BRUSSELS Part of a law to promote green energy violates the treaties underpinning the European Union, an adviser to the highest EU court found on Tuesday, stoking political debate about subsidies for renewable power.
The opinion will be considered further by the Court of Justice of the European Union over the next three to six months and could lead to the invalidation of an article of the EU law.
The European Commission, the EU executive, said it could not comment on ongoing cases.
An advocate general, who advises the European court in Luxembourg, found Sweden had respected EU law on promoting renewable energy, but in doing so had broken rules enshrined in the EU treaties on free movement of goods.
Opinions from advocates general are respected by the court in a majority of cases.
If the court confirms there is a conflict, the relevant section of the EU law would become invalid in two years' time, giving the Commission and member states two years to come up with an alternative.
"Article 3, paragraph 3 of the directive 2009/28 is invalid in that it gives member states the power to prohibit or restrict access to their support regimes for (energy) producers whose renewable energy installations are situated in another member state," Advocate General Yves Bot said in his opinion.
Sweden refused to award subsidies it hands out for domestic renewable energy to wind power generated on the Aland archipelago, which lies part way between Finland and Sweden.
Although it is part of Finland, Aland has its own parliament and is Swedish-speaking. Similarly, its link to the European Union is regulated by a special protocol.
Wind energy company Alands Vindkraft went to the Swedish courts, arguing Sweden was giving an unfair advantage to Swedish-produced energy. At the end of 2012, the Swedish courts referred the matter to the EU court.
The case has political resonance as Europe struggles to wean itself off green energy subsidies, which are blamed for inflating costs and making the European Union less competitive.
The Commission is pushing for harmonized subsidies across the bloc and encourages cross-border movement of power as part of a single energy market to limit costs and maximize available resources.
Camilla Rosenberg, chief legal officer of the Swedish Energy Agency, part of the Swedish government, said it was "exploring the consequences" of a ruling.
"A possible consequence is that the renewable target for the EU is jeopardized, should the court rule completely in accordance with the advocate general's proposal," she said.
Specialist energy lawyers said the impact could be far-reaching.
"Should the advocate general's opinion find its way into a final court decision, it certainly undermines the basis for most of the current incentive system using national generation as a criterion, including the German EEG (renewable energy law)," said Jochen Terpitz, a partner at international law practice Simmons & Simmons.
He also said the opinion could add to pressure on Germany to find a compromise with the European Commission, which is investigating whether its subsidy law is fair.
(Additional reporting by Vera Eckert in Frankfurt; Editing by Dale Hudson and Jane Baird)