In October, the European Union approved a controversial subsidy deal to allow billions of pounds of state aid for Hinkley Point C, a new nuclear reactor planned for the United Kingdom. Austria’s intention to launch a legal challenge against this decision has provoked controversial comments in international media. So, why does Austria care about a nuclear power plant being built in the U.K., and what are the real issues at stake?
Austria has been deeply skeptical about nuclear power for decades. Recall that in a 1978 referendum, the Austrian electorate decided not to start the operation of the nuclear power plant Zwentendorf. After the catastrophic events in Chernobyl in 1986, the opposition to and concerns about nuclear power became deeply rooted in the Austrian population, at all levels of society. (Austria was among those countries in Central Europe that were most affected by the disaster.)
Information regarding the safety of nuclear power plants of Russian design, which became public after 1989, reinforced these apprehensions, leading to explicit government policy in 1990.
A joint publication by the Heads of the European Radiological protection Competent Authorities and the Western European Nuclear Regulators Association released in October 2014 clearly states “that the possibility of severe accidents … cannot be completely ruled out. Such accidents could be as severe as the Fukushima one, affect more than one European country and require rapid protective actions in several of them.”
The transboundary nature of the risks associated with nuclear power dictates that the legitimate interests of Austrian citizens are represented in relation to all nuclear projects and installations.
As a matter of principle, Austria does not consider nuclear power to be compatible with the concept of sustainable development. Therefore, it does not consider reliance on nuclear power to be a viable option to combat the greenhouse effect. Sustainable development, if fully applied to the energy sector, would require substantial increases in energy efficiency and energy saving as well as a switch to renewable sources of energy.
It has been argued that the Austrian government’s long-standing position on this subject, supported by numerous resolutions in Parliament, is at the core of the intended legal challenge. But that is not the case. Austria fully respects every country’s sovereign right to decide on its national energy mix.
Our objection stems from concern about the provision of U.K. state aid for the project, and the extent to which it would comply with common European state aid and competition rules. The current European Environmental and Energy State Aid Guidelines allow, under strictly defined circumstances, for state aid to renewable energy projects – but there are no such rules for nuclear power projects. Therefore, an assessment has to be made on the basis of general EU competition law.
As a general rule, the Treaty on the Functioning of the European Union prohibits state aid, while it leaves some room for certain policy objectives for which state aid can be considered compatible with the internal market.
European Commission guidelines and decision practice, as well as the European Court of Justice’s jurisdiction, have developed a set of principles that put these exemptions to the general rule into concrete terms. As the planned state aid for Hinkley Point C differs tremendously from all of these principles, it seems inevitable that the European Commission’s decision will be challenged.
The commission seems to be relying heavily on the idea of market failure, for instance, to justify its decision. This cannot be accepted: If the market fails to finance an unsustainable project, it is simply doing its job.
In essence, the arguments raised in order to justify this state aid could apply to any other large-scale power project as well. State aid for the Hinkley Point C nuclear power plant could therefore not only serve as a model for further nuclear new build projects, but also lead to a run on state aid throughout the entire EU energy sector.
Against this background, Austria feels it has no option but to challenge this state aid decision at the courts of the European Union. This action is not aimed at any particular EU member state, but rather seeks to defend a common competition regime, which this decision could render meaningless.