State Aid to Hinkley Point: An Update | Leigh Hancher

In this podcast, Leigh Hancher discusses the recent non-binding opinion (http://curia.europa.eu/juris/documents.jsf?num=C-594/18%20) of Gerard Hogan, Advocate General of the European Court of Justice, with regard to a decision on state aid to the nuclear power plant Hinkley Point C in the UK. In Hogan’s opinion, EU judges should dismiss an appeal by Austria aimed at overturning the approval of UK state aid to support the construction of the nuclear plant. Hogan stated, “it is clear that the development of nuclear power is, as reflected in the Euratom Treaty, a clearly defined objective of EU law”. In 2014, after several agreed changes to the plans, the European Commission approved the UK’s plans to give state aid to support the construction of two EPR reactor units at Hinkley Point C, deeming it compatible with EU state aid guidelines and thus the internal market. At the time, it was considered by the Commission that the aid was justified as there was a “lack of market-based financial instruments and other contracts to hedge against the substantial investment risks in the project”. The project is a joint venture between EDF and China General Nuclear Power Corporation, with the latter holding a 33.5% stake. The planned plant, which would be the first new nuclear power station to be built in the UK in almost twenty years, would account for approximately 7% of the UK’s electricity supply. Austria first launched an appeal to this decision in 2015 on the basis that approval of the scheme contradicted EU policy to support renewable energy. The then Austrian chancellor Werner Faymann argued that nuclear power “is not an innovative technology and is therefore not worthy of a subsidy”. He added that “[State] aid is there to support new and modern technologies that are in the general interest of all EU countries. This is in no way true of nuclear power.” The case divided Member States. In the course of proceedings, Luxembourg intervened in support of Austria while France, Poland, Czechia, Hungary, Romania, Slovakia and the UK intervened in support of the Commission. In July 2018, the General Court dismissed the action brought by Austria. However, in September 2018, Austria appealed against the decision before the European Court of Justice. In his opinion of 7 May 2020, Hogan stated that, by accepting the objectives of the Euratom Treaty, all Member States have “clearly signified their unqualified acceptance in principle of the right of other Member States to develop nuclear power plants in their own territories should they wish to do so.” He also notes that EU law (according to Art 194 TFEU) has given each Member State the right to determine its own energy mix. Hogan comments that, according to its wording and the position of the provision in the TFEU, aid, in order to be compatible with the Treaty, neither has to pursue an ‘objective of common interest’ nor an ‘objective of public interest’. It only has to ‘facilitate the development of certain economic activities’ and it must not ‘adversely affect trading conditions to an extent contrary to the common interest.’ As Hogan noted, “This case can be described as the legal side of a dispute between Member States that are in favour of nuclear power and those that are not. Both sides claim that they pursue their course with a view to protecting the environment”. While a decision on this appeal is still pending, Hogan’s opinion will be taken into account when the European Court ultimately rules on Austria’s appeal. In the podcast, Leigh Hancher shares her thoughts on the opinion.