31st May 2023

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

  • 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 11 member states, led by Denmark, wants the European Union to stop funding fossil fuels, under EU rules for cross-border energy projects - which are currently under revision.

Austria, Belgium, Germany, Denmark, Estonia, Ireland, Luxembourg, Latvia, the Netherlands, Spain and Sweden have stressed that decarbonising the energy system now will play a key role in achieving EU's 2030 and 2050 climate goals.

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They said EU regulation must not facilitate investments in fossil fuel infrastructure, such as gas pipelines, but provide incentives to invest in the "energy system of the future", such as renewables or hydrogen.

In a position paper, distributed at the so-called 'coreper' meeting of EU ambassadors on Wednesday (5 May), the group of countries pointed out that the revision of the Trans-European energy infrastructure (TEN-E) regulation is a "litmus test" of the EU's commitment to achieving climate neutrality.

"The EU's climate goals require that policy initiatives on infrastructure provide the necessary framework to phase out fossil fuels while ensuring [the] security of supply and cost-efficiency," reads the position paper.

They add that upcoming infrastructure investments will have an economic and technical lifetime that goes to 2050 and beyond, and, therefore, EU rules should "avoid lock-in effects" and "sunk investments".

"Luxembourg is proud to be part of this declaration alongside Denmark and nine other member states, sharing the view that fossil fuels are not our future," tweeted Luxembourg energy minister, Claude Turmes.

In December, the European Commission proposed updating the TEN-E regulation, which determines which key energy cross border infrastructure projects in the EU are eligible for public funds through the European Investment Bank.

These projects are listed in the so-called "Projects of Common Interest" (PCI) every two years.

The current PCI list involves some 74 fossil-gas projects eligible to receive public funds - including the controversial EastMed pipeline, designed to link Israel and Cyprus to Greece. The European Commission will finalise the assessment of the projects later this month.

The Portuguese presidency of the EU council aims to reach a compromise on the updated TEN-E regulation in June. The issue will be further discussed by EU ambassadors on 26 May and by EU energy ministers in mid-June.

However, according to an EU diplomat, "there is still a division among member states on the inclusion of fossil projects in the revision of the TEN-E Regulation".

"Some still see room to extend existing natural gas PCIs, [what] would undermine the purpose of the revision and hurt the long term objectives of the Green Deal," the source said.

In the EU, close to a quarter of all electricity produced is generated from natural gas.

But it is estimated that EU gas expansion projects, which are already under construction or planning to be built, creates an €87bn in stranded assets risks.

"More and more member states understand both the economic and climate negative impacts of funding gas projects. It's important that those voices, that want to focus investments on no-regrets technologies, are the loudest," Tara Connolly, campaigner at Global Witness, told EUobserver.

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