Briefing: Commission debate on State aid to nuclear

Publication - October 8, 2013
“The Commission should not issue guidelines for state aid to the nuclear sector; subsidising new nuclear plants creates unjustifiable market distortions and environmental risks. Furthermore, DG Competition lacks the experience and the knowledge of the sector that are required to issue guidelines. If transparency is the Commission’s objective, then we urge Commissioner Almunia to enforce EU competition law and open an inquiry on hidden subsidies to nuclear operators, as provided by the newly adopted regulation on state aid”. Andrea Carta – Greenpeace EU Legal Strategist

Background

On 19 July 2013, the Sueddeutsche Zeitung revealed that DG Competition was preparing draft guidelines to allow state aid to nuclear energy. The plan sparked controversy in several countries, including Austria and Germany. Chancellor Angela Merkel reacted on the same day saying: "Germany voted against (nuclear plants getting subsidies) and I support that" [1].

Commission Vice-President Almunia claimed that guidelines on state aid to nuclear would not change the current “neutral position” of the EU executive on nuclear energy and indicated that “guidelines (on state aid to nuclear) would only set out clear and transparent principles, discussed ex ante with stakeholders” [2].

As the Sueddeutsche Zeitung revealed on 19 September 2013, Commissioner Oettinger stated, at a meeting of EU nuclear regulators, that “it will be necessary to carefully bypass or pragmatically adapt [European] state aid rules” in order to allow public subsidies [3]. This “pragmatic adaptation��� is what the inclusion of nuclear in the state aid guidelines on energy tries to achieve.

What is the current legal framework?

Under EU law, State aid is “incompatible with the internal market” and therefore prohibited [4]. Therefore, and contrary to Commissioner Almunia’s claims, no specific rule is necessary to prohibit state aid to nuclear energy. General guidelines or individual decisions are therefore required to authorise nuclear subsidies.

The current framework requires member states wishing to subsidise nuclear power, to ask the Commission for an authorisation. Member states have the burden of proving that: i) State aid to nuclear energy meets a common EU objective; ii) it is an adequate instrument to achieve this objective; iii) in the absence of state aid, that objective would not be met (i.e. a market failure exists justifying the aid), and, iv) the aid does not go beyond what is necessary to meet the stated objective (proportionality of the aid). As explained below, adopting a framework for aid to nuclear energy would reduce the burden of proof for member states, establishing the eligibility of such aid.

What are the implications of including nuclear in the guidelines?

The leaked draft guidelines describe the development of nuclear as "a common EU objective": thus, should the draft be adopted, member states would not have to prove that subsidies to new nuclear built are eligible for authorisation [5];

The leaked draft suggests that market failures make subsidies to nuclear necessary: these are the low price of carbon permits and the lack of baseload capacity (i.e. the power output of a power plant that can be produced over a given period of time at a constant rate). In this respect we note that: 1) nuclear power is not an effective way to reduce greenhouse gas emissions; 2) nuclear power, like fossil fuels, produces a series of negative externalities which are not factored into the price of electricity (it is, therefore, itself a source of market failures); 3) relying on nuclear for baseload capacity would hinder competition in the electricity market and create obstacles to the integration of renewable energy, given that nuclear is inflexible (once a reactor is online, its output cannot be varied in response to market signals) [6]. Again, DG Competition’s draft would lift the burden of proof from member states and create a presumption of legality for nuclear subsidies.

Guidelines limit the Commission’s capacity to assess a case: currently, the Commission can decide each case on its own merit, taking into account the concrete circumstances of a case, without being bound by general rules. Guidelines for aid to nuclear energy, adopted without the necessary experience and knowledge of the sector, risk proving inadequate to guarantee the correct assessment of national aid measures.

Would guidelines increase transparency in the relation between states and nuclear operators?

No! Commissioner Almunia claims that a set of rules is necessary to assess state aid to nuclear. However, such rules would only make the decision-making process of the Commission more predictable, and would fail to increase the transparency of the nuclear industry. These new rules would create a “checklist” for member states wishing to subsidise nuclear operators, leaving existing aid in the dark. This is tantamount to preparing an amnesty for the subsidies nuclear operators already receive in relation to decommissioning, waste and liability.

Enforcing EU law against cases of illegal aid is the only appropriate response to hidden and illegal subsidies to nuclear energy. The recently adopted procedural rules on state aid give DG Competition the power of opening “sector inquiries” (investigations covering entire sectors, aiming at detecting and exposing illegal subsidies). Thus, the Commission already has the instruments to bring transparency in a sector rigged by decades of hidden subsidies. They should enforce existing law instead of trying to create new rules that would skew the market even further in favour of an outdated, dangerous and expensive technology.

Media Contact: Andrea Carta - Greenpeace EU legal strategist: +32 (0)496 161582, .

Notes

[1] Reuters: ‘Germany rebuffs European nuclear power subsidy proposal’, 19 July 2013.

[2] European Commission, ‘No Commission plans to encourage or make state aid for nuclear power easier’, 7 October 2013: Our rebuttal of Commission denials: Greenpeace, ‘Debunking the Commission's claims on nuclear state aid’, 26 July 2013.

[3] Greenpeace, ‘Reaction to Oettinger comment on nuclear state aid reported in Süddeutsche Zeitung’, 19 September 2013.
[4] Consolidated version of the Treaty on the Functioning of the European Union, Article 107.

[5] Greenpeace Energy Desk, ‘Exclusive: Leaked nuclear state aid proposals spark controversy’’, 19 July 2013.

[6] For more details: Greenpeace, ‘European Commission attempts to open door for subsidies to nuclear energy’, 19 July 2013.

This press briefing is also available on www.greenpeace.eu

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