11 State aid in the energy sector Leigh Hancher and Francesco Salerno I. INTRODUCTION The European Union rules on State aid are of considerable importance to the energy sector given the traditionally high level of involvement of governments in energy production and supply. The opening up of the energy market in 2007 by means of EU legislation has been accompanied by vigorous enforcement of the competition rules as well as the State aid rules. Indeed, the Commission’s Energy Sector Inquiry of 2007 announced that it would apply Articles 107 and 108 TFEU more rigorously in the energy sector, especially to preferential tariffs and to long term contracts.1 More importantly, State aid is an important instrument for stimulating environmental protection and climate change, which appears to enjoy centre stage amongst the different facets of energy policy in the EU, as highlighted also in the Lisbon Treaty 2009. As is well known, energy policy in the EU rests on three pillars, that is, internal market, climate change and security of supply.2 While the Lisbon Treaty 2009 has introduced a new chapter on energy, thus providing a legal basis for energy policy, it has at the same time made clear that security of supply rests in the hands of the Member States.3 With respect to the two other pillars, the Commission’s success in mustering support for a common EU policy has certainly been greater in the climate change area compared to the internal market. The recent calls by the Commission on 20 Member...
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