Impact of latest CJEU rulings on nuclear projects in the EU

In the first, the Court of Justice of the European Union (CJEU) annulled the European Commission's decision approving Hungary's state aid for the expansion of the Paks nuclear power plant, carried out in cooperation with Russia. In the second, the CJEU dismissed Austria's action seeking the annulment of an EU regulation recognising natural gas and nuclear energy technologies as environmentally sustainable. These rulings may be of key importance for the development of further nuclear projects in the European Union. 

Red light for Hungary – CJEU invalidates decision on state aid for PAKS II project

Hungary has only one nuclear power plant – Paks NPP, which accounts for approximately 50% of the country's electricity production (1). In recent years, it was decided to expand this power plant by constructing new units 5 and 6 based on Russian VVER-1200 technology (Paks II project). 

The project was to be financed entirely by the Hungarian state. The construction of the new reactors was awarded directly to the Russian company Nizhny Novgorod Engineering, in accordance with the agreement between Russia and Hungary on cooperation on the peaceful use of nuclear energy. Under this agreement, Russia also agreed to grant Hungary a state loan to finance most of the costs of development of the new reactors. 

In 2017, following an investigation, the European Commission issued a decision stating that Hungary's financial support for the Paks II project constituted state aid and allowed its use subject to a number of strict conditions (including the obligation to use the profits from the power plant exclusively to finance this project or to pay the profits to the Hungarian state). (2)

This decision was challenged by Austria, which did not agree with Hungary granting state aid. Austria argued, among other things, that the Commission's decision was unlawful since no public procurement procedure was initiated for the construction of the new nuclear reactors for Paks II. In its view, inviting competitors to tender for the contract could have led to a completely different form of aid measure, in particular with regard to the amount and structure of the aid. (3) Despite this argument, the General Court of the European Union, in its judgment of 30 November 2022, (4) upheld the validity of the decision and dismissed the action. 

The situation changed on 11 September 2025, when the Court of Justice of the European Union ruled to set aside the above-mentioned judgment of the General Court of the European Union and annulled the decision on the admissibility of state aid for the Paks II project (CJEU judgment in Case C‑59/23 P). (5)

The CJEU pointed out that, when assessing the compatibility of state aid with the internal market, it is also necessary to examine any distortions of competition that may have arisen on the market for the construction of nuclear power stations as a result of the award of a contract for the construction of new nuclear reactors in breach of EU public procurement rules, since that award is an aspect that is inextricably linked to the object of the aid measure at issue. (6)

In this regard, the CJEU emphasised in particular that an analysis of the conformity of the direct award of a contract for the construction of two new nuclear reactors with public procurement rules was all the more necessary since the organisation of an open, impartial and unconditional tender procedure for the award of a contract for the construction of infrastructure may, as the Republic of Austria correctly submits, have an impact in particular on the cost of the investment required for that construction and on the properties of that infrastructure, and accordingly on the extent of any advantage granted to an undertaking or group of undertakings. (7)

As a result of the CJEU's ruling, the European Commission will once again have to examine the conformity of state aid for the Paks II project, which may significantly delay the investment process. 

Green light for new nuclear and gas projects in the EU: Nuclear energy and natural gas still considered environmentally sustainable

In 2020, the European Union adopted the so-called Taxonomy, i.e. a regulation establishing a framework to facilitate sustainable investment. (8) The aim of the Taxonomy was to redirect new investments in the EU towards environmentally sustainable projects by setting out specific criteria that such activities should meet. (9)

Originally, this catalogue of projects did not include investments based on natural gas and nuclear energy. However, this situation changed in 2022, when technical screening criteria covering the above technologies were also established. (10) However, this state of affairs was opposed by Austria (one of the countries against nuclear energy in the EU), which requested that the regulation extending the catalogue of investments considered environmentally sustainable be annulled. Austria raised a number of objections in this regard, including that the Commission did not base its assessment on clear scientific evidence regarding the environmental impact of these technologies. 

After more than two years, a ruling was issued in the case. In the judgment of 10 September 2025, the Court dismissed Austria's action (11), which means that nuclear energy and natural gas will continue to be eligible to be qualified, under certain conditions, as environmentally sustainable. 

In particular, the Court pointed out that:

1. the Commission has a broad discretion in assessing scientific studies and selecting those that should be given priority over others. (12)
2. The Commission cannot be required to rely on scientific evidence that is beyond doubt, as this would impose on it an obligation to demonstrate a zero level of risk. (13)
3. Many of Austria's arguments were found to be unfounded. Among other things, Austria's argument that including natural gas in the classification would create an inappropriate incentive that would ultimately produce stranded assets, because gas is only available as a fuel at much higher price or will even become unavailable, was neither substantiated nor proven. (14) Similarly, the argument that nuclear energy would lose some of its usefulness in a scenario of increasingly frequent and severe droughts is too speculative to establish that the Commission made a manifest error of assessment. (15)

What do the latest CJEU rulings mean for nuclear projects in the EU?

The ruling on the nuclear project in Hungary shows that every stage of the investment process is important in ensuring that the project complies with the law. Nuclear power plants are particularly capital-intensive projects, which means that state support is usually necessary for their implementation and, moreover, may result in serious distortions of competition in the EU market. This impact should be examined as early as the project contractor selection stage, as the tender procedure may affect the final price of the project and, as a result, the scope of any state aid that may be granted. In this context, the recent announcements of the Polish government, which declares that the contractor for the second Polish nuclear power plant will be selected through a competitive tender procedure, should be viewed positively. 

On the other hand, keeping nuclear energy and natural gas within the scope of environmentally sustainable projects should reduce potential doubts about the legitimacy of investing in these technologies. Therefore, new nuclear and gas projects can expect continued support at the European level in the coming years. However, it should not be forgotten that these technologies are still considered only "transitional" – for example, in order to maintain their environmentally sustainable status, new nuclear power plants should obtain building permits by 2045, and modifications to existing facilities should be approved by 2040. Consequently, projects that do not fit within the above timeframe may lose their environmentally sustainable status and thus lose the interest of financing institutions. 

As never before, the following will be crucial for the implementation of new nuclear projects:

• Skillful planning and execution of the tender process to select relevant business partners, while ensuring compliance with EU public procurement law.
• Preparing the investment process and contractual structure with a view to obtaining and maintaining the most favourable conditions for state aid, as well as adequate preparation for dialogue with the European Commission at the stage of notification of such aid.
• Planning the project with a view to meeting the latest regulatory requirements, including the criteria set out in the Taxonomy, in order to ensure legal compliance and increase the attractiveness of the project to potential investors and financing institutions. 

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References

1. Nuclear Power in Hungary, World Nuclear Association, 3 December 2024. < https://world-nuclear.org/information-library/country-profiles/countries-g-n/hungary > [access: 30 September 2025].
2. Commission Decision (EU) 2017/2112 of 6 March 2017 on the measure/aid scheme/State aid SA.38454 — 2015/C (ex 2015/N) which Hungary is planning to implement for supporting the development of two new nuclear reactors at Paks II nuclear power station (notified under document C(2017) 1486).
3. Judgment of the General Court of 30 November 2022 – Austria v Commission – T-101/18, paragraphs 15–18. 
4. Ibid. 
5. Judgment of the Court of 11 September 2025 – Austria v Commission (Paks II nuclear power plant) – C-59/23 P.
6. Ibid., paragraph 80 of the judgment. 
7. Ibid., paragraph 76 of the judgment.
8. Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088 (OJ EU L 198, p. 13, as amended).
9. The technical eligibility criteria are set out in Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by establishing the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives (OJ EU L 442, p. 1, as amended).
   
10. Commission Delegated Regulation (EU) 2022/1214 of 9 March 2022 amending Delegated Regulation (EU) 2021/2139 as regards economic activities in certain energy sectors and Delegated Regulation (EU) 2021/2178 as regards specific public disclosures for those economic activities (OJ EU L 188, 2022, p. 1).
11.  Judgment of the General Court of 10 September 2025 — Austria v Commission — T-625/22.
12. Ibid., paragraph 212.
13. Ibid., paragraph 359
14. Ibid., paragraph 667.
15. Ibid., paragraph 401.