GIUSEPPE EMANUELE CORSARO, Energy and environmental State aid: the Court of Justice of the European Union interprets extensively the notion of “incentive effect” in the case Veejaam and Espo, C-470/20, of 15 December 2022

ABSTRACT – This paper analyses the relationship between State aid law and environmental protection, with a focus on the recent preliminary ruling in the case Veejaam and Espo. The ruling emphasised the importance of promoting renewable energy development as an objective of common interest under EU law, even if it may create some distortion of competition. The ECJ stated that state aid can have an “incentive effect” where in the absence of the aid the enterprise could not bear the necessary costs of environmental standards. It has been argued in this paper that a coherent interpretation of EU State aid law in the context of environmental protection should prioritise the enhancement of environmental standards, rather than merely relieving the financial burden on economic operators. While State aid may have an “incentive effect” when economic operators cannot bear the cost of environmental standards, the primary goal of State aid should be to encourage and reward investments in environmental protection that exceed EU requirements.

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