 as regards the number of allowances to be placed in the market stability reserve for the Union greenhouse gas emission trading system until 2030 (OJ 2023 L 110, p. 21) states:

‘In order to address the structural imbalance between supply of and demand for allowances in the market, Decision [2015/1814] established a market stability reserve … in 2018, which has been operational since 2019. Without prejudice to further revisions of the reserve as part of the general revision of Directive [2003/87] and of Decision [2015/1814] in 2023, the Commission should continuously monitor the functioning of the reserve and ensure that the reserve is kept fit for purpose in case of future unforeseeable external shocks. A robust and forward-looking reserve is essential to ensure the integrity of the EU ETS and to effectively steer the EU ETS so that it can contribute, as a policy tool, to achieving the Union’s climate-neutrality objective by 2050 at the latest and to the aim of achieving negative emissions thereafter, as laid down in [the European Climate Law].’

 Regulation 2023/955

33      The third paragraph of Article 1 of Regulation 2023/955 is worded as follows:

‘The measures and investments supported by the Fund shall benefit households, micro-enterprises and transport users, which are vulnerable and particularly affected by the inclusion of greenhouse gas emissions from buildings and road transport [“the BRT sectors”] within the scope of Directive [2003/87], in particular households in energy poverty or households in transport poverty.’

34      According to Article 2(1) of that regulation, ‘energy poverty’ means ‘a household’s lack of access to essential energy services that underpin a decent standard of living and health, including adequate warmth, cooling, lighting, and energy to power appliances, in the relevant national context, existing social policy and other relevant policies’.

35      Annex II to that regulation, entitled ‘Maximum financial allocation for each Member State under the Fund pursuant to Articles 10 and 14’, provides that, for the period from 2026 to 2032, the maximum financial allocation for the Republic of Poland represents 17.60% of the total allocation for all of the Member States, which could reach an amount of EUR 11 439 026 446, pursuant to the first and second subparagraphs of Article 10(1), and an amount of EUR 9 608 782 215 pursuant to the third subparagraph of Article 10(1) of that regulation.

 Regulation (EU) 2023/956

36      Recital 12 of Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism (OJ 2023 L 130, p. 52) states:

‘The [carbon border adjustment mechanism (CBAM)] seeks to replace those existing mechanisms by addressing the risk of carbon leakage in a different way, namely by ensuring equivalent carbon pricing for imports and domestic products. To ensure a gradual transition from the current system of free allowances to the CBAM, the CBAM should be progressively phased in while free allowances in sectors covered by the CBAM are phased out. The combined and transitional application of EU ETS allowances allocated free of charge and of the CBAM should in no case result in more favourable treatment for Union goods compared to goods imported into the customs territory of the Union.’

 The contested directive

37      Recitals 1 to 9, 17, 20, 39, 43, 64, 70, 75, 77, 78, 80, 81, 84, 90, 91 and 107 of the contested directive state:

‘(1)      The Paris Agreement … entered into force on 4 November 2016. The Parties to the Paris Agreement have agreed to hold the increase in the global average temperature well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1,5 °C above pre-industrial levels. That commitment has been reinforced with the adoption under the UNFCCC of the Glasgow Climate Pact on 13 November 2021, in which the Conference of the Parties to the UNFCCC, serving as the meeting of the Parties to the Paris Agreement, recognises that the impacts of climate change will be much lower at a temperature increase of 1.5 °C … compared with 2 °C, and resolves to pursue efforts to limit the temperature increase to 1.5 °C.

(2)      The urgency of the need to keep the Paris Agreement goal of 1,5 °C alive has become more significant following the findings of the Intergovernmental Panel on Climate Change in its Sixth Assessment Report that global warming can only be limited to 1,5 °C if strong and sustained reductions in global greenhouse gas emissions within this decade are immediately undertaken.

(3)      Tackling climate- and environmental-related challenges and reaching the objectives of the Paris Agreement are at the core of the communication of the Commission of 11 December 2019 on “The European Green Deal” (the “European Green Deal”).

(4)      The European Green Deal combines a comprehensive set of mutually reinforcing measures and initiatives aimed at achieving climate neutrality in the Union by 2050, and sets out a new growth strategy that aims to transform the Union into a fair and prosperous society, with a modern, resource-efficient and competitive economy where economic growth is decoupled from resource use. It also aims to protect, conserve and enhance the Union’s natural capital, and protect the health and well-being of citizens from environment-related risks and impacts. This transition affects workers from various sectors differently. At the same time, that transition has gender equality aspects as well as a particular impact on some disadvantaged and vulnerable groups, such as older people, persons with disabilities, persons with a minority racial or ethnic background and low and lower-middle income individuals and households. It also imposes greater challenges on certain regions, in particular structurally disadvantaged and peripheral regions, as well as on islands. It must therefore be ensured that the transition is just and inclusive, leaving no one behind.

(5)      … As the [EU ETS], established by Directive [2003/87], is a cornerstone of the Union’s climate policy and constitutes its key tool for reducing greenhouse gas emissions in a cost-effective way, the amendments to Directive [2003/87], including with regard to the scope thereof, adopted through this Directive are part of the essential elements of the “Fit for 55” package.

(6)      The necessity and the value of delivering on the European Green Deal have only grown in light of the very severe effects of the COVID-19 pandemic on the health, the living and working conditions and the well-being of the Union’s citizens. Those effects have shown that our society and our economy need to improve their resilience in relation to external shocks and act early to prevent or mitigate the effects of external shocks in a manner that is just and results in no one being left behind, including those at risk of energy poverty. European citizens continue to express strong views that this applies in particular to climate change.

(7)      The Union committed to reducing the Union’s economy-wide net greenhouse gas emissions by at least 55% compared to 1990 levels by 2030 in the updated [nationally determined contribution] submitted to the UNFCCC Secretariat on 17 December 2020.

(8)      Through the adoption of [the European Climate Law], the Union has enshrined in legislation the objective of economy-wide climate neutrality by 2050 at the latest and the aim of achieving negative emissions thereafter. That [law] also establishes a binding Union domestic reduction target for net greenhouse gas emissions (emissions after deduction of removals) of at least 55% compared to 1990 levels by 2030, and provides that the Commission is to endeavour to align all future draft measures or legislative proposals, including budgetary proposals, with the objectives of that Regulation and, in any case of non-alignment, provide the reasons for such non-alignment as part of the impact assessment accompanying those proposals.

(9)      All sectors of the economy need to contribute to achieving the emission reductions established by [the European Climate Law]. Therefore, the ambition of the EU ETS should be adjusted so as to be in line with the economy-wide net greenhouse gas emission reduction target for 2030, the objective of achieving climate neutrality by 2050 at the latest and the aim of achieving negative emissions thereafter, as laid down in [the European Climate Law].

…

(17)      International maritime transport activity, consisting of voyages between ports under the jurisdiction of two different Member States or between a port under the jurisdiction of a Member State and a port outside the jurisdiction of any Member State, has been the only means of transportation not included in the Union’s past commitments to reduce greenhouse gas emissions. Emissions from fuel sold in the Union for voyages that depart in one Member State and arrive in a different Member State or a third country have grown by around 36% since 1990. Those emissions represent close to 90% of all Union navigation emissions, as emissions from fuel sold in the Union for voyages departing from and arriving in the same Member State have been reduced by 26% since 1990. In a business-as-usual scenario, emissions from international maritime transport activities are projected to grow by around 14% between 2015 and 2030 and by 34% between 2015 and 2050. If the climate change impact of maritime transport activities grows as projected, it would significantly undermine reductions made by other sectors to combat climate change and therefore to achieve the economy-wide net greenhouse gas emission reduction target for 2030, the Union’s climate-neutrality objective by 2050 at the latest, and the aim of achieving negative emissions thereafter, as laid down in [the European Climate Law], and the objectives of the Paris Agreement.

…

(20)      [CO2] emissions from maritime transport account for around 3 to 4% of Union emissions. … In this context, Directive [2003/87] should be amended to include maritime transport in the EU ETS in order to ensure that that sector contributes its fair share to the increased climate objectives of the Union as well as to the objectives of the Paris Agreement …

…

(39)      Achieving the Union’s emission reduction target for 2030 will require a reduction in the emissions of the sectors covered by the EU ETS of 62% compared to 2005. The Union-wide quantity of allowances of the EU ETS needs to be reduced to create the necessary long-term carbon price signal and impetus for that degree of decarbonisation. The total quantity of allowances should be reduced in 2024 and 2026 to bring it more in line with actual emissions. Moreover, the linear reduction factor should be increased in 2024 and in 2028, also taking into account the inclusion of emissions from maritime transport. The steeper cap trajectory resulting from those changes will lead to significantly greater levels of cumulative emission reductions up to 2030 than would have occurred pursuant to Directive (EU) 2018/410 [of the European Parliament and of the Council of 14 March 2018 amending Directive 2003/87 to enhance cost-effective emission reductions and low-carbon investments, and Decision 2015/1814 (OJ 2018 L 76, p. 3)]. …

…

(43)      To address the distributional and social effects of the transition in low-income Member States, an additional amount of 2,5% of the Union-wide quantity of allowances from 2024 to 2030 should be used to fund the energy transition of the Member States with a [GDP] per capita below 75% of the Union average in the years 2016 to 2018, through the Modernisation Fund referred to in Article 10d of Directive [2003/87].

…

(64)      The scope of the Modernisation Fund should be aligned with the most recent climate objectives of the Union by requiring that investments are consistent with the objectives of the European Green Deal and [the European Climate Law], and eliminating the support to any investments related to energy generation based on fossil fuels, except as regards the support for such investments with revenue from allowances voluntarily transferred to the Modernisation Fund in accordance with Article 10d(4) of Directive [2003/87]. In addition, limited support for such investments should continue to be possible with revenue from the allocations referred to in Article 10(1), third subparagraph, of that Directive under certain conditions, in particular where the activity qualifies as environmentally sustainable under Regulation (EU) 2020/852 of the European Parliament and of the Council [of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ 2020 L 198, p. 13)] and as regards the allowances auctioned until 2027. For the latter category of allowances, the downstream uses of non-solid fossil fuels should, in addition, not be supported with revenue from allowances auctioned after 2028. Furthermore, the percentage of the Modernisation Fund that needs to be devoted to priority investments should be increased to 80% for the Modernisation Fund allowances transferred in accordance with Article 10d(4) of Directive [2003/87] and referred to in Article 10(1), third subparagraph, of that Directive, and to 90% for the additional amount of 2,5% from the Union-wide quantity of allowances.

Energy efficiency including in industry, transport, buildings, agriculture and waste; heating and cooling from renewable sources; as well as support for households to address energy poverty, including in rural and remote areas, should be included within the scope of the priority investments. …

…

(70)      The exclusion from the EU ETS of installations exclusively using biomass has led to situations where installations combusting a high share of biomass have obtained windfall profits by receiving free allowances greatly exceeding actual emissions. Therefore, a threshold value for zero-rated biomass combustion should be introduced, above which installations are excluded from the EU ETS. The introduction of a threshold would provide more certainty as to which installations are under the EU ETS scope and would enable free allowances to be more evenly distributed to sectors more at risk of carbon leakage in particular. The threshold should be set at a level of 95% to balance the advantages and disadvantages for installations of remaining under the scope of the EU ETS. Therefore, installations that have retained the physical capacity to burn fossil fuels should not be incentivised to revert to the use of such fuels. A threshold of 95% would ensure that if an installation uses fossil fuels with the purpose of remaining within the scope of the EU ETS to benefit from free allocation allowances, the carbon costs related to the use of those fossil fuels would be sufficiently important to act as a disincentive.

…

(75)      … the Commission announced that a further expansion of emissions trading could include emissions from [BRT sectors], while indicating that covering all emissions from fuel combustion would present important benefits. Emissions trading should be applied to fuels used for combustion in the [BRT sectors] as well as in additional sectors which correspond to industrial activities not covered by Annex I to Directive [2003/87][(“additional sectors”)] such as the heating of industrial facilities … For those sectors, a separate but parallel emissions trading system should be established to avoid any disturbance of the well-functioning emissions trading system for stationary installations and aviation. The new system is accompanied by complementary policies shaping expectations of market participants and aiming for a carbon price signal for the whole economy while providing measures to avoid undue price impacts. Previous experience has shown that the development of the new system requires setting up an efficient monitoring, reporting and verification system. With a view to ensuring synergies and consistency with the existing Union infrastructure for the EU ETS, it is appropriate to set up an emissions trading system for the buildings, road transport and additional sectors via an amendment to Directive [2003/87].

…

(77)      Due to the very large number of small emitters in the buildings, road transport and additional sectors, it is not possible to establish the point of regulation at the level of entities directly emitting greenhouse gases, as is the case for stationary installations and aviation. Therefore, for reasons of technical feasibility and administrative efficiency, it is more appropriate to establish the point of regulation further upstream in the supply chain. The act that triggers the compliance obligation under the new emissions trading system should be the release for consumption of fuels which are used for combustion in the [BRT sectors], including for road transport of greenhouse gases for the purpose of their geological storage, as well as in the additional sectors which correspond to industrial activities not covered by Annex I to Directive [2003/87]. To avoid double coverage, the release for consumption of fuels which are used in activities under Annex I to that Directive should not be covered.

(78)      The regulated entities in the buildings, road transport and additional sectors and the point of regulation should be defined in line with the system of excise duty established by … Directive [2020/262], with the necessary adaptations, as that Directive already lays down a robust control system for all quantities of fuels released for consumption for the purposes of paying excise duties. …

…

(80)      The total quantity of allowances for the new emissions trading system should follow a linear trajectory to reach the emission reduction target for 2030, taking into account the cost-efficient contribution of the [BRT sectors] of 43% emission reductions by 2030 compared to 2005 and of the additional sectors, a combined cost-efficient contribution of 42% emission reductions by 2030 compared to 2005. The total quantity of allowances should be established for the first time in 2027, to follow a trajectory starting in 2024 from the value of the 2024 emissions limits, calculated in accordance with Article 4(2) of Regulation [2018/842] on the basis of the reference emissions for the sectors covered for 2005 and the period from 2016 to 2018 as determined under Article 4(3) of that Regulation. Accordingly, the linear reduction factor should be set at 5,10%. From 2028, the total quantity of allowances should be set on the basis of the average reported emissions for the years 2024, 2025 and 2026, and should decrease by the same absolute annual reduction rate as set from 2024, which corresponds to a 5,38% linear reduction factor compared to the comparable 2025 value of the above defined trajectory. If those emissions are significantly higher than that trajectory value and if such divergence is not due to small-scale differences in emission measurement methodologies, the linear reduction factor should be adjusted to reach the required level of emission reduction in 2030.

(81)      The auctioning of allowances is the simplest and the most economically efficient method for allocating emission allowances, and also avoids windfall profits. Both the buildings and road transport sectors are under relatively little or non-existent competitive pressure from outside the Union and are not exposed to a risk of carbon leakage. Therefore, allowances for buildings and road transport should only be allocated via auctioning, without there being any free allocation.

…

(84)      The introduction of the carbon price in the [BRT sectors] should be accompanied by effective social compensation, especially in view of the existing levels of energy poverty. About 34 million Europeans, nearly 6,9% of the Union population, have said that they cannot afford to heat their home sufficiently in a 2021 Union-wide survey. To achieve effective social and distributional compensation, Member States should be required to spend the auction revenues from emissions trading for the buildings, road transport and additional sectors on the climate and energy-related purposes already specified for the existing emissions trading system, giving priority to activities that can contribute to addressing social aspects of the emissions trading in the buildings, road transport and additional sectors, or for measures added specifically to address related concerns for those sectors, including related policy measures under Directive [2012/27].

A new Social Climate Fund established by Regulation [2023/955] will provide dedicated funding to Member States to support the most affected vulnerable groups, especially households in energy or transport poverty. The Social Climate Fund will promote fairness and solidarity between and within Member States while mitigating the risk of energy and transport poverty during the transition. It will build on and complement existing solidarity mechanisms, in synergy with other Union spending programmes and funds. 50 million allowances from the EU ETS pursuant to Article 10a(8b) of Directive [2003/87] and 150 million allowances from emissions trading in the buildings, road transport and additional sectors, and revenue generated from the auctioning of allowances concerning the buildings, road transport and additional sectors, up to a maximum of EUR 65 000 000 000, should be used for the financing of the Social Climate Fund in the form of external assigned revenue on a temporary and exceptional basis, pending the discussions and deliberations on the Commission’s proposal of 22 December 2021 for a Council Decision amending [Council] Decision (EU, Euratom) 2020/2053 [of 14 December 2020 on the system of own resources of the European Union and repealing Decision 2014/335/EU, Euratom (OJ 2020 L 424, p. 1)] concerning the establishment of a new own resource based on the EU ETS in accordance with Article 311, third paragraph, TFEU.

…

(90)      It is appropriate to introduce measures to address the potential risk of excessive price increases, which, if particularly high at the start of the new emissions trading system, may undermine the readiness of households and individuals to invest in reducing their greenhouse gas emissions. Those measures should complement the safeguards provided by the market stability reserve and that became operational in 2019. While the market will continue to determine the carbon price, safeguard measures will be triggered by a rules-based automatic mechanism, whereby allowances will be released from the market stability reserve only if one or more concrete triggering conditions based on the increase in the average allowance price are met. This additional mechanism should also be highly reactive, in order to address excessive volatility due to factors other than changed market fundamentals. … This should be without prejudice to any accompanying measures that Member States might adopt to address adverse social impacts.

(91)      In order to increase certainty for citizens that the carbon price in the initial years of the new emissions trading system does not go above EUR 45, it is appropriate to include an additional price stability mechanism to release allowances from the market stability reserve in the event the carbon price exceeds that level. In principle, the measure should apply once during a period of 12 months. … In view of the aim of this mechanism to ensure stability in the initial years of the new emissions trading system, the Commission should assess its functioning and whether it should be continued after 2029.

…

(107)      Since the objectives of this Directive, namely to promote reductions of greenhouse gas emissions in a cost-effective and economically efficient way in a manner commensurate with the economy-wide net greenhouse gas emission reduction target for 2030 through an extended and amended Union wide market-based mechanism, cannot be sufficiently achieved by the Member States but can rather, by reason of its scale and effects, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 [TEU]. In accordance with the principle of proportionality as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.’

38      Article 3 of the contested directive, entitled ‘Transposition’, provides, in paragraph 1:

‘Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with Article 1 of this Directive by 31 December 2023. They shall apply those measures from 1 January 2024.

However, Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with the following articles by 30 June 2024:

(a)      Article 1, point (3)(d), of this Directive regarding Article 3, points (ae) to (ai), of Directive 2003/87/EC as added by that point;

(b)      Article 1, point (29), of this Directive with the exception of Article 30f(4) of Directive [2003/87] as inserted by that point; and

(c)      Article 1, point (31), of this Directive regarding Annexes III and IIIa to Directive [2003/87] as inserted by that point.

…’

 The Agreement on better law-making

39      Point 14 of the Interinstitutional Agreement between the European Parliament, the Council of the European Union and the European Commission on Better Law-Making of 13 April 2016 (OJ 2016 L 123, p. 1) (‘the Agreement on better law-making’) is worded as follows:

‘The [Parliament] and the Council, upon considering Commission legislative proposals, will take full account of the Commission’s impact assessments. To that end, impact assessments shall be presented in such a way as to facilitate the consideration by the [Parliament] and the Council of the choices made by the Commission.’

40      Under point 25, first paragraph, of that agreement:

‘The Commission shall provide, in relation to each proposal, an explanation and justification to the [Parliament] and to the Council regarding its choice of legal basis and type of legal act in the explanatory memorandum accompanying the proposal. The Commission should take due account of the difference in nature and effects between regulations and directives.’

 Forms of order sought and procedure before the Court of Justice

41      The Republic of Poland claims that the Court should:

–        annul the contested directive in its entirety; and

–        order the Parliament and the Council to pay the costs.

42      The Parliament and the Council contend that the Court should:

–        dismiss the action; and

–        order the Republic of Poland to pay the costs.

43      By decision of the President of the Court of 15 November 2023, the Commission was granted leave to intervene in support of the form of order sought by the Parliament and the Council.

44      By decision of the President of the Court of the same date, Hungary was granted leave to intervene in support of the form of order sought by the Republic of Poland.

 The action

45      In support of its action, the Republic of Poland relies on seven pleas in law, alleging an infringement of, first, point (c) of the first subparagraph of Article 192(2) TFEU; second, point (a) of the first subparagraph of Article 192(2) TFEU; third, the principle of energy solidarity, referred to in Article 194(1)(b) TFEU; fourth, the principle of subsidiarity, referred to in Article 5(3) TEU; fifth, the principle of proportionality guaranteed in Article 5(4) TEU, read in conjunction with Article 191(2) TFEU; sixth, the principle of equal treatment; and, lastly, seventh, the principle of sincere cooperation, referred to in Article 4(3) TEU.

 First and second pleas in law: infringement of point (c) of the first subparagraph of Article 192(2) TFEU and of point (a) of the first subparagraph of Article 192(2) TFEU respectively

 Arguments of the parties

46      By its first plea, the Republic of Poland, supported by Hungary, submits that, by adopting the contested directive on the basis of Article 192(1) TFEU, the EU legislature infringed point (c) of the first subparagraph of Article 192(2) TFEU, under which, by way of an exception to the decision-making procedure provided for in Article 192(1) TFEU, the Council must act unanimously when adopting measures significantly affecting a Member State’s choice between different energy sources and the general structure of its energy supply.

47      In accordance with the principle that special laws take precedence over general laws, the application of point (c) of the first subparagraph of Article 192(2) TFEU is mandatory where the conditions that is specifies are met. Accordingly, the EU legislature’s decision not to apply that provision should be clear from the travaux préparatoires for the contested directive in order for the Court to be able to review objectively whether the adoption of that directive under Article 192(1) TFEU is contrary to point (c) of the first subparagraph of Article 192(2) TFEU.

48      In the present case, the contested directive falls within a general trend on the part of the EU institutions to seek to deter Member States from using fossil fuels and to limit the freedom of choice which point (c) of the first subparagraph of Article 192(2) TFEU guarantees them in defining their energy mix. In that regard, recital 64 of the contested directive states that support for any investment linked to the production of energy from fossil fuels should be eliminated. Similarly, recital 70 of that directive states that installations that have retained the capacity to burn fossil fuels should not be incentivised to revert to the use of such fuels.

49      It is irrelevant that that directive seeks to amend Directive 2003/87 and Decision 2015/1814, which were adopted on the basis of Article 192(1) TFEU. As is apparent from the judgment of 21 June 2018, Poland v Parliament and Council (C‑5/16, EU:C:2018:483, paragraph 49), an amending act does not necessarily have to have the same legal basis as the act being amended.

50      Furthermore, contrary to what the Court held in paragraph 42 of that judgment, point (c) of the first subparagraph of Article 192(2) TFEU should apply as soon as a measure significantly affects a Member State’s choice between different energy sources and the general structure of its energy supply, and not only where the ‘principal aim’ of that measure is significantly to affect such a choice. Since that provision expressly lays down the criterion of the effect of the act in order for the exception that it provides for to apply, it would be contra legem to replace that criterion with that of the aim and content of the measure. The Republic of Poland adds that the criterion of the effect of the act is, moreover, used for the application of certain legislative procedures in given areas of EU law, such as those relating to competition law or the freedoms of movement.

51      In the light of paragraphs 41, 42 and 46 of that judgment, it would be sufficient for the institution, which is the author of an EU act, to claim, in the act itself, that its principal objective is not to influence the choice of a Member State between different sources of energy in order to justify the fact that point (c) of the first subparagraph of Article 192(2) TFEU does not constitute its legal basis. However, that interpretation runs counter to settled case-law according to which the choice of the legal basis for a legal act of the European Union cannot be based on the subjective intention of the EU institutions.

52      In that regard, in the contested directive, the EU legislature uses, more specifically from a linguistic point of view, the concepts of ‘limitation’, ‘reduction’ or ‘decrease’ of greenhouse gas emissions, while endeavouring to conceal the fact that the main objective of that directive is the decarbonisation of Member States’ economies and the phasing-out of fossil fuels as energy sources. In so doing, the EU legislature circumvented Article 194(2) TFEU, pursuant to which the measures necessary to achieve the European Union’s objectives in the field of energy ‘shall not affect a Member State's right to determine the conditions for exploiting its energy resources, its choice between different energy sources and the general structure of its energy supply, without prejudice to Article 192(2)(c) [TFEU]’.

53      The Republic of Poland also disputes the assertion, contained in the judgment of 21 June 2018, Poland v Parliament and Council (C‑5/16, EU:C:2018:483, paragraph 41), that the assumptions as to the likely impact of a measure on which the EU legislature bases its choices are, by their nature, speculative, and thus are in no way objective factors amenable to judicial review. That interpretation would render the preparation of an impact assessment superfluous and infringe the Agreement on better law-making.

54      In addition, the Court should ascertain whether the evidence relied on is factually accurate, reliable and relevant to support the conclusions drawn from it, in accordance with the judgment of 15 February 2005, Commission v Tetra Laval (C‑12/03 P, EU:C:2005:87, paragraph 39).

55      In any event, it follows from the judgment of 21 June 2018, Poland v Parliament and Council (C‑5/16, EU:C:2018:483, paragraph 42), that the assessment by the EU legislature of the effects of an act is relevant only in relation to the aim and content of that act for the purposes of examining an infringement of point (c) of the first subparagraph of Article 192(2) TFEU. Thus, since the main objective or main effect of the contested directive is to affect a Member State’s choice between different energy sources and the general structure of its energy supply, it should have been adopted on the basis of that provision.

56      The Republic of Poland considers that the intention of the EU legislature, which is expressed in the travaux préparatoires for the contested directive, should be held to be the objective criterion for the application of point (c) of the first subparagraph of Article 192(2) TFEU, together with the aim and content of the measure, having regard to the particular situation of the Member State concerned.

57      In that regard, decisive importance should be attached to Commission proposal of 14 July 2021 for a directive of the European Parliament and of the Council amending Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union, Decision (EU) 2015/1814 concerning the establishment and operation of a market stability reserve for the Union greenhouse gas emission trading scheme and Regulation (EU) 2015/757 (COM(2021) 551 final), the impact assessment report attached to that proposal (‘the impact assessment for the contested directive’) and the EU Reference Scenario for 2020, relating to the main results as regards energy, transport and greenhouse gas emissions, which is mentioned in that impact assessment.

58      The Republic of Poland submits, however, that the Commission has not demonstrated clearly, separately and objectively whether the aim and content of the contested directive meet the condition that the Republic of Poland’s choice between different energy sources and the general structure of its energy supply are significantly affected, within the meaning of point (c) of the first subparagraph of Article 192(2) TFEU. That omission on the part of the Commission forces that Member State to rely on incomplete legislative documents, such as those referred to in the preceding paragraph, in order to demonstrate that that directive should have been adopted on the basis of that provision. That situation infringes the first paragraph of point 25 of the Agreement on better law-making, according to which the Commission is to provide the Parliament and the Council, in the explanatory memorandum accompanying the proposal, and for each proposal, with an explanation and justification for its choice of legal basis and type of legal act.

59      According to the Republic of Poland, the objective of reducing greenhouse gas emissions pursued by the contested directive justifies basing the adoption of that directive on point (c) of the first subparagraph of Article 192(2) TFEU. By requiring net greenhouse gas emissions to be reduced by at least 55% by 2030 compared to greenhouse gas emission levels for 1990 and reducing them to zero by 2050, as stated in recitals 7 to 9 of the contested directive, that directive sets such an ambitious objective that its implementation by means of the ETS 2 would require the Republic of Poland to phase out the use of all polluting solid fossil fuels, while increasing the production of energy from alternative sources of energy.

60      The two main groups of provisions of the contested directive confirm that it significantly affects a Member State’s choice between different energy sources and the general structure of its energy supply, within the meaning of point (c) of the first subparagraph of Article 192(2) TFEU.

61      In the first place, the third and fourth paragraphs of Article 9 and Article 30c(1) and (2) of Directive 2003/87, read in conjunction with recitals 39 and 80 of the contested directive, impose the continuous reduction of the ceiling for available greenhouse gas emission allowances, which requires the Republic of Poland to reduce the use of solid fossil fuels as energy sources in the activities covered by the current EU ETS.

62      In the second place, Chapter IVa of, and Annex III to, Directive 2003/87 provide that the volume of fuels released for consumption for activities in the sectors covered by the ETS 2 is intended to decrease on account of the ceiling on the quantity of greenhouse gas emission allowances for the whole of the European Union.

63      Since, in Poland, the main fuels consumed are solid fossil fuels and oil-derived fuels, the ETS 2 significantly affects the choice of the Republic of Poland between different energy sources and the overall structure of its energy supply, within the meaning of point (c) of the first subparagraph of Article 192(2) TFEU.

64      That Member State therefore disputes the claim of the ‘technological neutrality’ of the ETS 2 and considers that it intentionally steers the composition of the Member States’ energy mix by requiring an increase in the share of renewable energy sources or non-carbon fuels.

65      Furthermore, in order to assess whether point (c) of the first subparagraph of Article 192(2) TFEU applies, it is necessary to assess its implementation at the level of each Member State considered individually and, consequently, the way in which the measure concerned significantly affects the choice of each Member State between different energy sources and the general structure of its energy supply. That provision does not therefore require the EU act to affect at least several Member States of the European Union as regards that choice and structure.

66      In support of its second plea in law, the Republic of Poland, supported by Hungary, claims that the ETS 2 is a ‘provision primarily of a fiscal nature’, the adoption of which should have been based on point (a) of the first subparagraph of Article 192(2) TFEU, under which, by way of an exception from the procedure laid down in Article 192(1) TFEU, the Council, acting unanimously, is to adopt provisions primarily of a fiscal nature, that is to say, rules defining fiscal solutions subject to the attainment of an environmental objective. That assessment is supported by the judgment of 29 April 2004, Commission v Council (C‑338/01, EU:C:2004:253, paragraph 37), according to which the concept of a ‘provision primarily of a fiscal nature’ must be interpreted broadly. That provision thus permits the introduction of mandatory levies, levied unilaterally, which have a budgetary purpose and the amount of which is determined by the entity imposing it.

67      That is the case with the ETS 2, which is based on the levying of tax charges on motor fuels offered for sale as motor fuels or heating fuels. Those tax charges are therefore a form of indirect tax on the consumption of a particular type of fuel. The chargeable event for the tax charge under the ETS 2 is the purchase, by a taxable person, of greenhouse gas emission allowances, the cost of which increases the unit price of the fuel sold at the time of its release for consumption. The tax charges imposed within the ETS 2 framework on fuels released for consumption are based on the potential greenhouse gas emission associated with the use of certain types of fuels, rather than on the actual greenhouse gas emissions generated by their use. The penalties also illustrate the binding nature of the tax charges and ensure the fulfilment of the obligation to surrender greenhouse gas emission allowances under the ETS 2.

68      In addition, the Republic of Poland submits that revenues from the auctioning of greenhouse gas emission allowances under the ETS 2 feed into the Social Climate Fund, the budgets of the Member States and, in the future, the EU budget, as provided for in Commission proposal of 22 December 2021 for a Council Decision amending Decision (EU, Euratom) 2020/2053 on the system of own resources of the European Union (COM(2021) 570 final). A redistributive function characteristic of taxation is conferred on the ETS 2, since the budgetary revenue it generates contributes to public funds allocated to achieving the objectives of the European Union’s climate policy, to mitigating the social impact of that policy and to achieving general budgetary objectives.

69      Furthermore, it follows in particular from Article 30h of Directive 2003/87 that the price of greenhouse gas emission allowances is not freely determined by the market, but is subject to regulation intended to prevent its increase and to keep it below EUR 45. The function of creating budgetary revenue, which characterises measures of a fiscal nature, is thus decisive as regards the choice of the legal basis for the contested directive. The Republic of Poland states that its budget will be credited with more than EUR 14 billion during the period from 2027 to 2030, while the budgets of all the Member States, for the same period, will be credited by more than EUR 172 billion.

70      Moreover, the environmental function of the ETS 2 is, to a certain extent, neutralised by the exemptions laid down for fuels produced from municipal and hazardous waste or by the exclusion from the transport sector of the use of agricultural vehicles on bitumen roads.

71      The Republic of Poland also emphasises that, if the Court were to interpret point (a) of the first subparagraph of Article 192(2) TFEU restrictively, by limiting the conditions for its application to fiscal measures which have the characteristics of a tax, that classification would have to be adopted for the ETS 2. In fact, Article 30e(3) of Directive 2003/87 treats the ETS 2 as being a measure equivalent to the taxes on CO2 emissions introduced by certain Member States before the entry into force of that directive.

72      Finally, unlike the EU ETS, the ETS 2 is not a market-based instrument but a regulatory mechanism analogous to excise duties. As a result of the changes introduced by the contested directive, the Republic of Poland considers that the judgment of 21 December 2011, Air Transport Association of America and Others (C‑366/10, EU:C:2011:864), in so far as it concerns the legal nature of the EU ETS, is obsolete.

73      The Parliament and the Council, supported by the Commission, contend that the first and second pleas in law must be rejected as unfounded.

 Findings of the Court

74      By its first and second pleas in law, the Republic of Poland submits, in essence, that the contested directive should have been adopted not on the basis of Article 192(1) TFEU but on the basis of point (a) or point (c) of the first subparagraph of Article 192(2) TFEU, due to the fact that, first, the measure concerned significantly affects, at the very least, its right to choose between different energy sources and the general structure of its energy supply and, second, the ETS 2 is a provision primarily of a fiscal nature.

75      In that regard, it should be borne in mind that the selection of either point (a) or point (c) of the first subparagraph of Article 192(2) TFEU as the legal basis for a measure is based on the same factors as those consistently taken into account by the Court in its case-law (see, to that effect, judgment of 21 June 2018, Poland v Parliament and Council, C‑5/16, EU:C:2018:483, paragraphs 37 to 39).

76      The Court has repeatedly held, first, that the choice of the legal basis for a measure may not depend simply on an institution’s conviction as to the aim pursued but must rest on objective factors which are amenable to judicial review, such as the aim and content of the measure itself (see, to that effect, judgments of 26 March 1987, Commission v Council, 45/86, EU:C:1987:163, paragraph 11; of 29 April 2004, Commission v Council, C‑338/01, EU:C:2004:253, paragraph 54; and of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 121).

77      If the choice of the legal basis for a legislative measure depended on the assessment of its likely effects, which, by its nature, is speculative, only an ex post analysis would make it possible to ascertain the real and specific effects of such a measure. That assessment cannot therefore in any way constitute an objective factor amenable to judicial review (see, to that effect, judgment of 21 June 2018, Poland v Parliament and Council, C‑5/16, EU:C:2018:483, paragraph 41).

78      Furthermore, it is settled case-law that the legality of an EU act cannot depend on retrospective considerations of its efficacy (judgments of 7 February 1973, Schroeder, 40/72, EU:C:1973:14, paragraph 14; of 5 October 1994, Crispoltoni and Others, C‑133/93, C‑300/93 and C‑362/93, EU:C:1994:364, paragraph 43; and of 12 July 2001, Jippes and Others, C‑189/01, EU:C:2001:420, paragraph 84).

79      It follows that the assessment of the expected effect of an EU act on the energy policy of a Member State may be taken into consideration only in the context of the assessment of the aim or content of that act (see, to that effect, judgment of 21 June 2018, Poland v Parliament and Council, C‑5/16, EU:C:2018:483, paragraph 42).

80      Second, the choice of the legal basis for a measure may also be based on its context, provided that that context is capable of shedding light on the objective pursued by that measure (see, to that effect, judgments of 27 February 2014, United Kingdom v Council, C‑656/11, EU:C:2014:97, paragraph 50; of 3 December 2019, Czech Republic v Parliament and Council, C‑482/17, EU:C:2019:1035, paragraph 32; of 8 December 2020, Hungary v Parliament and Council, C‑620/18, EU:C:2020:1001, paragraph 39; and of 16 February 2022, Poland v Parliament and Council, C‑157/21, EU:C:2022:98, paragraph 122).

81      In that regard, a distinction must be drawn between an act analogous to a pre-existing act and an act which amends a pre-existing act. According to the case-law that a legal basis for a measure must be determined autonomously, having regard to its own aim and content, and not to the legal basis used for the adoption of other EU measures that might, in certain cases, display similar characteristics (judgments of 10 January 2006, Commission v Parliament and Council, C‑178/03, EU:C:2006:4, paragraph 55, and of 21 June 2018, Poland v Parliament and Council, C‑5/16, EU:C:2018:483, paragraph 49). By contrast, in the case of a measure amending existing rules, it is important to take into account, for the purposes of identifying the legal basis for that measure, the existing rules which it amends and, in particular, their objective and content (judgments of 3 December 2019, Czech Republic v Parliament and Council, C‑482/17, EU:C:2019:1035, paragraph 42, and of 8 December 2020, Hungary v Parliament and Council, C‑620/18, EU:C:2020:1001, paragraph 40).

82      Third, if examination of an EU measure reveals that it pursues several purposes or that it comprises several components and if one of those purposes or components is identifiable as the main or predominant purpose or component, whereas the others are merely incidental or are only extremely limited in scope, the legal basis for adopting that measure must be determined in accordance with that main purpose or component (see, to that effect, judgments of 23 February 1999, Parliament v Council, C‑42/97, EU:C:1999:81, paragraphs 39 and 40; of 8 December 2020, Hungary v Parliament and Council, C‑620/18, EU:C:2020:1001, paragraph 38; and of 21 March 2024, Landeshauptstadt Wiesbaden, C‑61/22, EU:C:2024:251, paragraph 47).

83      Fourth, a broad interpretation of the first subparagraph of Article 192(2) TFEU would risk having the effect of turning recourse to the special legislative procedure into the general rule, whereas the FEU Treaty intended it to be an exception. In accordance with the principle that exceptions must be interpreted strictly, point (c) of the first subparagraph of Article 192(2) TFEU can form the legal basis of an EU measure only if it follows from the aim and content of that measure that the primary outcome sought by that measure is significantly to affect a Member State’s choice between different energy sources and the general structure of the energy supply of that Member State (judgment of 21 June 2018, Poland v Parliament and Council, C‑5/16, EU:C:2018:483, paragraphs 44 to 46). Similarly, point (a) of the first subparagraph of Article 192(2) TFEU can constitute the legal basis of an EU measure only if it is apparent from its aim and content that the primary result sought by that measure is the adoption of provisions primarily of a fiscal nature.

84      In the present case, it should be noted, in the first place, that the contested directive amends Directive 2003/87, in particular by inserting new provisions into that directive, with the result that the latter directive constitutes the legal context of the contested directive. Accordingly, it is necessary, in accordance with the case-law referred to in paragraph 81 of the present judgment, to identify the legal basis on which the contested directive should have been adopted, taking into account both the context established by Directive 2003/87 and the legislation resulting from the amendments made to it by the contested directive.

85      In that regard, it should be emphasised that the objective of Directive 2003/87, which was adopted on the basis of Article 175(1) EC, now Article 192(1) TFEU, is the protection of the environment. Indeed, as is apparent from recital 5, that directive, the purpose of which is to establish an EU ETS to reduce greenhouse gas emissions in the atmosphere to a level that prevents dangerous anthropogenic interference with the climate system with the ultimate objective of protection of the environment, falls within the scope of EU policy on the environment (see, to that effect, judgments of 16 December 2008, Arcelor Atlantique et Lorraine and Others, C‑127/07, EU:C:2008:728, paragraphs 29 and 30; of 8 March 2017, ArcelorMittal Rodange et Schifflange, C‑321/15, EU:C:2017:179, paragraph 24; and of 20 June 2019, ExxonMobil Production Deutschland, C‑682/17, EU:C:2019:518, paragraph 62).

86      The contested directive pursues the same objective as Directive 2003/87, which it amended. It follows, in particular, from recitals 1 to 9 of the contested directive that that directive seeks to strengthen and adapt the climate objectives of the European Union, following the findings of the Intergovernmental Panel on Climate Change (IPCC) in its Sixth Assessment Report. The worsening of the consequences of global warming has led, inter alia, the European Union to adopt the European Climate Law, Article 4(1) of which lays down the binding target for the reduction, in the European Union, of net greenhouse gas emissions by at least 55% by 2030 compared to the 1990 greenhouse gas emission levels and Article 2(1) of which provides for the reduction of those emissions to net zero in the European Union by 2050 at the latest. That law also provides that the Commission must endeavour to align all future draft measures or legislative proposals with those objectives. In addition, according to the contested directive, all sectors of the economy must contribute to the achievement of the reductions in greenhouse gas emissions established by that law. As stated in its recital 20, that directive also includes maritime transport in the EU ETS so that that sector contributes to the achievement of the increased climate objectives of the European Union as well as to the objectives pursued by the Paris Agreement.

87      The contested directive thus forms part of a context which is new, on the one hand, due to the rapid acceleration of climate change and, on the other hand, by the inclusion in the European Climate Law of the binding target for the reduction, in the European Union, of net greenhouse gas emissions by at least 55% by 2030 compared with the greenhouse gas emission levels of 1990. Article 30(1) of Directive 2003/87 provides, moreover, that that directive is to be kept under review ‘in the light of international developments and efforts undertaken to achieve the long-term objectives of the Paris Agreement, and of any relevant commitments resulting from the Conferences of the Parties to the [UNFCCC]’.

88      That is why the second paragraph of Article 1 of Directive 2003/87 provides for increased reductions in greenhouse gas emissions in order to achieve the levels of reductions which are considered scientifically necessary to avoid dangerous climate change. In so doing, the contested directive seeks to contribute to the attainment of the European Union’s objective of climate neutrality and its climate objectives set out in the European Climate Law and, consequently, of those pursued by the Paris Agreement.

89      From the same perspective, recitals 5, 17, 20 and 75 of the contested directive present the EU ETS, established by Directive 2003/87, as a cornerstone of the European Union’s climate policy and therefore envisage extending its scope, in particular to maritime transport and to the BRT sectors. That extension was, inter alia, given concrete expression in Article 3a of Directive 2003/87 and in Chapter IVa of that directive, and, more specifically, in Article 30a thereof.

90      In addition, Articles 9 and 10a of Directive 2003/87 adjust, first, the EU-wide quantity of greenhouse gas emission allowances and their linear reduction factor and, second, lay down transitional rules for the issuance of free allocation of those allowances. On this point, recital 39 of the contested directive clearly states that the EU-wide quantity of greenhouse gas emission allowances of the EU ETS must be reduced to create the necessary long-term carbon price signal and give new impetus to the decarbonisation process. It should also be observed that the decrease in free allocation of allowances is planned in the context of the CBAM established by Regulation 2023/956. Recital 12 of that regulation states that the CBAM is intended progressively to replace existing mechanisms, such as the free allocation of greenhouse gas emission allowances, by providing a different response to the risk of carbon leakage, namely by ensuring equivalent carbon pricing for imports and products from the European Union.

91      In parallel, Articles 10, 10a, 10d and 10e of Directive 2003/87 extend the objectives and actions eligible under the Innovation Fund, the Modernisation Fund, the Social Climate Fund and the Recovery and Resilience Facility, while increasing the amounts allocated to those funds, it being specified that the resources allocated to them contribute to financing the climate transition.

92      In the second place, recitals 64 and 70 of the contested directive cannot be understood as calling into question the technological neutrality of the contested directive and, more specifically, of the ETS 2.

93      Recital 64 highlights the fact that the scope of the Modernisation Fund must be aligned with the European Union’s most recent climate objectives and states that, as a result, the investments it will use to finance must be consistent with the objectives of the European Green Deal and those pursued by the European Climate Law. It follows that, according to the EU legislature, support for any investment linked to the production of energy from fossil fuels must be eliminated. That recital cannot, however, be understood as meaning that the EU legislature condemns the production of energy from fossil fuels. For the sake of consistency with strengthening the climate objectives of the European Union, the EU legislature merely states that, as a general rule, the production of energy from that type of fuel cannot give rise to a right to financing from that fund.

94      Recital 70 of the contested directive refers to the specific situation in which the exclusion from the EU ETS of installations exclusively using biomass has led to installations that combust a high share of biomass obtaining windfall profits by receiving free allowances for greenhouse gas emissions greatly exceeding actual emissions.

95      It follows that those two recitals cannot be interpreted as calling into question the principle of technological neutrality, according to which the law must specify the rights and obligations of persons in a generic manner so as not to favour the use of one technology to the detriment of another (see, to that effect, judgments of 24 March 2022, Austro-Mechana, C‑433/20, EU:C:2022:217, paragraph 27, and of 20 June 2024, GEMA, C‑135/23, EU:C:2024:526, paragraph 37). Without prohibiting or imposing the use of a particular energy source, the contested directive focuses exclusively on the need to reduce greenhouse gas emissions in all sectors covered by the EU ETS. Therefore, the Republic of Poland is free to use technologies, such as CO2 capture and storage, which, instead of reducing the combustion of fossil fuels, allow action to be taken on emissions generated by that combustion.

96      Furthermore, it should be borne in mind that the EU legislature cannot be deprived of the possibility of adapting Directive 2003/87 to any change in circumstances or any development of knowledge, having regard to its task of safeguarding the general interests recognised by the Treaties, which include the protection of the environment (see, to that effect, judgments of 10 December 2002, British American Tobacco (Investments) and Imperial Tobacco, C‑491/01, EU:C:2002:741, paragraph 77; of 3 December 2019, Czech Republic v Parliament and Council, C‑482/17, EU:C:2019:1035, paragraph 56; and of 4 October 2024, Lithuania and Others v Parliament and Council (Mobility package), C‑541/20 to C‑555/20, EU:C:2024:818, paragraphs 266 and 1426).

97      In the third place, as has been recalled in paragraph 83 of the present judgment, in accordance with the principle that exceptions must be interpreted strictly, points (a) and (c) of the first subparagraph of Article 192(2) TFEU can form the legal basis of an EU measure only if it follows from its aim and content that the primary outcome sought by that measure is the adoption of provisions that are primarily fiscal in nature or that seek significantly to affect a Member State’s choice between different energy sources and the general structure of its energy supply.

98      First, as regards the exception provided for in point (c) of the first subparagraph of Article 192(2) TFEU, as the Parliament and the Council correctly submit, by focusing solely on the consequences of the contested directive as regards the Republic of Poland’s choice of energy structure and by ignoring the aim actually pursued by that directive as well as its content, that Member State’s analysis results in excluding the adoption, on the basis of Article 192(1) TFEU, of any measure seeking to reduce greenhouse gas emissions, on the ground that that reduction inevitably adversely affects activities which release those gases into the atmosphere.

99      Such an analysis of the contested directive runs counter to the principle that exceptions must be interpreted strictly. It is also contrary to the provisions of the contested directive which, in themselves and primarily, are not intended to lay down measures significantly affecting a Member State’s choice between different energy sources and the general structure of its energy supply, but have, at most, indirect and incidental effects on the general structure of the energy supply of the Member States (see, by analogy, judgment of 23 February 1999, Parliament v Council, C‑42/97, EU:C:1999:81, paragraph 63).

100    As regards, second, the exception provided for in point (a) of the first subparagraph of Article 192(2) TFEU, it follows from paragraphs 84 to 95 of the present judgment that the main objective of the contested directive is the protection of the environment. Therefore, it cannot successfully be argued that the environmental objective of that directive is secondary to its fiscal or budgetary objective.

101    In that regard, it is irrelevant that, in the judgment of 29 April 2004, Commission v Council (C‑338/01, EU:C:2004:253, paragraph 63), delivered in the context of Articles 93 to 95 EC, now Articles 113 to 115 TFEU, the Court held that, because of their general nature, the term ‘fiscal provisions’ covers not only all areas of taxation, without drawing any distinction between the types of duties or taxes concerned, but also all aspects of taxation, whether material rules or procedural rules.

102    Furthermore, in a case concerning the aviation sector, the Court has already held that the EU ETS is a market-based measure and that, unlike a duty, tax or charge on fuel consumption, that system, apart from the fact that it is not intended to generate revenue for the public authorities, does not in any way enable the establishment, applying a basis of assessment and a rate defined in advance, of an amount that must be payable per tonne of fuel consumed for all flights carried out in a calendar year (judgment of 21 December 2011, Air Transport Association of America and Others, C‑366/10, EU:C:2011:864, paragraphs 142 and 143).

103    Contrary to the submissions of the Hungarian Government, the same applies, mutatis mutandis, to the ETS 2, since, as the Parliament has submitted, Article 30e of Directive 2003/87 provides that the greenhouse gas emission allowances to be surrendered are to be transferred, surrendered or cancelled in accordance with rules comparable to those applicable under the EU ETS.

104    It is true that Article 30e(3) provides that, by way of derogation and until 31 December 2030, where a regulated entity established in a given Member State is subject to a national carbon tax in force for the years 2027 to 2030, covering the activity referred to in Annex III to that directive, the competent authority of the Member State concerned may, under certain conditions, exempt that regulated entity from the obligation to surrender greenhouse gas emission allowances under paragraph 2 of that article for a given reference year. However, it cannot be inferred from Article 30e(3) of that directive that the ETS 2 constitutes a tax. The only conclusion that can be drawn from that provision is that the EU legislature intended to take account of the fact that certain Member States had made that activity subject to a carbon tax. The fact remains that the objective of climate neutrality pursued by the European Union may also be achieved without it being necessary to introduce such a tax.

105    Furthermore, the measures which may be taken under Article 30h of Directive 2003/87 in the event of an excessive increase in prices are intended, as stated in recital 91 of the contested directive, to reassure citizens that the carbon price in the initial years of the ETS 2 being applied will not go above EUR 45. In any event, the Republic of Poland has not shown how such an intention to limit the carbon price could be capable of making the price of greenhouse gas emission allowances fiscal in nature.

106    Similarly, the definition in Article 3(ae) of Directive 2003/87 of the concept of ‘regulated entity’ by reference to Directive 2020/262 is explained solely by the intention of the EU legislature to rely on a robust control system for all quantities of fuels released for consumption and thus to limit the administrative burdens caused by the adjustment to the EU ETS. That reference to Directive 2020/262 cannot, therefore, in any way lead to ETS 2 being treated in the same way as an excise duty.

107    It should also be observed that the revenue generated by the ETS 2 is allocated to environmental protection, since, in accordance with Article 30d(6) of Directive 2003/87, it contributes to compensating for the social consequences thereof, in particular by contributing to the financing of the tasks attributed to the various funds referred to in paragraph 91 of the present judgment.

108    Moreover, the obligation for the Member States to provide for effective, proportionate and dissuasive penalties, which was already contained in the original version of Article 16 of Directive 2003/87, has the sole objective of ensuring compliance with the contested directive. Hence, the presence of that provision cannot, in itself, change the nature of the EU ETS and render the ETS 2 a provision primarily of a fiscal nature.

109    Lastly, it should be noted that no provision of EU law requires the EU institutions to set out the reasons for not relying on Article 192(2) TFEU as the legal basis for an EU measure, if the choice of Article 192(1) TFEU appears to be duly justified. The choice of a legal basis implies, ex hypothesi, that the other potential legal bases, which could have formed the basis of that measure, did not appear to be appropriate.

110    In the light of the foregoing considerations, the first and second pleas in law must be rejected as unfounded.

 Third plea in law: infringement of the principle of energy solidarity laid down in Article 194(1)(b) TFEU

 Arguments of the parties

111    By its third plea in law, the Republic of Poland, supported by Hungary, submits that the contested directive infringes the principle of energy solidarity, referred to in Article 194(1)(b) TFEU. It points out, by analogy with the judgment of 10 July 1984, Campus Oil and Others (72/83, EU:C:1984:256, paragraph 34), that, for it, the supply of coal is of exceptional importance for the functioning of the economy, the institutions and the essential public services of a Member State, and also even for the survival of its inhabitants.

112    Moreover, even though it was formally adopted as part of the European Union’s environmental policy, the contested directive undoubtedly relates to its energy policy. The artificial increase in the cost of electricity generation brought about by that directive would lead not only to the bankruptcy of many undertakings in the industrial sector and negative social repercussions, but also to an increased risk of carbon leakage, as a result of the relocation of electricity-generating installations to third countries whose climate policy is less restrictive than that of the European Union.

113    By failing to include a comparative analysis of the interests of the European Union and those of the Member States liable to be affected, or any balancing of those interests where they conflict, the proposal COM(2021) 551 final, referred to in paragraph 57 of the present judgment, and the contested directive infringe the principle of energy solidarity, laid down in Article 194(1) TFEU, as interpreted in the judgment of 15 July 2021, Germany v Poland (C‑848/19 P, EU:C:2021:598, paragraph 73).

114    The Republic of Poland considers that that lacuna is all the more open to criticism since it follows from paragraph 14 of the conclusions of the European Council of 11 December 2020, to which the Commission referred in that proposal, that ‘the new 2030 target needs to be achieved in a way that preserves the EU’s competitiveness and takes account of Member States’ different starting points and specific national circumstances and emission reduction potential, … as well as efforts made.’ Similarly, it is apparent from those conclusions that ‘the European Council acknowledges the need … to respect the right of the Member States to decide on their energy mix and to choose the most appropriate technologies to achieve collectively the 2030 climate target, including transitional technologies such as gas.’

115    Lastly, the Republic of Poland states that its third plea does not concern the operation of the Modernisation Fund and the Social Climate Fund or the issue of the free allocation of greenhouse gas emission allowances.

116    The Parliament and the Council, supported by the Commission, contend that the third plea in law must be rejected as unfounded.

 Findings of the Court

117    By its third plea, the Republic of Poland, supported by Hungary, submits that the contested directive infringes the principle of energy solidarity, referred to in Article 194(1) TFEU. It submits that, even though that directive threatens the security of its energy supply, the EU institutions have neither taken into account the interests of the European Union and those of the Member States liable to be affected by that threat, nor, a fortiori, weighed those interests.

118    As a preliminary point, it should be noted that the judgment of 10 July 1984, Campus Oil and Others (72/83, EU:C:1984:256), relied on by the Republic of Poland, is irrelevant in the present case, since that Member State has in no way demonstrated that the contested directive would have the consequence of interrupting its supply of fossil fuels. Moreover, that judgment, which concerns the free movement of goods, was delivered before the inclusion in the Treaties of any environmental objective and the principle of energy solidarity, which limits its relevance in the context of the present action.

119    That being said, it should be borne in mind that Article 194(1) TFEU provides that, in the context of the establishment and functioning of the internal market and with regard to the need to preserve and improve the environment, EU policy on energy is to aim, in a spirit of solidarity between Member States, to ensure the functioning of the energy market; ensure security of energy supply in the European Union; promote energy efficiency and energy saving and the development of new and renewable forms of energy; and promote the interconnection of energy networks.

120    In so far as the examination of the first and second pleas in law demonstrates that the contested directive was correctly adopted on the basis of Article 192(1) TFEU and therefore falls within the scope of the European Union’s environmental policy, the principle of energy solidarity, which is applicable only to acts falling within the scope of EU policy on energy, cannot effectively be relied on.

121    Nevertheless, as the Court emphasised, in essence, in the judgment of 15 July 2021, Germany v Poland (C‑848/19 P, EU:C:2021:598, paragraphs 38 and 41), that principle corresponds to a specific expression, in the field of energy, of the principle of solidarity, which is itself one of the fundamental principles of EU law and which underpins the entire EU legal system.

122    In that context, it must be understood that, by the ground alleging an infringement of the principle of energy solidarity, referred to in Article 194(1) TFEU, the Republic of Poland submits that there was an infringement of the principle of energy solidarity, which, like the general principles of EU law, constitutes a criterion for assessing the legality of measures adopted by the EU institutions (see, by analogy, judgment of 15 July 2021, Germany v Poland, C‑848/19 P, EU:C:2021:598, paragraph 45).

123    In the same way as the principle of energy solidarity, first, the principle of solidarity entails compliance with rights and obligations both for the European Union and for the Member States. While the European Union is bound by an obligation of solidarity towards the Member States, those Member States are equally bound by an obligation of solidarity between themselves and with regard to the common interest of the European Union and the policies pursued by it. Second, that principle requires that the EU institutions, including the Commission, balance the interests involved in the light of that principle, taking into account the interests both of the Member States and of the European Union as a whole. Third, the application of the principle of solidarity does not mean, however, that an EU act must never, under any circumstances, have negative impacts for the particular interests of a Member State in the field to which it relates (see, by analogy, judgment of 15 July 2021, Germany v Poland, C‑848/19 P, EU:C:2021:598, paragraphs 49, 53 and 73).

124    In the present case, the Republic of Poland claims that the artificial increase in the cost of generating electricity brought about by the contested directive has negative social repercussions and risks increasing carbon leakage.

125    It must be observed that that claim is not substantiated. In any event, the EU legislature took the interests of the Member States into consideration. It is clear from the contested directive that the EU legislature has provided for specific compensatory measures in order to take into account the specific situation and interests of each Member State. From that point of view, and contrary to the Republic of Poland’s submissions, it is necessary, in order to assess whether that directive complies with the principle of solidarity, to take into account the compensatory measures which it lays down, as well as those which were introduced at the time the directive was adopted.

126    In that regard, it should be noted, first, that recital 43 of the contested directive, which sheds light on the scope of Article 10(1) and (3)(ha) and (k) of Directive 2003/87, states that, in order to address the distributional and social effects of the transition in low-income Member States, an additional amount of 2.5% of the EU-wide quantity of greenhouse gas emission allowances from 2024 to 2030 should be used to fund the energy transition of Member States with a GDP per capita below 75% of the EU average in the years 2016 to 2018, through the Modernisation Fund.

127    Second, according to Article 10d(2)(e) and (f) of Directive 2003/87, read in conjunction with Article 10(3)(ha) of that directive, and with the first and second subparagraphs of recital 64 of the contested directive, the percentage of the Modernisation Fund that needs to be devoted to priority investments is to be increased. Thus, in accordance with Article 10d(4) of Directive 2003/87, that percentage is raised to 80% as regards greenhouse gas emission allowances transferred pursuant to that fund, which are referred to in the third subparagraph of Article 10(1) of that directive. Among those priority investments, Article 10d(2)(e) and (f), read in conjunction with Article 10(3)(k), of Directive 2003/87, refers to the support provided to low-income households to address energy poverty, as well as to support for the redeployment, reskilling and upskilling of workers in the carbon-dependent regions in the Member States that are beneficiaries of revenues assigned to the Modernisation Fund.

128    Third, Article 30d(3), (4) and (6)(a) and (b) of Directive 2003/87, read in conjunction with recital 84 of the contested directive, provides that the introduction of the carbon price in the BRT sectors is to be accompanied by effective social compensation, especially in view of existing levels of energy poverty. To that end, that provision refers to the new Social Climate Fund, which was established by Regulation 2023/955 and which is to provide dedicated funding to Member States to support the most affected vulnerable groups, especially households, in energy or transport poverty. That fund is required to promote fairness and solidarity between and within Member States, while mitigating the risk of energy and transport poverty during the transitional period between the entry into force of the contested directive and the actual application, in 2027, of the auctioning system in the BRT sectors. From that point of view, that fund will receive revenues of up to EUR 65 billion in total from the auctioning of greenhouse gas emission allowances under the ETS 2.

129    Furthermore, as has been recalled in paragraph 123 of the present judgment, the principle of solidarity does not preclude an EU measure from having negative impacts for the particular interests of a Member State in the field to which it relates.

130    Lastly, as is apparent from Annex II to Regulation 2023/955 and Annex IIb to the contested directive, the Republic of Poland is the largest beneficiary of the Social Climate Fund and the Modernisation Fund. As regards the Social Climate Fund, Annex II to that regulation provides that that Member State will be able to obtain, for the period from 2026 to 2032, under, first, the first and second subparagraphs of Article 10(1) and, second, the third subparagraph of Article 10(1) of that regulation, respectively, the sum of EUR 11 439 026 446 and the sum of EUR 9 608 782 215. Those amounts represent 17.6% of the allocation allocated to all the Member States from that fund. As regards the Modernisation Fund, Part A of Annex IIb to Directive 2003/87, which sets out the allocation key for funds from the Modernisation Fund, in accordance with the third subparagraph of Article 10(1), provides that the Republic of Poland is to benefit from 43.41% of those funds. As regards Part B of that annex, it determines the allocation key for the funds from the Modernisation Fund, in accordance with the fourth subparagraph of Article 10(1), and states that 34.2% of those funds are to be allocated to that Member State.

131    In the light of the foregoing considerations, the third plea in law must be rejected as unfounded.

 Fourth plea in law: infringement of the principle of proportionality laid down in Article 5(3) TEU

 Arguments of the parties

132    By its fourth plea, the Republic of Poland submits that the contested directive infringes the principle of subsidiarity, laid down in Article 5(3) TEU, in that, under Article 4(1) of Regulation 2018/842, the Member States are already required to achieve increased greenhouse gas emission reduction targets in the BRT sectors. Those objectives are likely to be achieved more effectively at national level, since that regulation leaves to the Member States the choice of the measures enabling them to be achieved. The introduction of the ETS 2 by the contested directive is therefore not necessary, within the meaning of Article 5(3) TEU, in order to enable the European Union to achieve the greenhouse gas emission reduction targets set for 2030.

133    The introduction of the ETS 2 also produces a series of negative effects, such as an increase in energy shortage, an increase in costs of undertakings and a reduction in their competitiveness. The EU legislature has not demonstrated that the objective of reducing greenhouse gas emissions in the BRT sectors can be better achieved by EU action than by that of the Member States in that area. In addition, the EU legislature itself considers the measures adopted individually by certain Member States in the form of national carbon taxes to be sufficient, since it granted a temporary deferral of the introduction of the ETS 2 to Member States which have introduced such taxes.

134    The Republic of Poland also considers that the requirements set out in Article 5 of Protocol (No 2) on the application of the principles of subsidiarity and proportionality, annexed to the EU Treaty and to the FEU Treaty (‘Protocol No 2’) have not been complied with. Under that article, draft legislative acts must, on the one hand, be justified with regard to those principles and, on the other hand, contain a detailed statement making it possible to appraise whether a given measure complies with those principles. The finding that a given objective can be better achieved at EU level than at national level must be substantiated by qualitative and, wherever possible, quantitative indicators.

135    However, the sole reasoning given for the need to establish a market-based mechanism at EU level in the BRT sectors is, on the one hand, the desire to promote the reduction of greenhouse gas emissions in a cost-effective and economically efficient way and in a manner commensurate with the economy-wide net greenhouse gas emission reduction target for 2030 and, on the other hand, the inability of the Member States sufficiently to achieve those targets, as stated in recital 107 of the contested directive.

136    The capacity of the Member States to achieve the objectives pursued by Regulation 2018/842 was not ascertained. Nevertheless, Member States have taken measures to strengthen national policies and measures in the BRT sectors.

137    According to the Republic of Poland, the Commission, for its part, noted in its proposal COM(2021) 551 final, referred to in paragraph 57 of the present judgment, the need to reduce greenhouse gas emissions through the adoption of cost-effective and the most rational solutions based on the market, such as the EU ETS. It also emphasised the need to eliminate the risk of distorting competition resulting from the creation of greenhouse gas emission allowances at the level of national markets. The Commission relies on the same arguments as regards the extension of the greenhouse gas emission pricing scheme to new sectors.

138    However, the different scenarios set out by the Commission, forecasting the impact of macroeconomic trends and policies, of fuel prices and of technologies on the development of the European Union’s energy system, transport and greenhouse gas emissions, plead in favour of national actions focusing on intensifying regulatory measures adopted under energy and transport policy and on abandoning the ETS 2.

139    Moreover, the BRT sectors would hardly be affected by the risk of distortion of competition when Member States apply their own greenhouse gas emission reduction policies, since some of those sectors, in particular the building sector, have essentially a national dimension. The same applies to the additional sectors. In addition, possible distortions of competition could be reduced or eliminated by measures taken by the individual Member States under Regulation 2018/842.

140    The Parliament and the Council, supported by the Commission, contend that the fourth plea in law must be rejected as unfounded.

 Findings of the Court

141    By its fourth plea in law, the Republic of Poland, supported by Hungary, submits that the contested directive infringes the principle of subsidiarity set out in Article 5(3) TEU.

142    According to Article 5(3) TEU, ‘under the principle of subsidiarity, in areas which do not fall within its exclusive competence, the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.’ In addition, Article 5 of Protocol No 2 provides, inter alia, that ‘the reasons for concluding that a Union objective can be better achieved at Union level shall be substantiated by qualitative and, wherever possible, quantitative indicators.’

143    As the Parliament and the Council have correctly submitted, it is clear from the impact assessment for the contested directive that the requirements of the principle of subsidiarity were taken into consideration when that directive was adopted.

144    First of all, it is apparent from sections 2.1 and 2.4 of that impact assessment that the EU legislation pre-dating the contested directive would not have made it possible to achieve the greenhouse gas emission reduction target of 55% by 2030. That impact assessment indicates, in that regard, that, if that legislation prior to that directive were to remain unchanged, the sectors currently covered by the EU ETS would have, according to the EU reference scenario for 2020 referred to in paragraph 57 of the present judgment, together reduced greenhouse gas emissions by 51% in 2030 compared to those issued in 2005. That contribution would be insufficient in the light of the overall target of reducing those emissions by 55% compared with those for 1990.

145    Next, section 2.4.2 of the impact assessment for the contested directive states that, in the BRT sectors, carbon pricing at national level is often absent or limited, which demonstrates the need for action at EU level.

146    Furthermore, that directive’s compliance with the principle of subsidiarity is apparent from sections 3.2 and 3.3 of that impact assessment, which highlight the necessity of EU action and its added value, respectively.

147    As regards the necessity of EU action, that impact assessment states that climate change is a transboundary problem and that European action can effectively complement and reinforce regional, national and local action. Increasing the European Union’s greenhouse gas emission reduction target by 2030 will impact many sectors across the European economy. Coordinated action at EU level is therefore indispensable and has a much bigger chance of leading to the necessary transformation of greenhouse gas emission reductions. Furthermore, EU action can also inspire and pave the way for the development of market-based measures at global level.

148    As regards the added value of EU action, as a carbon market, the EU ETS incentivises greenhouse gas emission reductions to be made by the adoption of the most cost-effective solutions first across the activities it covers, achieving greater efficiency by virtue of its scale. Implementing a similar measure at national level would result in smaller, fragmented carbon markets, compared with the EU market, risking distortions of competition and would be likely to lead to higher overall costs of the abatement of greenhouse gas emissions. The same logic holds for the extension of carbon pricing to the BRT sectors.

149    Finally, according to Article 5 of Protocol No 2, the impact assessment for a legislative act must include quantitative indicators ‘wherever possible’. It follows from that wording that the presence of quantitative indicators in an impact assessment is not systematically required. In any event, as the Parliament and the Council have submitted, both the impact assessment for the contested directive and the impact assessment accompanying the Communication of 17 September 2020 from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, entitled ‘Stepping up Europe’s 2030 climate ambition’ (COM(2020) 562 final), contained such indicators, of which neither the inadequacy nor the irrelevance has been demonstrated by the Republic of Poland.

150    In the light of the foregoing considerations, the fourth plea in law must be rejected as unfounded.

 Fifth plea in law: infringement of the principle of proportionality guaranteed by Article 5(4) TEU, read in conjunction with Article 191(2) TFEU

 Arguments of the parties

151    By its fifth plea, the Republic of Poland submits that point 29 of Article 1 of the contested directive, which introduces the ETS 2, is incompatible with the principle of proportionality, read in conjunction with Article 191(2) TFEU.

152    According to that Member State, first, the ETS 2 is not necessary because the reductions in greenhouse gas emissions in the sectors it covers were achieved through the application of Regulation 2018/842, which is, furthermore, less onerous for the Member States. The impact assessment for the contested directive confirms that, for 2030, the decrease in greenhouse gas emissions compared to 2005 for sectors not covered by the EU ETS was greater in the context of the ‘REG’ scenario, which did not envisage the establishment of the ETS 2, than in the context of the ‘MIX’ and ‘MIX-CP’ scenarios, which, on the contrary, retain that system. On average, at EU level, the reduction in those emissions was 40.49% under the REG scenario, and 38.93% and 39.80% under the MIX and MIX-CP scenarios respectively. Thus, not only could the required reductions be achieved by a method other than the ETS 2, but that other method could even lead to greater reductions in greenhouse gas emissions.

153    In so doing, the Republic of Poland submits, the EU legislature infringed Article 5 of Protocol No 2. As interpreted in the judgment of 7 September 2006, Spain v Council (C‑310/04, EU:C:2006:521, paragraphs 122 and 133), that article requires that the EU institutions which adopted the act in question must be able to show before the Court that in adopting that act they actually exercised their discretion, which presupposes that all the relevant factors and circumstances of the situation the act was intended to regulate were taken into consideration.

154    Second, the major shortcoming of the impact assessment for the contested directive is the lack of a proper examination of the disproportionate increase in energy poverty caused by the introduction of the ETS 2. In particular, that impact assessment does not address the REG scenario. It shows that the introduction of an ETS 2 would increase the average share of energy expenditure of Polish households by 8.0% for 2030, under the REF 2020 scenario, by 9.16%, under the REG scenario, and up to 9.7 or 9.8%, under the MIX and MIX-CP scenarios. A share of energy expenditure exceeding 10% of the household budget is indicative of energy poverty.

155    In addition, that assessment was carried out only in respect of 2030, even though the effects of the obligation to surrender greenhouse gas emission allowances under the ETS 2 will not have been fully realised by 2030.

156    Furthermore, in that impact assessment, the tripartite distribution between the Member States, depending on whether their GDP per capita is less than 60%, ranging between 60% and 100% or above 100% of the EU average, did not allow account to be taken of the different geographical location of the Member States. The performance of those whose heating needs are greater because of a cold climate would thus be neutralised by the results of the Member States with low heating needs because of their geographical location.

157    The impact assessment for the contested directive does not make it possible to determine what the risk of energy poverty would have been if the legislation prior to that directive had been maintained, or what would have been, in that case, the level of risk of energy poverty in the European Union and, in particular, in the Member States which are most vulnerable owing to their geographical location. The shortcomings of that impact assessment thus relate to determinative aspects, with the result that the Parliament and the Council have not shown that the adoption of the contested directive remained within the limits of their discretion.

158    Third, that impact assessment is obsolete and minimises the negative impact of the ETS 2 on fuel prices. It did not take into account the increase in fuel prices caused, in particular, by the Russian Federation’s war of aggression against Ukraine. That increase has a negative impact on the possibility of replacing highly polluting fuels with less polluting fuels. In that context, the Republic of Poland also observes that the REG scenario is the one which requires the least fuel imports into the European Union.

159    Fourth, the reference to the principle of proportionality contained in the impact assessment for the contested directive does not concern the justification for establishing the ETS 2, but only the scope of that system. In fact, that impact assessment merely states, with regard to the need to establish the ETS 2, that the two variants envisaged, namely options EXT1 and EXT2, which consisted of establishing a separate upstream system for greenhouse gas emission allowance trading within the European Union at EU level covering, in the first variant, buildings and road transport and, in the second variant, all emissions from the combustion of fossil fuels which are not covered by the EU ETS, offer increased certainty of achieving overall greenhouse gas emissions reductions. Nor does that assessment set out, contrary to the requirements of Article 5 of Protocol No 2, the impact of the ETS 2 on GDP broken down by Member State.

160    In the impact assessment for the ‘Fit for 55’ legislative package, which is a comprehensive set of mutually reinforcing measures and initiatives aimed at achieving climate neutrality in the European Union by 2050, the Commission forecast, by 2030, for the ETS 2, an average allowance price of EUR 50 under the MIX scenario and EUR 84 under the MIX-CP scenario. However, those projections are contrary to the forecasts of most think tanks, which suggest that very high, three-figure prices for greenhouse gas emission allowances in the BTR sectors are highly likely, and the Commission failed to give reasons in support of the prices it relied on. Moreover, although the market stability reserve was created to stabilise the market, it would not prevent an increase in the price of greenhouse gas emission allowances, which could be very sharp. The structure of the ETS 2 and the assumptions of recourse to that reserve provided for by the contested directive create a serious risk of instability, reduction of market liquidity and uncontrolled increase in the price of allowances.

161    Finally, the solution to the problem of high energy costs for households is not the creation of the Social Climate Fund or the inclusion of household support in the measures that may be financed by the Modernisation Fund, since the resources allocated to those two funds are too low in relation to the needs of the Member States. Accordingly, the Republic of Poland should receive approximately EUR 22 billion from those two funds by 2032, which is insufficient to finance the improvement in the energy performance of buildings, the cost of which is estimated at approximately EUR 340 billion by 2050.

162    The Parliament and the Council, supported by the Commission, contend that the fifth plea in law must be rejected as unfounded.

 Findings of the Court

163    By its fifth plea in law, the Republic of Poland, supported by Hungary, submits that point 29 of Article 1 of the contested directive infringes the principle of proportionality laid down in Article 5(4) TEU, read in conjunction with Article 191(2) TFEU. However, in its written pleadings, that Member State has not put forward any argument as regards the alleged infringement of Article 191(2) TFEU. It is therefore appropriate to examine the fifth plea in law only in so far as it seeks a declaration by the Court of Justice of a breach of the principle of proportionality alone.

164    Article 5(4) TEU provides that, under the principle of proportionality, the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties.

165    That principle requires that measures implemented through provisions of EU law should be appropriate for attaining the legitimate objectives pursued by the legislation concerned and do not go beyond what is necessary to achieve it. Thus, when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (judgments of 13 November 1990, Fedesa and Others, C‑331/88, EU:C:1990:391, paragraph 13; of 13 March 2019, Poland v Parliament and Council, C‑128/17, EU:C:2019:194, paragraph 94; and of 3 December 2019, Czech Republic v Parliament and Council, C‑482/17, EU:C:2019:1035, paragraph 76).

166    With regard to judicial review of compliance with that principle, the Court has accepted that, in the exercise of the powers conferred on it, the EU legislature must be allowed a broad discretion in areas in which its action involves political, economic and social choices and in which it is called upon to undertake complex assessments and evaluations, a fortiori where they are of an evolving nature. That broad discretion of the EU legislature applies to the determination of the nature and scope of the measures which it adopts and, to some extent, to the establishment of the basic facts (see, to that effect, judgments of 8 July 2010, Afton Chemical, C‑343/09, EU:C:2010:419, paragraphs 28, 33 and 46; of 21 June 2018, Poland v Parliament and Council, C‑5/16, EU:C:2018:483, paragraphs 150, 151 and 170; and of 4 October 2024, Lithuania and Others v Parliament and Council (Mobility package), C‑541/20 to C‑555/20, EU:C:2024:818, paragraphs 219 and 242).

167    Consequently, the legality of a measure adopted in one of those areas can be affected only if the measure is manifestly inappropriate having regard to the objective which those institutions are seeking to pursue. Therefore, the question is not whether a measure adopted in such an area was the only or the best possible measure, since the EU judicature cannot substitute its assessment of scientific and technical facts for that of the EU legislature on which the Treaties have placed that task (see, to that effect, judgments of 12 July 2001, Jippes and Others, C‑189/01, EU:C:2001:420, paragraphs 82 and 83, and of 4 October 2024, Lithuania and Others v Parliament and Council (Mobility package), C‑541/20 to C‑555/20, EU:C:2024:818, paragraph 242).

168    However, even where it has broad discretion, the EU legislature is required to base its choice on objective criteria and examine whether the aims pursued by the measure chosen are such as to justify even substantial negative economic consequences for certain operators. The EU institutions which have adopted the act in question must therefore be able to show before the Court that in adopting that act they actually exercised their discretion, which presupposes that consideration was taken of all the relevant factors and circumstances of the situation the act was intended to regulate. It follows that those institutions must at the very least be able to produce and set out clearly and unequivocally the basic facts which had to be taken into account as the basis of the contested measures of that act and on which the exercise of their discretion depended. In that regard, the validity of an EU measure must be assessed in the light of the information available to the EU legislature at the time of the adoption of the legislation in question and cannot depend on retrospective considerations concerning its efficacy (see, to that effect, judgments of 7 February 1973, Schroeder, 40/72, EU:C:1973:14, paragraph 14; of 12 July 2001, Jippes and Others, C‑189/01, EU:C:2001:420, paragraph 84; and of 21 June 2018, Poland v Parliament and Council, C‑5/16, EU:C:2018:483, paragraphs 152 and 153).

169    Furthermore, the EU legislature does not have to take into consideration the particular situation of a Member State where the EU measure concerned has an impact in all Member States and requires that a balance between the different interests involved be ensured, taking account of the objectives of that measure. Therefore, the attempt to strike such a balance taking into account not the particular situation of a single Member State but that of all the Member States of the European Union cannot, in itself, be regarded as contrary to the principle of proportionality (judgments of 18 June 2015, Estonia v Parliament and Council, C‑508/13, EU:C:2015:403, paragraph 39; of 21 June 2018, Poland v Parliament and Council, C‑5/16, EU:C:2018:483, paragraph 167; and of 4 October 2024, Lithuania and Others v Parliament and Council (Mobility package), C‑541/20 to C‑555/20, EU:C:2024:818, paragraph 246).

170    Lastly, as has already been stated in paragraph 125 of the present judgment as regards the assessment of whether the contested directive complies with the principle of solidarity, account must be taken of the compensatory measures which it includes and of those which were introduced at the same time as its adoption in order to ascertain whether that directive complies with the principle of proportionality.

171    In the present case, in order to demonstrate a breach of the principle of proportionality, the Republic of Poland starts, in the first place, from the premiss that the EU legislation pre-dating the contested directive, in particular Regulation 2018/842, was sufficient to achieve the greenhouse gas emission reduction target set at 55% by 2030, as laid down in the European Climate Law, which is confirmed by the REG scenario. It concludes that the adoption of that directive was not necessary.

172    At the outset, it should be recalled that, as has been pointed out in paragraph 167 of the present judgment, where the EU legislature has a broad discretion, its legality can be affected only if the measure is manifestly inappropriate having regard to the objective which it is seeking to pursue. Therefore, the question is not whether that measure was the only or the best possible measure, since the EU judicature cannot substitute its assessment of scientific and technical facts for that of the EU legislature on which the Treaties have conferred that task.

173    In those circumstances, even if the EU legislation prior to the contested directive had made it possible to achieve the increased target of reducing greenhouse gas emissions by 55% by 2030, that in no way prevented the EU legislature from adopting new legislation in order to achieve that result.

174    In any event, as is apparent from paragraph 144 of the present judgment, the premiss on which the Republic of Poland’s arguments are based is incorrect. Section 2.1 of Part 1 of the impact assessment for the contested directive establishes that the EU legislation pre-dating that directive would not have made it possible to achieve the increased greenhouse gas emission reduction target of 55% by 2030. It is from that perspective that recital 9 of that directive highlights the need to adjust the ambition of the EU ETS in order to bring it into line with that increased target and, beyond that, with the objective of climate neutrality by 2050 at the latest.

175    The Republic of Poland is also incorrect in alleging that the REG scenario merely maintains the status quo. It is true that that scenario does not envisage extending the EU ETS to the BRT sectors. Nevertheless, section 8.5.2 of Part 2 of the impact assessment for the contested directive makes clear that that scenario is based on a significant increase in energy efficiency, renewable energy and transport policy requirements. In addition, in their written pleadings, the Parliament and the Council maintained, without being contradicted by the Republic of Poland, that the additional investments required, for the period covering the years 2021 to 2030, by the REG scenario compared with the MIX scenario, which is closest to the option ultimately chosen by the EU legislature, could be assessed at EUR 21 billion. The Republic of Poland has not taken into consideration that additional cost anticipated by the REG scenario as compared with the other scenarios envisaged by the Commission.

176    In the second place, the argument regarding the lack of a proper examination of the increase in energy poverty, according to which energy costs in a percentage greater than 10% of household budget would be an indication of energy poverty, must be rejected. That approach is not consistent with the definition set out in Article 2(1) of Regulation 2023/955, the scope of which corresponds, in accordance with Article 1 of that regulation, to that of Directive 2003/87. According to that definition, ‘energy poverty’ means ‘a household’s lack of access to essential energy services that underpin a decent standard of living and health, including adequate warmth, cooling, lighting, and energy to power appliances, in the relevant national context, existing social policy and other relevant policies’.

177    Above all, the Republic of Poland fails to take into account, in that regard, that the Member States have the option of using the resources derived from the auctioning of CO2 emission allowances under the ETS 2 to combat energy poverty.

178    As the Parliament and the Council have correctly submitted, and as has been noted in paragraphs 126 to 128 of the present judgment, the resources resulting from the auctioning of the ETS 2 allowances contribute to offsetting the impact of that system on vulnerable households. The impact assessment for the contested directive also stated that a flat-rate redistribution of carbon revenues at national level, based on the size of households, could have a positive impact on reducing costs for the EU population as a whole, in particular under the MIX scenario. That impact assessment also notes that the carbon revenues at national level should be sufficient to offset the negative consequences of the ETS 2 suffered by the most affected persons. Therefore, the redirection to vulnerable households of those revenues contributes to compensating for the impact of the introduction of the ETS 2 on those households.

179    Article 30d(6) of Directive 2003/87 expressly calls on Member States to give priority to using the revenues generated from the auctioning of greenhouse gas emission allowances to address the social aspects of the introduction of the ETS 2. On that basis, Member States may, in accordance with points (a) and (b) of Article 30d(6), take measures to contribute to the decarbonisation of heating and cooling systems for buildings or to the reduction of their energy needs, including the integration of renewable energy, as well as measures to provide financial support to low-income households in the worst-performing buildings. Member States may also adopt measures to accelerate the uptake of zero-emission vehicles or to provide financial assistance to address social aspects concerning low- and middle-income transport users.

180    More broadly, sections 6.3.2 and 6.3.3 of Part 1 of the impact assessment for the contested directive specifically addressed the examination of the economic and social impacts, in particular on employment and vulnerable and low-income households, of the introduction of the ETS 2. Those sections illustrate the intention of the EU legislature to pay particular attention to the problem of combating energy poverty.

181    As the Parliament and the Council have argued, it follows in particular that, admittedly, significantly greater investments will be required in the Member States for low-income households. Nevertheless, from that perspective, Regulation 2023/955 established the Social Climate Fund, which is financed by the auctioning of greenhouse gas emission allowances under the ETS 2 and of which the Republic of Poland is the largest beneficiary. Account must also be taken of the sums allocated under the Modernisation Fund, of which the Republic of Poland is the largest beneficiary, as noted in paragraph 130 of the present judgment.

182    In the third place, as regards the argument that the Russian Federation’s war of aggression against Ukraine was not taken into account by the Commission in its impact assessment for the contested directive, it should be recalled, as is apparent from the case-law cited in paragraphs 78 and 168 of the present judgment, that the validity of an EU act must be assessed in the light of the information available to the EU legislature at the time of the adoption of the legislation in question and cannot depend on retrospective considerations concerning its efficacy. In the present case, that impact assessment, which dates from 14 July 2021, pre-dates that war of aggression.

183    In any event, it cannot be disputed that the EU legislature included, in the contested directive, mechanisms which allow the European Union to react in the event of external shocks, such as the Russian Federation’s war of aggression against Ukraine.

184    Article 30h of Directive 2003/87, entitled ‘Measures in the event of an excessive price increase’, provides, in paragraph 1 thereof, for the possibility of releasing 50 million greenhouse gas emission allowances covered by Chapter IVa of that directive from the market stability reserve where, for more than three consecutive months, the average price of greenhouse gas emission allowances auctioned is more than twice the average price of those allowances during the six preceding consecutive months. Similarly, Article 30h(3) allows 150 million greenhouse gas emission allowances to be released from the ETS 2 where, during more than six consecutive months, the average price of greenhouse gas emission allowances auctioned is more than three times their average price during the six preceding consecutive months.

185    For 2027 and 2028, 50 million greenhouse gas emission allowances may even be released where the average price of greenhouse gas emission allowances is more than 1.5 times the average price of those allowances recorded during the six preceding consecutive months. Finally, Article 30h(2) establishes a levy of 20 million greenhouse gas emission allowances where the average price of greenhouse gas emission allowances exceeds EUR 45 for a period of two consecutive months.

186    Thus, the gradual mechanism provided for in Article 30h of Directive 2003/87 is capable of being applied in the event of a crisis situation.

187    It follows from recital 90 of the contested directive that those safeguard measures, which are intended to counter the potential risk of an excessive price increase, are objective in nature, since their triggering is subject to one or more conditions based on an increase in the average price of greenhouse gas emission allowances. In addition, that supplementary mechanism provided for in Article 30h of Directive 2003/87 appears particularly reactive in order to remedy any excessive volatility caused by factors other than changes in market fundamentals. Furthermore, that mechanism does not preclude Member States from being able to adopt any accompanying measure which they consider necessary to address negative social consequences.

188    Nor should it be overlooked that, as stated in recital 5 thereof, the contested directive forms part of the ‘Fit for 55’ legislative package. The market stability reserve mechanism established by Decision 2015/1814 is specifically intended, according to recital 9 of Decision 2023/852, to make the EU ETS more resilient in the event of unpredictable external shocks, such as the Russian Federation’s war of aggression against Ukraine.

189    In addition, Article 10e(1) of Directive 2003/87, which was inserted by Article 5 of Regulation 2023/435, provides, as an exceptional and unique measure, for the auctioning, until 31 August 2026, of greenhouse gas emission allowances totalling EUR 20 billion to finance the Recovery and Resilience Facility. Similarly, Article 10e(4) of Directive 2003/87 allows 27 million greenhouse gas emission allowances from the market stability reserve to be allocated to the Innovation Fund until 31 December 2030, in order rapidly to diversify the European Union’s energy supply and reduce dependence on fossil fuels before 2030.

190    In the fourth and last place, as regards the argument that the impact assessment for the contested directive does not comply with the requirements laid down in Protocol No 2 in that the Commission does not set out therein the impact of the ETS 2 on GDP broken down by Member State, it should be noted that the Republic of Poland has not put forward any evidence capable of demonstrating that the alleged omission should be regarded as a breach of the principle of proportionality. Furthermore, as the Council submits, such a requirement cannot be inferred from the wording of Article 191(3) TFEU, according to which, when drawing up its policy on the environment, the European Union is to take account, amongst other things, of the balanced development of its regions.

191    In the light of the foregoing considerations, both the choice made by the EU legislature to establish an ETS 2 and the detailed rules for applying that system which it adopted in point 29 of Article 1 of the contested directive cannot be regarded as manifestly inappropriate, within the meaning of the case-law referred to in paragraph 167 of the present judgment, in relation to the objective of reducing greenhouse gas emissions by 55% by 2030 which that legislature seeks to pursue.

192    In those circumstances, the fifth plea in law must be rejected as unfounded.

 Sixth plea in law: breach of the principle of equal treatment

 Arguments of the parties

193    By its sixth plea, alleging a breach of the principle of equal treatment, the Republic of Poland, supported by Hungary, submits that, by excluding the energy industry sectors which are not covered by the ETS and the manufacturing and construction sectors referred to in Annex III to Directive 2003/87 from the right to the free allocation of greenhouse gas emission allowances, the EU legislature discriminated against operators of installations falling within those sectors as compared with those of the sectors covered by the ETS.

194    The Republic of Poland states, in that regard, that, under Article 10b(4) of Directive 2003/87, there is free allocation of greenhouse gas emission allowances to district heating networks and high-efficiency cogeneration covered by Directive 2012/27, in order to meet economically justified demand for the production of heating or cooling. By comparison, in the context of the ETS 2, the only means for placing greenhouse gas emission allowances on the market is the sale by auction.

195    The Republic of Poland emphasises the great similarity between the installations covered by the EU ETS and those which fall within the energy industry sectors not covered by the EU ETS and the manufacturing and construction sectors referred to in Annex III to Directive 2003/87. However, while fuel users operating installations covered by the EU ETS receive a free allocation of greenhouse gas emission allowances, Article 10a of that directive denies such free allocation to operators of installations in sectors corresponding to industrial activities not covered by Annex I to that directive in breach of the principle of equal treatment. That situation is all the more serious since the operators of installations covered by the EU ETS generally have greater financial resources and greater investment capacity at their disposal, which are further increased by various support schemes which also originate in the provisions of the same directive, and they are in a better position to address increasing production costs given their higher turnover. The contested directive does not, however, provide any objective justification for that differentiation.

196    The Parliament and the Council, supported by the Commission, contend that the sixth plea in law must be rejected as unfounded.

 Findings of the Court

197    By its sixth plea in law, the Republic of Poland submits, in essence, that, by excluding the possibility of obtaining a free allocation of greenhouse gas emission allowances under the ETS 2, the contested directive infringes the principle of equal treatment.

198    As a preliminary point, it should be recalled that the principle of equal treatment is a general principle of EU law, enshrined in Article 20 of the Charter of Fundamental Rights of the European Union, which requires that comparable situations must not be treated differently and that different situations must not be treated in the same way unless such treatment is objectively justified. The comparability of the respective situations at issue must be assessed not in a global and abstract manner, but in a specific and concrete manner having regard to all the elements which characterise them. Those elements must, in particular, be determined and assessed in the light of the subject matter and purpose of the EU act which makes the distinction in question. The principles and objectives of the field to which the act concerned relates must also be taken into account (see, to that effect, judgments of 16 December 2008, Arcelor Atlantique et Lorraine and Others, C‑127/07, EU:C:2008:728, paragraphs 23, 25 and 26; of 12 May 2011, Luxembourg v Parliament and Council, C‑176/09, EU:C:2011:290, paragraphs 31 and 32; and of 4 October 2024, Lithuania and Others v Parliament and Council (Mobility package), C‑541/20 to C‑555/20, EU:C:2024:818, paragraphs 308 and 309).

199    In the present case, however, it should be noted that the ETS 2 and the EU ETS are objectively different. Whereas the former requires not final consumers but regulated entities, within the meaning of Article 3(ae) of Directive 2003/87, to surrender greenhouse gas emission allowances, the latter directly obliges the end user to surrender such allowances. Thus, while the ETS 2 is a system upstream of the supply chain, the EU ETS is a system which applies downstream of that chain. On that point, recital 77 of the contested directive states that, due to the very large number of small emitters present in the BRT sectors, it is not possible to establish the point of regulation at the level of entities directly emitting greenhouse gases, as is the case for stationary installations and aviation. Therefore, in the interests of technical feasibility and administrative efficiency, the EU legislature considered it more appropriate to establish the point of regulation further upstream in the supply chain. The act that triggers the compliance obligation under the ETS 2 is therefore the release for consumption of fuels used for combustion in the BRT sectors.

200    Furthermore, as the Parliament and the Council have correctly argued, if installations and operators covered by the EU ETS may, under certain conditions, receive free allocations of greenhouse gas emission allowances, that is because they are responsible for surrendering such allowances for their own emissions. By contrast, in so far as the entities responsible for surrendering greenhouse gas emission allowances under the ETS 2 may pass on the costs of emissions to final consumers and thus do not necessarily bear the financial burden related to complying with limits on emissions, they do not need to benefit from such free allowances. Furthermore, operators in the additional sectors which are responsible for emissions from fuels that they release for consumption are not required to surrender any allowances, either under the ETS 2 or under the EU ETS, since their size is below the threshold set by the ETS 2.

201    In that regard, it should be noted that, even though they belong to sectors falling within the scope of the EU ETS, installations falling within the additional sectors are only those which are not covered by the EU ETS. Annex III to Directive 2003/87, as inserted by the contested directive, excludes from the scope of the ETS 2 the consumption of fuels used for the activities listed in Annex I to Directive 2003/87, that is to say, activities covered by the EU ETS. Installations falling within the additional sectors, within the meaning of the ETS 2, are therefore in a different situation from that of installations covered by the EU ETS, since they do not bear any costs pursuant to the EU ETS as a result of their activities. It follows that, contrary to the allegations of the Republic of Poland, the contested directive cannot have the effect of impeding competition between those different types of installations.

202    In the light of the foregoing considerations, operators in the additional sectors and those covered by the EU ETS are not placed in a comparable situation with regard to the mechanism for the free allocation of greenhouse gas emission allowances.

203    Consequently, the sixth plea in law must be rejected as unfounded.

 Seventh plea in law: infringement of the principle of sincere cooperation laid down in Article 4(3) TEU

 Arguments of the parties

204    By its seventh plea in law, the Republic of Poland submits that the principle of sincere cooperation, as guaranteed in Article 4(3) TEU, was infringed during the preparatory work for the contested directive, on account of, first, the absence of a detailed discussion and specific reference to the positions of the Member States on the legitimacy of the introduction of the ETS 2, having regard to the significant risk of increased energy poverty, second, the extension, compared with proposal COM(2021) 551 final, referred to in paragraph 57 of the present judgment, of the scope of the ETS 2 to additional sectors, thereby exceeding the scope of the negotiating mandate given to the Presidency of the Council, third, setting too short a time limit for the purposes of transposing points 29 and 31 of Article 1 of the contested directive, with the exception of Article 30f(4) of Directive 2003/87, and, fourth, the breach of the principle of legal certainty arising, on the one hand, from the data-reporting obligations laid down in Article 30f(4) of Directive 2003/87, which apply to a period prior to the deadline for transposition of the contested directive and, on the other hand, from the introduction of impracticable deadlines for transposing the contested directive.

205    In accordance with the principle of sincere cooperation, according to the Republic of Poland, the European Union and its Member States should pay due regard to each other and take into account the arguments and positions they put forward, in order, in particular, to avoid a participant in the legislative process from having the impression that its arguments are not taken into account by the co-legislators.

206    In the present case, the EU institutions were aware of the socioeconomic difficulties associated with the mode of heating of buildings in Poland, since the Republic of Poland had already raised them in the case giving rise to the judgment of 22 February 2018, Commission v Poland (C‑336/16, EU:C:2018:94, paragraphs 27 and 89). Coal remains a major source of the supply of heating for Polish households. For 2021, the Republic of Poland represented approximately 75% of the consumption of solid fossil fuels by households in the European Union and, according to data from the Główny Urząd Statystyczny (Central Statistical Office, Poland), for that same year, almost 21% of Polish households were heated with coal. The energy consumption used for heating buildings in Poland is much higher than the EU average, especially for the most modest households, which explains why, in Poland for 2020, approximately 10% of households suffered energy poverty.

207    In that context, the design of the ETS 2, which will have the effect of including the price of CO2 emissions in the price of fuel purchased by the end user, would be very likely to worsen energy poverty, and that risk is increased by the Russian Federation’s war of aggression against Ukraine.

208    However, the state of energy poverty in each Member State was not examined in the course of the procedure for the adoption of the contested directive. In section 6.3.2.1 of Part 1 of the impact assessment for the contested directive, the Commission merely studied the development of the projections of the annual expenditure on the housing of households in relation to consumption throughout the European Union by 2030, according to three groups of countries classified on the basis of their respective GDP per capita. According to data from the statistical office of the European Union (Eurostat) for the financial year 2020, there are 14 Member States whose GDP per capita is between 60 and 100% of the average GDP per capita of the European Union, including the Kingdom of Spain, the Republic of Croatia, the Italian Republic and the Portuguese Republic. Such a grouping of Member States according to the level of their GDP, without regard to their meteorological conditions, does not make it possible to assess energy poverty correctly, since an increase in the heating expenditure of buildings would be felt less in southern Europe than in the Baltic Sea basin countries.

209    In addition, the deadline for transposition of the contested directive, which was set at 30 June 2024, is too short in the light of the changes resulting from the ETS 2 which require the entities subject to it to adopt measures for the collection and processing of a large number of data relating to the release for consumption of fuels in the sectors covered by that ETS.

210    The EU legislature also infringed the principle of sincere cooperation by requiring, in Article 30f(4) of Directive 2003/87 and with effect from 30 April 2025, any regulated entity holding a greenhouse gas emission permit on 1 January 2025 to report its historical emissions, namely its emissions prior to the application of that directive.

211    Lastly, the principle of legal certainty was infringed in that the timetable laid down in the contested directive imposes on entities subject to the ETS 2 tasks that are impossible to fulfil, such as the obligation to collect data on CO2 emissions volumes for a period in which those operators were not yet required to hold a greenhouse gas emissions permit nor were in a position to apply a plan for monitoring the volume of greenhouse gas emissions approved by the competent national authority. During the period covered by that reporting obligation, that is to say, with effect from 1 January 2024, the process of transposing the contested directive could still have been ongoing in a Member State, since the deadline for transposition expired at the end of April 2024. Thus, by imposing on regulated entities the obligation to report historical emissions for the financial year 2024 by 30 April 2025, the contested directive seriously undermines the trust of businesses and citizens in the State and in the European Union and infringes the principle of legal certainty.

212    The Parliament and the Council, supported by the Commission, contend that the seventh plea in law must be rejected as unfounded.

 Findings of the Court

213    By its seventh plea in law, the Republic of Poland, supported by Hungary, submits that the contested directive infringes the principle of sincere cooperation, enshrined in Article 4(3) TEU, by disregarding the reservations expressed by the Republic of Poland during the procedure leading to the adoption of that directive.

214    At the outset, it should be noted that, of the four arguments put forward by that Member State in support of that plea, as summarised in paragraph 204 of the present judgment, only the first can be linked to the ground alleging a breach of the principle of sincere cooperation, namely the submission that that principle was infringed because there was no detailed discussion and no specific reference to the positions of the Member States on the legitimacy of the introduction of the ETS 2, in view of the significant risk of increased energy poverty.

215    As the Parliament submitted, in essence, in its defence, the three other arguments of the Republic of Poland referred to in paragraph 204 of the present judgment cannot in any way demonstrate a failure on the part of the EU legislature to comply with the principle of sincere cooperation, pursuant to which, in accordance with Article 4(3) TEU, the European Union and the Member States are, in full mutual respect, to assist each other in carrying out tasks which flow from the Treaties.

216    Neither the argument challenging the extension of the scope of the ETS 2 to the additional sectors, nor the argument based on the setting of an excessively short deadline for transposing points 29 and 31 of Article 1 of the contested directive can reflect any breach by the European Union of the obligation of mutual respect and assistance which it must observe vis-à-vis the Member States in carrying out tasks arising from the Treaties. While those arguments express the Republic of Poland’s dissatisfaction with the choice made by the EU legislature, they do not establish how that choice constitutes a failure to comply with the requirement of assistance in accomplishing the respective tasks of the European Union and the Member States.

217    As regards the complaint alleging a breach of the principle of legal certainty, that complaint should have been raised autonomously and cannot be attached to the ground alleging a breach of the principle of sincere cooperation.

218    Those three other arguments must therefore be declared ineffective.

219    That having been said, as is apparent, more specifically, from the assessment of the third and fifth pleas in law, it follows not only from the overall scheme of the contested directive but, more broadly, from the ‘Fit for 55’ legislative package that the EU legislature took full account of the concerns expressed by the Republic of Poland regarding the risk of an increase in the energy poverty of the most vulnerable households, it being understood that the criticism formulated by that Member State rests on an incorrect approach to the concept of ‘energy poverty’, as has been noted in paragraph 176 of the present judgment.

220    In addition, and above all, as the Parliament and the Council in essence submit, the Republic of Poland relies on the breach of the principle of sincere cooperation in order to seek to call into question the application of the qualified majority voting in the context of the adoption of an act within the Council.

221    The rules regarding the manner in which the EU institutions arrive at their decisions are laid down in the Treaties and are not within the discretion of the Member States or of the institutions themselves (see, to that effect, judgments of 23 February 1988, United Kingdom v Council, 68/86, EU:C:1988:85, paragraph 38, and of 6 September 2017, Slovakia and Hungary v Council, C‑643/15 and C‑647/15, EU:C:2017:631, paragraph 149). Accordingly, to acknowledge that an institution can establish secondary legal bases for the adoption of legislative acts or implementing measures, whether for the purpose of strengthening or easing the detailed rules for the adoption of an act, is tantamount to according that institution a legislative power which exceeds that provided for by the Treaties (judgments of 6 May 2008, Parliament v Council, C‑133/06, EU:C:2008:257, paragraph 56, and of 22 September 2016, Parliament v Council, C‑14/15 and C‑116/15, EU:C:2016:715, paragraph 47).

222    In the present case, the contested directive was adopted, on the basis of Article 192(1) TFEU, following an ordinary legislative procedure in the context of which the Council decides by qualified majority, in accordance with Article 16(4) TEU. In that context, as the Council correctly points out, in essence, the fact that a Member State does not agree with the choice made by that institution cannot constitute a ground leading to a finding of a breach of the duty of sincere cooperation on the part of that institution. If that were not the case, no legislative act could be adopted without unanimous agreement of the Members of the Council, which would infringe the rule of qualified majority applicable in the ordinary legislative procedure.

223    In the light of the foregoing considerations, the seventh plea in law must be rejected as unfounded and, consequently, the action must be dismissed in its entirety.

 Costs

224    Under Article 138(1) of the Rules of Procedure of the Court of Justice, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party’s pleadings. Since the Parliament and the Council have applied for costs to be awarded against the Republic of Poland, and since the latter has been unsuccessful, the Republic of Poland must be ordered to bear its own costs and to pay those incurred by the Parliament and the Council.

225    In accordance with Article 140(1) of those rules, pursuant to which the Member States and institutions which have intervened in the proceedings are to bear their own costs, Hungary and the Commission shall bear their own costs.

On those grounds, the Court (Second Chamber) hereby:

1.      Dismisses the action;

2.      Orders the Republic of Poland to bear its own costs and to pay the costs incurred by the European Parliament and the Council of the European Union;

3.      Orders Hungary and the European Commission to bear their own costs.

[Signatures]

*      Language of the case: Polish.