Next Monday, September 27th, the European Parliament’s Industry and Energy Committee (ITRE) will adopt its position on future energy infrastructure rules, known as TEN-E regulation. The deal that is currently being finalised with a view to be adopted by the majority of the political parties will not help the EU put a halt on new fossil gas infrastructure any time soon.
“By adopting such a position, MEPs will give a clear signal that they are in favor of publicly supporting fossil gas infrastructure and hydrogen blending projects, until late into this decade. But the devastating impacts of the climate crisis that are already in our doorstep show that there is no room for continuing fossil gas infrastructure built out. This will create stranded assets, and coupled to the electricity price crisis due largely to skyrocketing gas prices, trigger high costs for consumers while undermining a swift transition towards a fully renewable energy system,” said Esther Bollendorff, EU Gas Policy Coordinator at CAN Europe.
Why is the deal bad?
1) The proposed deal will allow fossil gas projects on the 4th and the 5th PCI lists (Projects of Common Interest) to apply for PCI status under the new TEN-E regulation (i.e. grandfathering) with the only restriction that they cannot apply for EU public money from CEF (Connecting Europe Facility) but enjoy other advantages, such as accelerated permitting procedures and easier access to other sources of funding (state aid, recovery funds or private funding sources). Adopting such a position would mean supporting exemptions for at least 55 fossil gas mega-projects until late into the decade.
2) The proposed deal will also allow fossil gas companies to receive subsidies until 2027 to build new gas pipelines and terminals on condition that they are fully converted to carry only hydrogen by the end of 2029. This means that until the end of the decade, these infrastructures could transport fossil gas only or fossil gas blended with a negligible percentage of hydrogen – a costly practice that only yields low reduction of CO2 as pointed out by IRENA. Allowing for financial support for blending hydrogen in existing and new gas infrastructure, a number one demand of the gas industry, equates to providing subsidies for continued gas use instead of focusing on shifting funds to renewables and energy savings
Europe’s gas infrastructure network has been repeatedly qualified as oversized, going well-beyond the minimum requirements for security of supply. Continued fossil gas infrastructure build out when European demand needs to fall, will lead to accumulated stranded assets, which together with soaring electricity prices due to increasing gas prices will put a heavy burden on gas consumers, both households and industry. The International Energy Agency recently warned that governments must stop building new fossil fuel infrastructure if we are to limit global temperature increase to 1.5°C.
A little recap
The revision process for this European legislation, involving Members States and the European Parliament, went a long way since the Commission published its proposal last December. In its legislative proposal published in December 2020, the European Commission excluded EU funding support from the Connecting Europe Facility (CEF) for new gas infrastructure projects. This was a significant step forward, as it means that future gas projects (beyond the 5th Projects of Common Interest List) are not eligible anymore for public funding or any other important administrative support. However, it introduced new infrastructure categories for hydrogen and smart gas grids including loopholes for low carbon gases and blending hydrogen into gas grids. It therefore did actually not entirely exclude funding for fossil gas infrastructure.
In June, Energy Ministers took the Commission’s proposal a step back and asked for derogations on two specific gas infrastructure projects: Eastmed (importing gas from Israelian gas fields into the EU) and Melita (connecting Malta to mainland fossil gas supply). They also introduced a transitional period for blending, adding thereby a clear (but very late) end date for when mixing hydrogen to fossil gas needs to stop and existing (or new) infrastructure needs to be fully converted for 100% hydrogen use. The Council put an end date to financing blending projects by 2027 and asked for completion of 100% hydrogen infrastructure by 2029.
Recent joint NGO PR: The European Parliament at risk of losing sight of climate crisis by getting ready to support new fossil gas projects
CAN & FWAE PCI Briefing on the 5th PCI list
Unveiling the costs of future fossil gas infrastructure – and why they matter for the revision of the TEN-E regulation