Project background

While State aid is prohibited in the EU because it distorts competition and the internal market rules, it is allowed in specific cases to encourage key economic activities and projects including those aiming at environmental preservation and mitigating climate change. It is, however, important to ensure that state aid measures do not fund projects that jeopardise environmental and climatic objectives, although, as stated by the Aarhus Committee, this type of state aid should not be declared compatible with the EU internal market.

The Court of Justice of the European Union (CJEU) has stressed (Case C‑594/18 P, Austria v Commission) that compliance with environmental law is a requirement and state aid should not be declared compatible with the internal market if that aid breaches environmental law. Member States must ensure that aid measures comply with national and EU environmental law. As the Union has exclusive competence on competition law, the European Commission has the fundamental role to authorise those measures and ensure and verify that state aid measures comply with EU environmental law.  It is therefore of significant importance to guarantee that the general public has the possibility to participate in the adoption of participation and appeal state aid decisions affecting the environment.

EU Member States decide on the state aid measures and submit them to the Commission for authorisation. The type of decisions might differ from one country to another. According to the Convention, this decision, prior to the notification to the Commission, should be subject to challenge from an administrative or judicial point of view at a national level. Furthermore, once the authorization of the Commission is granted, the national decision which can then be executed should be subject to challenge.