CYIL vol. 15 (2024)

CYIL 15 ȍ2024Ȏ STATE AID BY CZECHIA TO DUKOVANY II safeguard mechanism was necessary to place investment risks at a level that would enable the investment despite market failure. Fifthly, when checking the necessity of the planned aid to Dukovany II, the European Commission duly took account of the Euratom Treaty objectives and the project’s compliance with EU law, in particular EU environmental law. 21 In so doing, the Commission referred to the judgment of the Court of Justice of the European Union in Austria v Commission , C-594/18 P with respect to Hinkley Point C , where the Court ruled that ‘ State aid which contravenes provisions or general principles of EU law cannot be declared compatible with the internal market ’ and that, for nuclear energy specifically, ‘ covered by the Euratom Treaty, State aid for an economic activity falling within that sector that is shown upon examination to contravene rules of EU law on the environment cannot be declared compatible with the internal market pursuant to that provision .’ 22 The Court held that the member states’ discretion when choosing their energy mix under Article 194 TFEU, the principle of protection of the environment, the precautionary principle, the “ polluter pays ” principle, the principle of sustainability, and environmental obligations under secondary legislation, e.g., environmental impact assessments under Directive 2011/92/EU 23 did not preclude state aid to nuclear energy projects. 24 Sixthly, the European Commission’s necessity assessment duly took account of the market failure characterizing the nuclear energy market, e.g., an unstable regulatory environment and high initial investment costs. 25 In so doing, the Commission referred to its general findings on market failure for nuclear new build in its Hinkley Point C Decision, 26 confirmed by the Court of Justice in Austria v Commission , C-594/18 P. 27 It had identified that market failure for nuclear new build principally stemmed from a combination of three concerns: (i) the scale of the capital requirement, (ii) the longevity of exposure to market price signals, which are in turn distorted by interventions, and (iii) the longevity of exposure to political decisions. Market failure is linked to the MEIP test in that it makes it unlikely that market forces alone would be capable of ensuring the timely delivery of a nuclear investment project. Proof of such market failure for a new nuclear build in Czechia was that, in 2014, a tender for the completion of the Temelín nuclear power plant had been canceled specifically because there was no guarantee of return on investment. 23 Directive 2011/92/EU of the European Parliament and the Council of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment, OJ L 26, 28.01.2012, p.1; https://eur-lex. europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32011L0092. 24 Case C-594/18 P Austria v Commission , ECLI:EU:C:2020:742, paragraphs (48) and (49). 25 European Commission’s Invitation to submit comments pursuant to Article 108(2) of the TFEU, “State Aid – CzechiaState aid SA.58207 (2021/N) – Support for the construction and operation of a new nuclear power plant at the Dukovany site” (2022/C 299/02); https://eur-lex.europa.eu/legal-content/EN/TXT/ PDF/?uri=CELEX:52022XC0805(04), OJ of 5.8.2022, C 299/5, recitals (163) and (180) to (185). 26 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, recitals 382-385. 27 Case C-594/18 P Austria v Commission , ECLI:EU:C:2020:742, paragraph (67). 21 Idem, recitals (165) to (172). 22 Case C-594/18 P Austria v Commission , ECLI:EU:C:2020:742, paragraphs (44) and (45).

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