Commission split over state aid for nuclear

Thursday, October 3, 2013

The European Commission is divided over state-aid rules for energy and the environment ahead of a debate to be held in Strasbourg next week (Tuesday 8 October). The Commission is preparing guidance for member states in a bid to solve inconsistencies that have plagued two areas: feed-in tariffs for renewable energy, and state subsidies for nuclear power plants. A draft version of the guidance will be issued by the end of the year, with a view to adoption in 2014.

The nuclear industry wants European Union rules changed so that member states can provide direct state aid for building nuclear power plants. But member states and Commission departments are split on the issue. Several member states – including France, the Czech Republic and the UK – want the Commission to relax state-aid rules so they can use environmental subsidies to fund nuclear plants, seeing such a policy as part of a ‘low-carbon' approach. But other countries, including Germany and Austria, are adamantly opposed to nuclear being on the same footing as renewables when it comes to environmental subsidies.

The Commission's energy department, headed by Germany's European commissioner, Günther Oettinger, is said to favour nuclear subsidies. Earlier this month, the newspaper Süddeutsche Zeitung reported that Oettinger told a meeting of nuclear regulators that state-aid rules should be changed to allow public financing of nuclear power stations. New nuclear power plants, he reportedly said, were not profitable and in order for them to make money, “it will be necessary to carefully bypass or pragmatically adapt state-aid rules”.

However, the Commission's climate and environment departments, as well as green campaigners, do not support the idea.
“Allowing public subsidies for nuclear power would distort the energy market in favour of a dangerous technology that is still a bad investment 60 years after it was created,” said Frederic Thoma of Greenpeace. “European commissioners should resist this lunacy when they decide their position.”

Support for renewables

The Commission's proposed guidelines will also look at state aid for renewable energy. There is concern about a lack of consistency in applying the rules in member states and retroactive changes to subsidy rules. Governments across Europe have slashed subsidy programmes for renewable energy, particularly for solar power. Feed-in tariffs, which set a higher payment for energy bought from renewable sources and fed into the grid, experienced sudden cuts in 2011.

At the conclusion of May's summit of EU leaders, which focused on energy, François Hollande, France's president, said that the EU had to develop a harmonised approach to these schemes. “There must be co-ordination, co-operation, and harmonisation for renewable energy,” he said. Member states must “refrain from changing the rules along the way, as was unfortunately the case in France in recent years”.

But there is disagreement about the degree of harmonisation needed. Environmental campaigners fear that the revision could end subsidies for emerging renewable businesses in favour of funds for nuclear. At the same time, investors have warned that the Commission must do something to rein in the sudden policy shifts at member-state level.

In August, the Green group in the European Parliament published the results of a study on state aid commissioned from E3G, a think-tank. The report warns against any EU attempt to harmonise the systems. “Solving climate change will require more government intervention in markets,” said Nick Mabey of E3G. “If state-aid policy tries to micro-manage this process, it will be overwhelmed, resulting in delays which will raise costs to consumers and slow European growth.”

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