EU shifts energy infrastructure funding away from gas, into electricity grids

"From now to 2030, we estimate that investments in electricity grids will have to double, compared to the last decade, reaching more than €50 billion per year," said Kadri Simson, the EU's energy commissioner. [Source: EC - Audiovisual Service]

The European Commission on Tuesday (15 December) proposed rules to restrict EU funding for natural gas infrastructure and instead funnel cash into electricity and low-carbon energy networks to meet climate goals.

The EU’s Trans-European Energy Networks rules, or TEN-E, define which cross-border energy projects are eligible to receive EU funding and fast-tracked permits.

The Commission on Tuesday proposed to rewrite those rules, which guided €4.7 billion in EU cash to cross-border energy projects over the last decade, including power grids and gas pipelines.

The proposal excludes dedicated oil and gas infrastructure from the rules, confirming draft plans previously reported by Reuters.

“The closer we move to our climate neutrality target, the more natural gas will be replaced by renewables and low-carbon gases,” EU energy commissioner Kadri Simson said, referring to the bloc’s goal to eliminate its net greenhouse gas emissions by 2050.

“Our policy objectives have changed with the Green Deal,” Simson told lawmakers in the European Parliament’s industry and energy committee. “From now to 2030, we estimate that investments in electricity grids will have to double, compared to the last decade, reaching more than €50 billion per year,” she said in a speech to MEPs.

The rules, which need approval from EU countries and European Parliament, would make more low-carbon technologies eligible for funding.

These include pipelines to carry hydrogen, offshore power grids to link wind farms at sea to countries’ electricity systems, and “smart gas grids” that integrate electricity and low-carbon gases into the network.

EU funding under the TEN-E rules aims to leverage cash from national governments and the private sector, to help mobilise the massive investments needed to meet Europe’s climate aims – including €65 billion in hydrogen infrastructure investments this decade, by the EU’s own estimates.

Some EU lawmakers and campaigners said the rules failed to block funding for fossil fuels, since they could support pipelines to carry hydrogen produced from natural gas in a process that causes CO2 emissions.

“This would only deepen the gas lock-in effect,” said Esther Bollendorff, NGO group Climate Action Network’s Gas Policy Coordinator, referring to concerns that building fossil fuel-based infrastructure could “lock in” planet-warming emissions for decades.

The Commission said projects should also face mandatory sustainability assessments, after the EU Ombudsman last month said the Commission had failed to properly assess the climate risk of gas projects under the current TEN-E rules.

LEAKED: EU’s trans-European energy infrastructure plan update

The European Commission will unveil plans on Tuesday (15 December) to finance cross-border energy infrastructure, as pressure builds on the EU executive to provide funding only to clean energy projects that will accelerate the transition to climate neutrality.

[Edited by Frédéric Simon]

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