The compatibility of national support schemes for renewable electricity with state aid rules- Comparison of the UK and French legal systems

Abstract

The European Union has adopted a binding target for the consumption of renewable energy as a way to reduce greenhouse gases emissions and improve security and diversity of ener-gy supply. The electricity sector has the greatest potential to achieve these objectives. In order to allow renewable electricity to emerge and compete with fossil fuels, Member States realized that a support system was needed. Different support mechanisms have been set up, but they can fall into two categories: feed-in tariffs and tradable green certificates. They are often characterized as public subsidies and may affect competition rules in the European Union. The purpose of this thesis is to identify the spectrum of possibilities for Member States to implement a support scheme that complies at the same time with European Union legisla-tion. As support schemes have to comply with state aid rules, the analysis of state aid con-trol by the Commission and the Court of justice can help to delineate certain standards. The study involves the comparison of two different support schemes, the UK and the French legal systems. It is found that the necessity to support renewable energy and the presence of legal instruments for these objectives cannot be used as a justification of the violation of state aid rules. First, the thesis identifies the conditions under which a support scheme can be qualify as state aid. Then, it considers the possibilities to justify state aid measures for reason of environmental protection. It is demonstrated that the Commission seeking to find a balance between the need for public funds and the goal of ensuring competitive market, adopt a flexible approach of the derogation of state aid to ensure the competitiveness of renewable electricity.