Wednesday

19th Jan 2022

Portugal under fire for backtracking on gas funding

  • It is estimated that EU gas expansion projects, already under construction or planning, create a risk of €87bn in stranded assets (Photo: © Trans Adriatic Pipeline)

A group of member states is seeking to prolong EU funding for cross-border natural gas projects - contrary to the European Commission's plans to remove all support for such infrastructure, according to a draft document seen by EUobserver.

The so-called TEN-E regulation determines which energy cross-border infrastructure projects in the EU are eligible for public funds through the European Investment Bank - listed under the so-called "Projects of Common Interest" (PCI).

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But Brussels proposed a revision of the TEN-E rules in December, excluding dedicated support for oil and gas infrastructure - in a bid to align a key piece of energy policy with the Green Deal and the EU's 2050 climate-neutrality goal.

However, some member states are challenging that position, under a proposal drafted by the Portuguese presidency - triggering outrage from green groups.

"Portugal is in the front line of decarbonisation. Therefore, it is not acceptable that our country, as EU presidency, supports continued natural gas investments, in stark contradiction with the EU's climate neutrality goals," said Francisco Ferreira, president of the Lisbon-based NGO ZERO.

The leaked proposal from the European Council, due to be discussed by EU ambassadors this week, proposes supporting projects until 2029 in which existing gas infrastructure is modified to mix hydrogen with natural gas.

This process, known as "blending", is considered one of the main sticking point of the discussion.

"If the blending happens this can lock investments in a mix of natural gas and fossil hydrogen for years. If the blending does not materialise then there is a lock-in on the modernised natural gas infrastructure," a EU diplomat told EUobserver, arguing that it is "a lose-lose scenario".

"There is a blocking minority against blending because of risks of market fragmentation and lock-in of natural gas," another EU diplomat said.

Meanwhile, the condition set out in the EU Commission proposal, that hydrogen must come from renewable sources, has also been expanded to include "low-carbon gases" - which could open the door for the fossil-fuel industry to lock in investment for years.

"This is absolutely a failure on behalf of the Portuguese presidency to reach a progressive deal with member states that is fit for the climate emergency the world is facing," said Tara Connolly from Global Witness.

"It seems their strategy, despite claiming to stand for real climate action, was to accept positions that satisfied the lowest common denominators, in order to get a deal at any cost," she added.

EastMed pipeline

The council position also foresees continued support for the controversial EastMed pipeline, designed to link Israel and Cyprus to Greece.

A final investment decision is expected by 2022, aiming to finish the project by 2025, Reuters reported.

A previous study showed that gas from EastMed could emit more emissions than Europe's most-polluting coal-fired plant in Poland.

The current PCI list includes some 74 fossil-gas projects eligible to receive public funds, including the EastMed pipeline. The entire list will be adopted by the end of this year.

EU Commissioner for energy Kadri Simson said last week that the assessment of the projects is to be finalised soon, pointing out that this time gas projects will be assessed "through a new methodology including strengthened sustainable criteria".

Earlier this month, 11 EU member states - Austria, Belgium, Germany, Denmark, Estonia, Ireland, Luxembourg, Latvia, the Netherlands, Spain and Sweden - stressed the need to stop funding fossil fuels - under EU rules for cross-border energy projects.

The Portuguese presidency was not available for a comment.

11 EU states want to cut fossil-fuels from cross-border projects

A group of 11 member states, led by Denmark, wants EU rules for cross-border energy projects to exclude funding for fossil fuels infrastructure. However, member states remain divided on the role of gas in cutting greenhouse gas emissions.

Controversial EastMed pipeline not necessary, report warns

A new report warned that the gas reserves over which Greece, Turkey, Cyprus, and the EU are currently embroiled could lead to an increase of greenhouse gas emissions that could undermine the bloc's climate goals for both 2030 and 2050.

New EU rules for energy-project funding to keep fossil gas

The European Commission will unveil a reform of EU criteria for picking energy infrastructure projects for financial support - with a particular focus on hydrogen. However, green groups have warned of the risks of not excluding fossil fuels.

EU defers decision on gas and nuclear as 'green' energy

The European Commission has laid out rules classifying industrial logging and the burning of trees and crops for energy as 'sustainable' investments. Decisions on whether to also list gas and nuclear energy as 'sustainable' investments will be made later.

EU ambassadors divided over prolonging gas funding

EU ambassadors have failed to reach an agreement over whether cross-border natural gas projects should continue to receive EU funding, under the TEN-E regulation, which is currently under revision.

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