* Leaked draft seen as legitimising nuclear funding
* Commission says it will still decide each case
* New nuclear needs state support in order to be built
By Barbara Lewis and Karolin Schaps
BRUSSELS/LONDON, Aug 14 European Union rules to
be published over the coming weeks could make it easier to
justify using taxpayers' money to fund new nuclear power, which
would pitch major EU powers against each other.
The European Commission, the EU executive, says its mind is
still open on the topic, but it is under pressure to set a legal
framework for state aid to nuclear projects after several member
states, including Britain, sought its guidance.
Whatever it lays down, as part of a wider modernisation of
state aid rules, is likely to widen a rift between anti-nuclear
nations, such as Germany and Austria, and those willing to
support the technology, including Britain and the Czech
A Commission spokesman said the executive is not planning to
encourage nuclear state aid, but lawyers said a leaked draft of
its proposal last month indicated it was leaning towards
allowing nuclear financing.
"Each notification by a member state would of course still
be subject to a case-by-case analysis by the European
Commission," said a spokesman for the Commission's competition
directorate, which leads on state aid rules.
Lawyers say the Commission does have the ultimate say on
state aid but that the process of issuing guidelines and
carrying out a consultation could legitimise nuclear state aid
for new builds, rather than just for short-term emergency
funding as has happened in the past.
The guidelines on environmental and energy aid for 2014-2020
are expected to be published around the end of September, after
elections in Germany scheduled for Sept. 22.
Following consultation with member states, they would need
to be approved by the EU Commissioners meeting as a body, which
is not expected until next year.
"There is still a long way to go before the European
Commission recognises nuclear alongside renewables as one of the
essential energy solutions to climate change," said a spokesman
for the World Nuclear Association, a global network representing
the nuclear industry.
SUPPORTERS AND OPPONENTS
Opponents of nuclear power, including environmental groups,
say government funding for atomic power would be a breach of EU
legal principles and would mark a major shift in policy.
Under EU law, state aid is designed to address problems that
the market cannot solve and must not cause unfair competition.
It is in principle reserved for technology in its infancy, such
as renewable energy. Nuclear generation began more than half a
Critics say giving state aid to nuclear projects, and
specifically to the handful of firms that are building atomic
plants in Europe such as France's EDF or Japan's
Hitachi creates a market distortion and puts other
energy sources at a disadvantage.
"It is pure hypocrisy," said Claude Turmes, member of the
European Parliament representing the Greens.
Other forms of subsidy have attracted fierce criticism, such
as funding for renewable power in Germany, where the public cost
of its shift from nuclear to wind and solar generation after the
Fukushima crisis in Japan has provoked heated debate.
Countries keen to attract nuclear investment have found that
developers are unwilling to build nuclear plants without state
guarantees on prices for the power generated.
New plants in Finland and France are billions of euros over
budget and years behind schedule, and regulatory changes since
the Fukushima accident have further inflated costs.
"Building new nuclear power infrastructure is getting
increasingly expensive, especially in the aftermath of the
Fukushima disaster, and in many cases is now not competitive
with other types of energy," Stephanie Pfeifer, chief executive
of the Institutional Investors Group on Climate Change, said.
The group represents pensions, insurers and other funds
responsible for 7.5 trillion euros ($9.75 trillion) in assets,
including renewable and fossil fuel energy.
"Without some form of government support or subsidy, the
economic case for investing in nuclear is unlikely to improve,"
Britain, which is counting on nuclear power to help meet its
2020 target to cut carbon emissions, has proposed a power market
reform package that includes guaranteeing a minimum price for
It requires state aid approval from the Commission to
legalise the policy, but the executive said it had not yet
received a formal application.
British Secretary of State for Energy and Climate Change Ed
Davey told Reuters during a visit to Brussels in June he was
confident Britain's plans for financing new nuclear would
"easily get state aid clearance".
He added, "There are some countries with a very large
nuclear industry. If they close, we don't have a cat in hell's
chance of tackling climate change. I would love to think we can
replace that with renewables alone, but frankly we won't be able
The Czech Republic is considering a similar mechanism of
state-backed power price guarantees.