Energy from wind mills - A legal analysis of the interaction between traditional regulation and market based instruments

First of all, a report from the Danish Energy Authority in October 2002 explains that the objectives in the directives article 3 are expected to be met due to measures already taken. Secondly, Danish legislation will already be in compliance with the criteria in articles 5-7, though only if the proposed statutory order concerning guarantees of origin of electricity produced from renewable energy sources enters into force. As for the compliance with the directives article 4 concerning the use of support schemes it is necessary to examine other EU-legislation as well, including the prohibition against state aid in article 87-88 of the EC treaty as well as the Community guidelines on State Aid for environmental protection (OJ 2001/37) and Case C-379/98 PreussenElektra. After a detailed analysis it is concluded that there is no conflicts between the EC regulation and the present use of subsidies to owners of wind turbines. Nor are there any conflicts between existing Danish regulation and article 28 in the EC treaty on prohibition of quantitative restrictions between member States. Furthermore it is examined whether the regulation of the Danish electricity sector is in compliance with the polluter pays principle in article 174.2 of the EC treaty. The conclusion is that this is not the case for the moment being, since the Danish regulation does not ensure the internalisation of costs related to environmental damage caused by the production of electricity. It is examined whether the lack of such regulation is in line with the principle of proportionality, but the conclusion is that this is not the case. Hence there is apparently a conflict between Danish regulation and EC law. Whether the EC authorities will take any action in that respect to be seen