An analysis of the measures implemented by member states to encourage investment in renewable energy projects. Do such measures comply with EU state aid provisions?

Abstract

This study delves into the European Union’s energy policy, specifically its strategy for 2020. Directive 2009/28/EC sets out binding targets regarding the production of renewable energy, and recommends that Member States implement support schemes and cooperation mechanisms in order to meet such targets. This thesis analyses the different support schemes that Member States have implemented, specifically Germany, the UK and Malta, and their effectiveness in encouraging investment in renewable energy projects. It establishes that there is a need for the convergence of such support schemes in order to avoid the fragmentation of the internal market. The harmonisation of support schemes is not currently optimal, and therefore the European Commission encourages Member States to cooperate with each other, and learn from each other’s experiences, in pursuance of the ‘Europeanisation’ of such support schemes. The study also discusses the benefits that may be derived from cooperation mechanisms, which allow Member States to benefit from the production of renewable energy in other Member States. By means of such mechanisms renewable energy will be produced were it is most cost-effective and therefore the distortion to the market is limited. However, unlike support schemes, very few Member States plan on using such mechanisms. Support measures may constitute state aid, and therefore may be prohibited under Article 107(1) TFEU, due to the fact that they distort competition and negatively affect the internal market. However, the Commission has the discretion to declare such measures as being compatible with the market if they fall within the scope of Article 107(3). This thesis analyses the situations when such support measures may be authorised and the effectiveness of the Environmental State Aid Guidelines and the General Block Exemption in providing guidance to Member States regarding the Commission’s practice in exercising its discretion.