CYIL vol. 15 (2024)

EVELYNE AMEYE It has to be stressed that the 2022 Guidelines on State Aid for Climate, Environmental Protection and Energy (CEEAG) 11 promoting aid that benefits the EU’s climate goals through a wide variety of aid measures – e.g., decarbonization aid in the form of contracts for difference, which may entail a payback by the beneficiary to the state if a reference price (e.g., the market price) exceeds the strike price set in the contract - do not apply to aid to the nuclear sector. The only exception is that the CEEAG applies to state aid for pink hydrogen, i.e., hydrogen produced using nuclear energy if it reduces emissions and does not increase the demand for electricity generated from fossil fuels. When assessing the positive condition, the European Commission takes careful consideration of the objectives of the Euratom Treaty, on the one hand, and market failure, on the other hand. The European Commission carefully considers the objectives of the Euratom Treaty because the TFEU is a lex generalis , whereas the Euratom Treaty is a lex specialis . In a legal hierarchy, a lex generalis cannot derogate from a lex specialis . This implies that the TFEU cannot derogate from the Euratom Treaty. However, the Euratom Treaty does not contain state aid rules. Legal hierarchy consequently dictates, in practical terms, that the European Commission carefully takes the objectives of the Euratom Treaty into account when applying the TFEU’s state aid rules. The objectives of the Euratom Treaty comprise, inter alia , Article 2(b) relating to nuclear safety, Article 2(c) relating to nuclear development and investment, and Article 2(e) relating to nuclear safeguards. The European Commission also takes into account the fact that the nuclear sector is characterized by market failure. This market failure is due to the fact that all nuclear investment projects bear intrinsic risks. First of all, there are construction risks because new nuclear builds are prone to huge delays and cost overruns. 12 Secondly, there are market risks. On the one hand, production cannot be stopped at nuclear power plants. On the other hand, nuclear power plants are characterized by high upfront costs and long recovery times. The average operational life of a nuclear power plant is 60 years, and traditional price hedging instruments are not available for more than 20 years. Hence, alternative ways need to be found to provide long-term revenue stability to private investors and avoid volatility. Recently, contracts for difference have been used for nuclear projects in an effort to alleviate market risks, e.g., UK Hinkley Point C . 13 However, private investors will only benefit from contracts for the difference if they manage to agree on a relatively high strike price with the government and if it is likely that the price of nuclear energy will remain lower than the strike price. Thirdly, there are environmental risks as nuclear projects carry radiation risks and generate nuclear waste and spent fuel. Fourthly, and often linked to the previous risks, there are political and regulatory risks. Political risks usually stem from safety perceptions by 11 Communication from the European Commission containing Guidelines on State Aid for Climate, Environmental Protection and Energy (2022/C 80/01), https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_566, replacing the former Communication from the European Commission containing Guidelines on State aid for Environmental protection and Energy 2014–2020 (2014/C 200/01). 12 E.g., the Finnish Olkiluoto 3 project endured 10 years of delay and triple costs, inter alia because AREVA became insolvent before the nuclear power plant saw the light. 13 Commission Decision (EU) 2015/658 of 8 October 2014 on the aid measure SA.34947 (2013/C) (ex 2013/N) which the United Kingdom is planning to implement for support to the Hinkley Point C nuclear power station (notified under document C(2014) 7142), https://eur-lex.europa.eu/legal-content/EN/ TXT/?uri=OJ:L:2015:109:TOC.

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