Think Glocally, Discriminate Internally? State Discretion, Renewable Electricity Schemes, and the Internal Market in the Context of Articles 34-36 TFEU and state Aid Rules

Abstract: The overarching question addressed in this essay is whether the seemingly wide scope of state discretion in respect of principal renewable electricity support schemes – feed-in tariffs (FIT), feed-in premiums (FIP), tradable green certificates (TGC), and FIT initiated by tendering (TENFIT) – is curtailed or upheld under the internal market regimes governing, firstly, the free movement of goods in the context of non-fiscal measures targeting imports i.e. articles 34 and 36 TFEU, and, secondly, state aid i.e. article 107 TFEU and the appurtenant soft law instruments issued by the Commission. Assuming that the outcome under these regimes may involve trade-offs in respect of how the energy policy trinity is balanced and potentially intervene in state’s energy competence as enshrined in articles 192 (2) letter c and 194 (2) second subparagraph TFEU, a subsidiary purpose is to tentatively assess whether the outcome may be considered legitimate. The analysis regarding the first regime shows that the exceptional two-tier justification approach established in PreussenElektra and maintained in the subsequent cases Ålands Vindkraft and Essent Belgium, formally based on both the mandatory requirements doctrine and article 36 TFEU, is in effect based on a lenient and territorialised conceptualisation of environmental protection. In spite of only dealing with FIT and TGC schemes respectively, this thread of case law may in the author’s view be generalised to other schemes. As such, this regime enables state discretion. The outcome under the state aid regime demonstrates that even though PreussenElektra settled a key doctrinal issue in the course of not classifying an early FIT scheme as state aid, this has nevertheless proved insufficient for the increasingly complex and state intervening FIT, FIP and TENFIT schemes. All support schemes currently amount to state aid in the Commission’s decisional practice, but it is questionable whether the EU courts will uphold such a view regarding TGC. Most importantly, with the adoption of the new compatibility guidelines EEAG 2014-2020, the consequences of falling within the Commission’s regulatory net has shifted dramatically to the effect that FIT and partly FIP schemes are gradually phased out. Accordingly, state discretion under the state aid regime is increasingly constrained. The legitimacy of this two-folded outcome is analysed from the perspective of input and output criteria. The fact that state discretion is constrained under the state aid regime, but upheld under articles 34-36 TFEU, corresponds from the perspective of input criteria to less and more legitimacy, respectively. However, considered from output criteria taking into account both regimes’ procedural facilitation of effective problem solving, the assessment is altered. This is also the case when assessed from a substantive output criterion focusing on cost efficient implementation of the policy objectives pertaining to the energy trinity. Thus, where the ECJ under articles 34-36 TFEU justifies discrimination within the internal market and among the member states to the detriment of a cost efficient fulfilment of the trinity, the soft law approach taken by the Commission in the context of state aid mitigates these effects by way of promoting cost efficiency within member states.