The Interaction Between the EU’s Climate Change Objectives and Its State Aid Regulation in the Area of Renewable Energy

Abstract

This paper analyses the interaction between the EU’s climate change objectives and its state aid regulation in the area of renewable energy through the chronology of the adoption of the EU’s key policy documents and related legislation. The EU’s state aid rules impose certain restrictions on the public financing of renewable energy, which is crucial for reaching the EU’s climate change objectives in due time. The paper identifies four challenges in this respect. The ultimate challenge for the EU is how to reconcile science, the market economy and energy politics. Another challenge for the EU was the diverging national energy policies before the ‘energy title’ was introduced in the Lisbon Treaty. The third challenge for the Commission is how to move the climate change issues up to the top decision-making level. The final challenge is the state aid framework that supports climate change mitigation, whose upcoming changes should address the gap between ambition and reality. The paper aims to assess the policy consistency of the EU’s climate change legislation in order to determine whether the EU’s credibility as a ‘green leader’ is just nominal. The notion of ‘nominal green leader’ is related to the consistency of the EU’s climate change legislation which seems not to have had the expected effect determined by the Kyoto Protocol and Paris Agreement. The paper brings the ambitious policies face to face with the data on state aid provided for climate and energy targets and compares them with the technological expectations in renewable energy deployment. The question that arises is whether it is time for the EU to balance the understanding of ‘common interest’ more towards climate change mitigation at the expense of certain elements of competition policy. Keywords: climate change, competition, electricity generation, internal market, renewable energy, state aid. This work is licensed under the Creative Commons Attribution − Non-Commercial − No Derivatives 4.0 International License. Suggested citation: D Vuletic, ‘The Interaction Between the EU’s Climate Change Objectives and Its State Aid Regulation in the Area of Renewable Energy’ (2020) 16 CYELP 319.