CYIL vol. 15 (2024)

CYIL 15 ȍ2024Ȏ STATE AID BY CZECHIA TO DUKOVANY II guidance for EU Member States and private investors in the EU that wish to embark on similar projects. When applying general EU state aid rules to nuclear projects, the European Commission’s test is two-fold. First, the European Commission assesses whether there is state aid. Second, if there is state aid, the European Commission assesses whether such state aid is compatible with the TFEU. When assessing Czechia’s proposed aid measures for Dukovany II , the European Commission has consistently applied this two-fold test, in the same way as it has done so far in all nuclear projects so far (e.g., UK NDA, British Energy, COFACE, Hinkley Point C, PAKS II ). The Commission starts by analyzing in the first stage whether the support measures for the nuclear project amount to state aid. This generally depends on whether a reasonable market investor would have made a decision similar to the one made by the state. If a reasonable private investor had given the same support as the state to the nuclear project, there would have been no state aid. The Commission does not interfere with the support measures in such cases. However, if a reasonable private investor had not done so, the support measures for the nuclear project would amount to state aid. In such cases, the Commission analyses in a second stage whether the support measures for the nuclear project are compatible with the TFEU. Generally, given the very broad umbrella provided by the objectives of the Euratom Treaty and market failure characterising nuclear new build, support measures for nuclear projects are considered to be compatible with the TFEU. Both the European Commission and, upon appeal, the European Courts have been quite lenient towards state aid for nuclear projects. Given the new taxonomy cataloguing nuclear energy as “green,” this trend is unlikely to change. However, as shown by Dukovany II , EU Member States should not slip into overly protecting investors and operators of nuclear new build by providing too many layers of watertight protection at all stages of a nuclear power plant’s life, encompassing both its construction and operation. Some windows need to be left open to allow for risk and competition. In state aid, too, the best is the enemy of the better.

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