European Union is one of the top-performing parts of the world in environmental matters: its Member States push hard to address modern environmental challenges they face, including climate change, and achieve their environmental targets. However, in doing so, the Member States need to comply with European Union law. The State aid policy and the 'polluter pays' principle of the environmental policy of the European Union often seem as obstacles before the Member States to implement their national environmental policies.On the one hand, State aid control is essential to keep the economy free from distorting state interventions and maintain a high level of competition in the internal market. On the other hand, the protection of the environment is among the priority objectives of the European Union. Moreover, requirements of environmental protection must be integrated into all policy areas, including State aid. The purpose of this work is to study how the environmental protection and its requirements are integrated into the State aid policy when these two legitimate interests -a competitive economy by controlling State aid and a green economy by promoting a higher level of environmental protection -intersect.To present the bigger picture, the study, first, visits the fundamentals, where the objectives of the European Union, general principles of the European Union law and the competence division are briefly elaborated. Next, the European Union legal framework for State aid control, environmental protection and environmental integration is shortly presented. Finally, the question of how the objective of environmental protection is reflected in the State aid policy is addressed with a deep analysis of the General Block Exemption Regulation, Environmental and Energy Aid Guidelines, and relevant Treaty rules. The thesis shows that although the Member States are confronted by the State aid policy of the European Union, this policy actually envisages quite generous rules and approach for granting necessary environmental State aid to businesses.