The Interplay between Objectives of the European Union's Energy Policy: The Case of State Funding of Energy Infrastructure

Abstract

Investments in energy infrastructure are one of the key energy policy priorities of the European Union. However, due to inherent high costs, these investments cannot be made without the Member States' support, notably in the form of State aid. This implies notifying the State aid to the European Commission for a prior assessment. Yet, the approach of the European Commission to such State aid has significantly changed over the past years: the introduction of a more refined economic approach to State aid analysis and the gradual withdrawal of State from infrastructure funding have modified the traditional approach that virtually ignored the question of State aid to infrastructure. Moreover, the assessment of energy infrastructural projects depends greatly on how Member States use State aid to balance different energy policy objectives, such as competitiveness, environmental protection, and security of supply. This paper endeavors to elucidate the interplay between these energy policy objectives involved in State funding of energy infrastructure, and in particular how they influence the final decision making.

Keywords: European Union, State aid, energy policy, energy infrastructure, renewable energy, interconnectors, nuclear energy, services of general economic interest, objectives of common interest

JEL Classification: K20, K23