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In the last decades, the topic on climate change has become a top issue that is considered on both international and European level. Thus aligning with the parallel international development tendencies had the European Union taken up the impetus in the advancement of this specific area. With the gradual expansion of the European Community policies the question of environmental concerns being considered under competition law as well with specific regard to State aid rules. This question became quite relevant with the EU accessing the Kyoto Protocol, undertaking the obligation to reduce greenhouse gas emission by the commitment period of 2008-2012. The accession has led to the adoption of Community measures establishing a common European approach towards greenhouse gas emission, yet leaving enough space for the questioning of compatibility of EU legislation with the polluter-pays principle. This essay aims at pointing out the core issues of the European Emission Trading Scheme with regard to the polluter-pays principle. The issue can be addressed through the analysis of the concept of State aid and their environmental implications. The main aim is to come to be able to come to a conclusion whether it is possible to strike a balance between environmental considerations and competition rules or whether there would be always a shift between the two approaches, precluding the possibility to address these issues together.

The question of compliance with the polluter-pays principle and State aid rules within the European Emission Trading Scheme