A satellite image shows damage at Fukushima I Nuclear Power Plant in 2011. The ongoing nuclear disaster in Japan is estimated to cost up to €169 billion.

For the last week, the European Commission has been at pains to explain itself after leaked plans to change EU rules and allow European countries to provide direct state aid to nuclear power came under heavy fire.

Chancellor Angela Merkel reiterated Germany’s opposition to subsidies for nuclear energy, while Austrian Chancellor Werner Faymann said Austria would resist the plans as there was no future for nuclear energy in Europe.

In an attempt to reassure anti-nuclear countries, the Commission published a rebuttal on its website. But the Commission’s arguments are as flawed as an ageing nuclear reactor. They paper over legal inconsistencies and are misleading about the effects that changes to European competition rules would have on the energy market. Here is a response to the Commission’s main points.

  • “The European Commission has no plans to encourage state aid for nuclear power or to make it easier for member states to grant such aid.”

Under EU competition rules, state aid is only legally justified if it supports a common EU interest. The first article in the “aid to nuclear energy” section of the leaked guidelines – seen by Greenpeace – clearly describes subsidies to nuclear energy as a “common EU objective”. Given the number of countries opposed to nuclear power in Europe, this definition can only be interpreted as a signal that the Commission intends to carve out specific state aid provisions for nuclear power.

  • “[State aid for nuclear power] is not currently prohibited per se. […] Member states are free whether (or not) to include nuclear in their fuel mix.”

Under the EU treaty, all state aid is prohibited as a distortion of competition, unless it is authorised by the Commission. No state aid can be presumed admissible unless the Commission clarifies this with guidelines or regulations. In the absence of such guidelines or regulations, EU member states need to prove that aid measures clearly meet a common EU interest when they apply for authorisations under the relevant Treaty rules.  Member states also need to demonstrate that subsidies are necessary to address shortcomings in the functioning of the energy market (known as market failures). In its draft guidelines, the Commission is pre-empting this discussion by indicating that nuclear power is needed to ensure a share of energy (so called "baseload") in the grid.

EU countries can of course decide their own energy mix, but must do so in accordance with EU rules on competition, internal market and environmental and health protection. Nowhere does EU law say that nuclear power is eligible for state aid.

  • “The Commission is obliged to take [the Euratom Treaty] into account when member states notify any aid that they wish to give to the nuclear sector. The possible adoption of specific provisions on nuclear power in Commission state aid guidelines would not change the situation in this respect.”

In its draft guidelines, the Commission argues that the development of new nuclear power stations is a common EU objective under article 2c of the 1957 Euratom treaty. However, Euratom and its article 2c do not promote the creation of new nuclear power capacity. They offer no legal basis to justify state aid in derogation of the EU treaty. The Commission is stretching the scope of article 2c beyond its reasonable limits when it says that it can provide a legal basis for the authorisation of state aid to nuclear power.

The Commission also fails to take into account the development of EU environmental law, the obligation to integrate it in all EU policies, including state aid control (Article 11 of the EU Treaty), and the fact that the EU Treaty of Lisbon and the Charter of Fundamental Rights guarantee a high level of health and environmental protection.

  • “It appears that several member states wish to subsidise nuclear power.”

The Commission has decided to act on behalf of countries like the UK and France that want to subsidise nuclear power. It is threatening the interests of other countries – like Germany, Austria, Italy, Denmark, Ireland and Luxembourg – that are opposed to the development of nuclear power and are instead investing in renewables and the modernisation of the energy system. As they stand, the guidelines would expose these and other EU countries to market distortion as a result of state aid for nuclear power. They also threaten to derail the EU’s objective of creating a single European energy market.

  • “Specific provisions on nuclear in these guidelines, alongside other provisions such as provisions on state aid for renewable energy sources (RES), would also not imply that RES and nuclear energy would be given the same status.”

Under the draft guidelines, nuclear energy would be subject to far more favourable state aid rules than renewables. The guidelines would allow nuclear operators to write off costs from decommissioning and waste treatment (before 2006). Even worse, the guidelines justify the substantial immunity of nuclear operators from liability, allowing EU countries to pass on to taxpayers any financial risks arising from nuclear accidents. The Commission considers that the low minimum levels of liability that operators must cover in accordance with two international conventions (the 1960 Paris Convention and 1963 Vienna Convention) are valid benchmarks for EU law. However, the EU itself and five EU countries are not even parties to these conventions.

  • “The inclusion of such provisions in the guidelines would have no implications whatsoever concerning Germany's nuclear phaseout.”

State aid for nuclear energy is a threat to Germany’s ability to phase out nuclear power and further develop renewable energy. It would perpetuate the fragmentation of the EU energy market, exacerbating the clash between inflexible and wasteful energy from nuclear power and flexible energy from renewables. It threatens investments in smarter interconnection between different parts of the power grid, capable of integrating renewable energy sources.

For an assessment of the impact of state aid for nuclear power, see: European Commission attempts to open door for subsidies to nuclear energy.

Andrea Carta – Greenpeace EU Legal Counsel