Friday

29th Mar 2024

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

  • According to critics, the lack of focus on renewable hydrogen 'serves the gas industry as an excuse to keep on expanding gas infrastructure subsidised with public money' (Photo: European Parliament)

The European Commission is expected to unveil on Tuesday (15 December) a reform of EU rules for selecting energy infrastructure projects for financial support - with an increased focus on hydrogen.

However, green groups have already slammed the proposal for not explicitly excluding fossil-gas subsidies - arguing that Europe does not need more gas infrastructure to achieve climate neutrality.

Read and decide

Join EUobserver today

Get the EU news that really matters

Instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

In the EU, fossil gas is already responsible for more emissions than coal.

The revision of the TEN-E regulation is aimed at aligning a key piece of energy policy with the Green Deal, but also at accelerating procedures for those energy cross-border projects labelled as so-called "Projects of Common Interest" (PCI).

The current PCI list made it possible for 55 fossil-gas projects to receive public funds through the European Investment Bank (EIB).

These include five liquified natural gas (LNG) projects, five gas storage sites and several pipeline projects such as the controversial EastMed pipeline, designed to link Israel and Cyprus to Greece.

Following the EIB's decision last year to phase out financing for all fossil fuels, the TEN-E regulation has been dogged by controversy, since the system has funded up to €4bn of new gas infrastructure in Europe without fully considering the associated climate risks.

Earlier this year, the European Ombudsman said that "given the EU's objectives concerning climate change and sustainability, it is regrettable that gas projects were included on previous PCI lists, without having their sustainability properly assessed".

In the reform of the TEN-E regulation, a draft version of which was obtained by EUobserver, the EU executive will remove all direct support for fossil-gas projects.

But it will continue expanding gas infrastructure by funding hydrogen, smart gas grids and electrolysers - without explicitly ruling out fossil gas.

"This means that the commission will continue subsidising fossil-gas projects instead of redirecting public funds into the 'no-regret' solutions which are energy efficiency and direct electrification with renewables," said Esther Bollendorff, coordinator at NGO Climate Action Network.

By 2030, total investment needed in hydrogen electrolysers is estimated between €24 to €42bn, while €65bn will be needed for hydrogen transport, distribution and storage.

'Grey' hydrogen

Yet, where the hydrogen originates from makes a difference. Experts differentiate between 'grey', 'blue' and 'green' hydrogen.

Grey hydrogen comes from natural gas and still generates significant carbon emissions, while blue hydrogen production relies on controversial technologies that can capture and store carbon emissions (CCS).

The cleanest version of all is green hydrogen as it is generated by renewable electricity without producing emissions - although this option is also the most expensive at the moment.

However, currently more than 90 percent of hydrogen is produced with fossil fuels, specifically natural gas.

EU ambassadors adopted on Friday a common position on Europe's hydrogen strategy, calling on the commission to support the development of hydrogen grids in the upcoming revision of the TEN-E regulation.

So far, the draft proposal foresees the development of at least five hydrogen projects by 2026.

In the conclusions, the European Council emphasised the need to boost renewable hydrogen over fossil hydrogen and to invest in local hydrogen grids.

EU ambassadors also referred to 'blue' hydrogen as "a solution temporarily complementing the renewable hydrogen production for scaling up the hydrogen market".

However, according to Bollendorff, "the narrative of gas being needed as a transition fuel, with blue hydrogen required in the first phase while making renewable hydrogen fit for the market, serves the gas industry as an excuse to keep on expanding gas infrastructure subsidised with public money."

EU lawmakers and EU energy ministers now have to agree their separate positions on the new TEN-E rules by next summer before entering negotiations to finalise the law.

Ombudsman censures EU Commission on gas-projects list

The European Ombudsman said the climate risks from gas projects included on the EU Commission's list of priority energy projects were not properly assessed, urging the commission to address the "shortcomings" of its methodology.

Investigation

The European gas trap

With the support of EU institutions, the fossil industry is investing in natural gas infrastructure all across the continent, from Tallinn to Athens and from the Baltic to the Aegean. But does Europe truly need all this natural gas?

Opinion

If EU is serious, it should use more US liquified gas, not less

You are not likely to hear this story, because it does not fit into the environmental activist or media narrative about American clean energy and will come as a shock to the most enthusiastic boosters of the Paris agreement.

Hydrogen strategy criticised for relying on fossil fuel gas

Civil society organisations criticised that the commission is relying on early-stage technologies that require the continued use of fossil fuels, undermining the EU's 2050 climate-neutrality target set in the Green Deal.

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.

Portugal under fire for backtracking on gas funding

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.

Opinion

EU Modernisation Fund: an open door for fossil gas in Romania

Among the largest sources of financing for energy transition of central and eastern European countries, the €60bn Modernisation Fund remains far from the public eye. And perhaps that's one reason it is often used for financing fossil gas projects.

Latest News

  1. Kenyan traders react angrily to proposed EU clothes ban
  2. Lawyer suing Frontex takes aim at 'antagonistic' judges
  3. Orban's Fidesz faces low-polling jitters ahead of EU election
  4. German bank freezes account of Jewish peace group
  5. EU Modernisation Fund: an open door for fossil gas in Romania
  6. 'Swiftly dial back' interest rates, ECB told
  7. Moscow's terror attack, security and Gaza
  8. Why UK-EU defence and security deal may be difficult

Stakeholders' Highlights

  1. Nordic Council of MinistersJoin the Nordic Food Systems Takeover at COP28
  2. Nordic Council of MinistersHow women and men are affected differently by climate policy
  3. Nordic Council of MinistersArtist Jessie Kleemann at Nordic pavilion during UN climate summit COP28
  4. Nordic Council of MinistersCOP28: Gathering Nordic and global experts to put food and health on the agenda
  5. Friedrich Naumann FoundationPoems of Liberty – Call for Submission “Human Rights in Inhume War”: 250€ honorary fee for selected poems
  6. World BankWorld Bank report: How to create a future where the rewards of technology benefit all levels of society?

Stakeholders' Highlights

  1. Georgia Ministry of Foreign AffairsThis autumn Europalia arts festival is all about GEORGIA!
  2. UNOPSFostering health system resilience in fragile and conflict-affected countries
  3. European Citizen's InitiativeThe European Commission launches the ‘ImagineEU’ competition for secondary school students in the EU.
  4. Nordic Council of MinistersThe Nordic Region is stepping up its efforts to reduce food waste
  5. UNOPSUNOPS begins works under EU-funded project to repair schools in Ukraine
  6. Georgia Ministry of Foreign AffairsGeorgia effectively prevents sanctions evasion against Russia – confirm EU, UK, USA

Join EUobserver

EU news that matters

Join us