The European Commission has adopted a proposal to revise the EU rules on Trans-European Networks for Energy (the TEN-E Regulation) to align the EU energy infrastructure regulation with the objectives of the European Green Deal. However, continued eligibility of gas projects for funding under the new rules sparks concern.
Adopted seven years ago, the EU’s TEN-E policy bought together stakeholders in regional groups to select and help implement projects of common interest (PCIs) that link Member States’ energy networks, connect regions isolated from European energy markets, strengthen existing cross-border interconnections and help integrate renewable energy.
“The current TEN-E framework has been fundamental in creating a true single energy market, making it better integrated, more competitive and secure,” said Commissioner for Energy Kadri Simson. “But our ambitious climate targets demand a stronger focus on sustainability and new clean technologies.”
The proposed changes reflect the key role energy infrastructure will play in the green transition and the upgraded 2030 climate and energy targets, prioritising electricity grids, offshore energy and renewable gases, while oil and natural gas infrastructure will no longer be eligible for support.
Shifting funds away from gas
The Commission expects that by the early 2020s, when the gas PCIs currently under implementation will be in operation, Europe should achieve a well-interconnected and shock-resilient gas grid with all Member States having access to a diversified range of suppliers, including to the global LNG market.
The Commission also noted that in the context of decarbonisation Europe’s gas mix is expected to change significantly. By 2050, natural gas consumption will be reduced by 66–71 per cent compared to 2015. In view of the improvements in infrastructure connections, technological developments and market functioning achieved over the past years and in view of the expected decline in natural gas demand, the Commission sees no justification for continued policy support for gas projects.
However, demand for renewable and low-carbon gases, in particular biogas, hydrogen and synthetic methane, will be double the demand for natural gas. Therefore, the Commission proposed a new focus on hydrogen infrastructure development and new provisions on smart grid investments for integrating clean gases (like biogas and renewable hydrogen) into the existing networks.
Rethinking the role of the gas infrastructure
As traditional gas projects are destined to be cut off from funding, the gas industry aims to reposition itself as a key enabler of the energy transition. According to Gas Infrastructure Europe (GIE), the European association of gas infrastructure operators, if we would like to overcome the challenges of gas and electricity integration, it is essential to keep a technology-neutral approach and an equal playing field for both energy vectors.
“To deliver the ultimate decarbonisation goal, a future-proof solution is needed and the gas infrastructure remains a pillar component of such an action plan,” stated Boyana Achovski, GIE Secretary-General.
“Today, we are already teaming up with the wind and solar power generation. By doing so, we will massively contribute to accelerating the deployment of renewable hydrogen in the soon future thanks to our technical capacities and ability to innovate,” she concluded.
GIE highlighted that gas storage facilities can bring the necessary flexibility to allow an increasing share of intermittent renewables to integrate our energy system.
“Given that as of today electricity storage solutions are either limited in scale or only suited for short-term storage, gas storages remain the only affordable large-scale technical solution to meet the seasonal storage needs compared to the other storage technologies,” read the press statement.
The conversion of Europe’s existing natural gas infrastructure into hydrogen infrastructure represents another opportunity for the gas industry to redefine its role in a decarbonised Europe. According to Hydrogen Europe, the most efficient way to transport hydrogen is in molecular form, using existing natural gas infrastructure, which can reduce the overall cost of the energy transition, avoiding the need to invest in new infrastructure.
Not excluded just hidden
Even though direct EU funding for fossil gas pipelines has been removed, environmentalist groups think that the proposed rules provide a loophole to continue to subsidise fossil gas-related infrastructure in disguise, under the categories of hydrogen and smart gas grids, missing the opportunity to rule out fossil gas explicitly and definitively.
“The myth of fossil gas being a transition fuel or a bridging fuel prevents the EU from ensuring policy coherence with its climate neutrality objective,” warned Climate Action Network (CAN) Europe, Gas Policy Coordinator, Esther Bollendorff.
“Allowing fossil gas, dressed up as low-carbon hydrogen, to be part of the energy transition is like falling in a dangerous, dirty and expensive pipe-trap which will require another imminent transition at citizens’ expense.”
According to environmental NGO Bellona, building a fossil gas pipeline today that comes with a narrative that the pipeline is ready to transport renewable or low carbon gasses in the future is all that is needed for gas to re-enter the TEN-E.
“A gas pipeline that is ready to transport renewable gases is totally non-binding and provides no mandate for that infrastructure to develop or transport new lower carbon gases,” read the press statement of Bellona.
An ongoing debate
The exclusion of fossil fuels from EU funding has been on the table of European lawmakers for a long time. Last week, the European Parliament and the Council reached a provisional agreement to cut funding for fossil projects under the 17.5 billion euros Just Transition Fund. However, gas projects that meet the taxonomy criteria of do no significant harm could still access funding from the regional development fund until 2025.
The adoption of the revised TEN-E policy will depend on the process of negotiation with the European Parliament and the Council. In the meantime, preparations had to start already now for the preparation of the fifth PCI list, due at the end of 2021. The preparations still follow the existing regulation, however, based on improved sustainability assessment of projects. The intention is for the new regulation to be in place in time for the sixth PCI list.
Photo: rhe pumping station of Bučany in Slovakia/European Commission.