Dismiss Austria's appeal against HPC state aid, says Advocate General

In October 2014, the EC approved aid which the UK government was planning to implement in favour of the construction of the HPC project. That aid, for EDF Energy subsidiary NNB Generation, is made up of three parts. Firstly, a contract-for-difference, which seeks to ensure price stability for sales of electricity and to guarantee compensation in the event of an early shutdown of the plant. Secondly, an agreement between the investors of NNB Generation and the UK's Secretary of State for Energy and Climate Change which guarantees compensation in the event of an early shutdown on political grounds. Thirdly, a credit guarantee by the UK on bonds to be issued by NNB Generation is intended to ensure the timely payment of principal and interest of qualifying debt, up to a maximum level of GBP17 billion (USD21 billion). The EC concluded that the aid is compatible with the internal market.

Austria filed a lawsuit with the European Court on 6 July 2015 seeking annulment of the EC's decision. Announcing the filing, the then Austrian chancellor, Werner Faymann, said that nuclear power "is not an innovative technology and is therefore not worthy of subsidy". He added, "[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."

In the course of the proceedings, Luxembourg intervened in support of Austria, while the Czech Republic, France, Hungary, Poland, Romania, Slovakia and the UK intervened in support of the Commission.

In a ruling on 12 July 2018, the General Court dismissed the action brought by Austria. On 21 September that year, Austria brought an appeal against the court's decision before the European Court of Justice.

In a non-binding opinion published today, Advocate General Hogan said the General Court was "fully entitled" to dismiss Austria's challenge and proposes that the Court of Justice dismiss Austria's appeal of that judgment. It is the role of the Advocates General to propose to the Court, in complete independence, a legal solution to the cases for which they are responsible. The judges of the Court of Justice are now beginning their deliberations on this case.

"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," Hogan said in his opinion. "At the very heart of this appeal brought by the Republic of Austria lies its contention that because it (and, for that matter, several other Member States) is resolutely opposed to the construction of nuclear power stations, the granting of aid for such projects by other Member States who support nuclear power is either expressly or implicitly precluded by the various Treaties governing the European Union (including the Euratom Treaty)."

Hogan noted that the Euratom Treaty has the same standing as the Treaty on European Union and the Treaty on the Functioning of the European Union (TFEU) as far as the primary law of the EU is concerned and that these two treaties apply in all areas of EU law that have not been dealt with by the Euratom Treaty. He found that there is nothing in the Euratom Treaty dealing with the issue of state aid and adds that he deemed it appropriate that rules contained in the TFEU concerning competition and state aid should apply to the nuclear energy sector when the Euratom Treaty does not contain specific rules.

He also noted that the Euratom Treaty provisions necessarily envisage the development of nuclear power plants. He concluded the argument put forward by Austria that those provisions of the Euratom Treaty do not cover either the construction of new nuclear power plants or the replacement and modernisation of existing plants by more modern, already developed technologies cannot be accepted.

Hogan said that, in any event, by accepting the objectives of the Euratom Treaty, all EU Member States have "clearly signified their unqualified acceptance in principle of the right of other Member States to develop nuclear power plants on their own territories should they wish to do so". A clearly stated Treaty objective of this kind, he says, must be capable of constituting an objective of common interest for the purposes of the application of the state aid rules.

"In these circumstances, I therefore propose that the Court should dismiss the appeal brought by the Republic of Austria in respect of the judgment of the General Court," Hogan said.

Under a deal agreed in October 2015, China General Nuclear will take a 33.5% stake in EDF Energy's project to construct Hinkley Point C, in Somerset, England. Consisting of two European Pressurised Reactors, it will be the first new nuclear power station to be built in the UK in almost 20 years and will provide about 7% of the country's electricity.

In February 2018, Austria also launched a lawsuit against the EC for its approval of Hungarian state subsidies for the construction of two new reactors at the Paks nuclear power plant. Hungary, which neighbours Austria, received the go-ahead to start construction of new nuclear power units at Paks, following the EC's approval in March 2017 of commitments the country had made to limit distortions in competition. The Commission concluded that Hungary's financial support for the Paks II project involves state aid, but it could approve this support under EU state aid rules on the basis of these commitments.