The EU’s 27 energy ministers on Friday (11 June) came to an uneasy compromise on the revision of EU rules covering investments in cross-border energy infrastructure, the so-called TEN-E regulation. The fraught debate sets an unwelcome precedent for future debates over gas.
The final compromise text, agreed by EU countries on Friday, left some capitals unhappy with the bloc’s restrictive approach to gas while others refused to support it because it allows too much fossil gas into Europe’s future pipeline network.
What the Dutch delegation called an “even distribution of unhappiness” over the issue also casts a long shadow over any future debate around gas.
“It clearly shows how controversial the gas issue is, even within the institutions,” said Elisa Giannelli, policy advisor at E3G, a climate think tank.
“It’s a controversial issue that will keep splitting the majorities in every institution,” she added. “I think that what we saw on Friday doesn’t really set the best type of precedent for the upcoming legislation.”
The revision of the regulation on trans-European energy infrastructure (TEN-E) saw an even split between 11 mostly western European countries and nine mostly central and eastern European countries over natural gas.
Both sides had a blocking majority, making a compromise extremely difficult to find.
The hard-fought agreement left the door open for some natural gas projects, including grandfathering – or rolling over – for current projects in Cyprus and Malta aimed at connecting the two Mediterranean islands to the European gas grid.
Another hotly contested issue was whether the EU should provide financial support for blending hydrogen into fossil gas. Up to 20% hydrogen can be safely added to existing gas pipelines without requiring retrofitting, a move supporters say can be a first and easy step to decarbonise Europe’s gas grid. Above that threshold, pipelines require an expensive retrofitting or refurbishing to carry greater quantities of hydrogen.
On Friday, EU energy ministers agreed to end financial support for blending gas projects in 2027 rather than 2029. They also agreed to stop financing for “retrofitting” pipelines, but left in the possibility for “conversion”.
But according to Giannelli, this is more a play on words rather than a significant increase in ambition.
“I think that a better compromise could have been found. When you look at the original Commission proposal, yes, you have low-carbon references, but you don’t have any grandfathering, you don’t have any blending,” she told EURACTIV.
The TEN-E regulation creates a framework for the European Union to finance cross-border energy infrastructure. It decides which projects qualify for Europe’s list of projects of common interest, which opens the door to faster permitting and a €5.8 billion pot of money exempt from EU state aid rules.
At Friday’s meeting, some EU countries, including the Czech Republic, Poland, Hungary, Bulgaria and Romania, supported a larger role for gas, with Poland suggesting blending could be permanent and the Czech Republic saying it could continue until 2035.
“We most certainly do not want to exploit natural gas forever. Neither does the Czech Republic want to cause any lock-in effect,” the Czech delegation said. “However, we want to utilise the already existing infrastructure to boost the growth of the hydrogen economy”.
They were up against 11 mostly Western EU countries, led by Luxembourg, which wanted to keep gas out of the regulation.
Today Ministers of 🇱🇺🇦🇹🇪🇸🇧🇪🇩🇪🇩🇰🇮🇪🇳🇱🇪🇪🇱🇻🇸🇪 met ahead of the #EnergyCouncil to reiterate their commitment against the inclusion of #gas & the blending of #hydrogen in the #TEN_ERegulation #EUCouncil pic.twitter.com/1PBeJ2ULUy
— Claude Turmes (@ClaudeTurmes) June 11, 2021
Four of them refused to support the final agreement, with Spain citing issues around smart gas grids and Luxembourg, Germany and Austria refusing to support the wording around electrolysers, which are used to produce green hydrogen.
“The electrolysers category does not give enough priority to renewables” while “the smart gas grids category does not contain enough sustainability criteria and leaves the door open to low-carbon gases whose climatic performance is questionable,” said a diplomat from one of the four countries that refused to back the compromise.
And while the blending derogation has been limited, it is still present in the text, the diplomat added.
Luxembourg led a last-minute attempt to boost the role of renewable power for electrolysers, but failed to garner enough support. Even Denmark, which had initially sided with Luxembourg, said it could live with the proposed compromise.
France, like Italy and Finland, has kept quiet throughout the gas debate. While earlier in the day, the French delegation had shown some support for limiting the role of gas, the country’s call to support the Portuguese EU Presidency proposal might have swayed other countries to support it, said Giannelli.
EU Commission deplores “missed opportunity” to advance EU climate goals
The European Commission’s original proposal was to stop all EU funding for fossil gas projects and instead funnel cash into electricity and low-carbon energy networks to meet climate goals.
Although the electricity projects were not affected by the discussion on gas, the compromise reached by EU countries marked a dilution of the EU’s ambition on climate change, the EU executive said.
“I look with concern at the proposal to continue investments in natural gas grids for the next 10 years in the form of retrofitting for hydrogen blending,” said EU energy commissioner Kadri Simson.
“There is a high risk that these investments may displace other green investments. I’m also not convinced that blending is fully in line with Europe’s hydrogen strategy,” she said earlier in the day.
“While I understand the stakes, I see in some areas a risk to miss the opportunity to advance Europe’s climate and energy goals,” Simson said.
However, Poland has a very different approach. According to Michał Kurtyka, Polish Minister of Climate and Environment, existing gas networks should be repurposed to transport hydrogen and help boost demand.
“We need to adapt the networks. We need to make sure that the already existing gas infrastructure will be adapted to also transport decarbonised gases, including hydrogen,” he said at an online event about hydrogen in Central and Eastern Europe on Friday (12 February).
Bumpy road ahead
The TEN-E regulation is not the only piece of legislation covering gas. But it is the first to reach EU ministers, and as such, it holds huge political relevance as a waymarker in the gas debate.
The EU’s sustainable finance criteria has already met delays because of divisions over gas and these are only likely to grow as more laws are put on the table to be revised.
Another battle lies ahead in December when the European Commission is due to table a comprehensive revision of EU legislation covering gas.
[Edited by Frédéric Simon]