19th Oct 2021

MEPs urged to end gas-funding, fix cross-border projects rules

  • Concessions for Malta and Cyprus will ensure the completion of the controversial EastMed pipeline, designed to link Israel and Cyprus to Greece, and the Melita pipeline, connecting Libya to Malta and Italy (Photo: Johannes Jansson/norden.org)

EU member states have decided to extend subsidies for some cross-border natural gas projects until the end of 2027 - a delay criticised by green groups as a major policy "loophole", incompatible with the bloc's climate targets.

The so-called TEN-E regulation determines which cross-border energy infrastructure projects in the EU are eligible for public funds and fast-tracked permits, under the "Projects of Common Interest" (PCI).

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Last year, the European Commission proposed a revision of the TEN-E rules, excluding dedicated support for oil and gas infrastructure - in a bid to align a key piece of energy policy with the Green Deal.

Despite a blocking minority of 11 countries, who called for rules to exclude fossil-fuel funding, energy ministers agreed their position on the updated TEN-E regulation on Friday (11 June) - paving the way for negotiations with the European Parliament.

Austria, Luxembourg, Germany and Spain did not support the agreement, pinning their hopes on MEPs to step in and make the rules better.

"We count on the parliament to improve the text," said Claude Turmes, the energy minister of Luxembourg.

Under the council position, in principle the EU would stop funding new natural gas and oil projects.

But projects in which existing gas infrastructure is modified to mix hydrogen with natural gas would be eligible for financial support until at least the end of 2027, and able to carry natural gas blended with hydrogen until 2030.

By the end of the transitional period, these projects will have to demonstrate that they do not "lead to the prolongation of the lifetime of natural gas".

However, green groups have warned that natural gas is likely to dominate these new projects because there is no clear definition of what percentages of each gas could be transported, or provisions to ensure that blended hydrogen comes from renewables.

Currently, more than 90 percent of hydrogen is produced with fossil fuels.

"The nine-year transition period during which existing gas infrastructure can be upgraded to carry hydrogen is totally at odds with an already well-oversupplied European gas grid," said Esther Bollendorff from Climate Action Network Europe.

The International Energy Agency (IEA) has scaled down gas demand projections for 2030, under Paris Agreement-compatible energy scenarios. The IEA recently said that "a total transformation of the energy systems" would be needed to reach net-zero emissions by 2050 - including no investment in new fossil-fuel projects from now on.

Malta and Cyprus pipelines

Yet, EU energy ministers agreed that those gas infrastructures already under the PCI list in Malta and Cyprus should maintain their status, and therefore, be eligible for further funding.

"The purpose of this exception is to end the isolation of these two member states and to give them access to future energy markets, including hydrogen," member states said.

This concession would ensure the completion of the controversial EastMed pipeline, designed to link Israel and Cyprus to Greece, or the Melita pipeline, connecting Libya to Malta and Italy.

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 EU executive by the end of this year.

EU Commissioner for energy Kadri Simson said last month that the assessment of the projects would be done "through a new methodology, including strengthened sustainable criteria".

However, a previous study showed that gas from EastMed could produce more emissions than Europe's most-polluting coal-fired plant, which is in Poland.

"It's hard to see how either the EastMed and Melita pipelines fit into this crucial analysis," said Frida Kieninger, a campaigner from Food & Water Action Europe.

"It is now down to MEPs to step in and bring a halt to more subsidies for fossil fuel projects - no exceptions, no loopholes," she added.

MEPs in the parliament's committee on energy are due to decide on this file on 15 July, which then must be voted in plenary. Trialogues negotiations are expected to start in September.

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