Lawmakers ban fossil gas from EU energy infrastructure funding, with some exceptions

“The objective of this revision is to align the TEN-E Regulation with the objectives of the European Green Deal," according to lead author of the report Zdzisław Krasnodębski MEP [Jan van de Vel / EP]

Lawmakers in the European Parliament voted on Tuesday (28 September) to remove support for fossil gas in EU funding rules for cross-border energy infrastructure known as the TEN-E regulation.

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.

Under a deal passed in the Parliament’s energy committee on Tuesday, natural gas infrastructure will no longer be eligible for EU funding under the revised regulation.

However, lawmakers agreed a derogation for gas infrastructure already approved under the EU’s so-called 4th and 5th list of projects of common interest.

These projects will receive EU funding only if they help member states move away from more polluting fossil fuels, like coal, lignite, peat and oil shale, according to MEPs.

Environmental groups denounced the deal, saying it will allow more than fifty gas infrastructure projects to be considered for EU priority status – including the Baltic Pipe in Denmark, the EastMed pipeline connecting Greece and Cyprus as well as the Shannon LNG terminal in Ireland.

Hydrogen blending towards 100% until 2030

In addition, lawmakers voted to make hydrogen blended with fossil gas eligible for special status.

Under a compromise drawn up earlier this month, EU support for investments in blending infrastructure will end in 2027, and all blending projects will have to convert to 100% hydrogen by 2029.

Erik Bergkvist, a Swedish social democrat MEP involved in the Parliament negotiations, said these dates will send a clear signal for the industry to start the transition to renewables.

“Blending is only allowed with the purpose of creating dedicated hydrogen pipelines and as a technical necessity in a provisional timeframe to allow switching existing pipelines to 100% hydrogen pipelines,” he told EURACTIV.

“There’s no financing for fossil fuels,” Bergkvist insisted. “We have updated the TEN-E to focus on renewable sources. We have connected offshore grids and included new categories. The energy projects applying for EU funding will have to prove their energy efficiency as the main criterion in the process of assessment of eligibility for EU funding,” he said.

The hydrogen industry has said that this provides a solid step towards creating a hydrogen economy.

“Repurposed infrastructure must be fit to carry pure hydrogen. The following negotiations will be key to ensure that converting existing natural gas infrastructure into a hydrogen backbone is not used as a backdoor for the continued use of unabated fossil fuels,” said Jorgo Chatzimarkakis, Hydrogen Europe CEO.

Similarly, the industry body, Eurogas, said the European Parliament took a sensible approach to the revision, including understanding EU countries’ specific needs, like the switch from coal to gas.

“It’s reassuring to see the Parliament recognises the immediate emissions savings blending offers – this is good news for renewable and low carbon gas scale up too,” said Bronagh O’Hagan from Eurogas.

But environmental campaigners at Greenpeace warned that, in practice, Parliament’s stance means pipelines could still carry fossil gas or gas blended with a marginal amount of hydrogen until the end of the decade. This, it argues, goes against the advice of the International Energy Agency, which called for halting all investments in new fossil fuels projects in order to meet the UN target of limiting global warming to 1.5°C.

The vote in the European Parliament’s energy committee follows a deal by EU leaders earlier this year, which also allowed exceptions for gas investments into the TEN-E regulation – a move that was widely criticised by environmental organisations at the time.

Infrastructure dispute reveals deep divisions in Europe over gas

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.

EU countries are now waiting for the Parliament to finalise its position in plenary before entering so-called trilogue talks with the European Commission and hammer out the EU’s final decision.

And it is inevitable that fossil gas will once again be the biggest source of contention.

“We will keep on fighting to keep fossil fuels out,” Bergkvist told EURACTIV. “This will be our priority. We go into negotiations with a broad majority from the European Parliament which gives us a strong position in the negotiations,” he said.

But, according to campaigners, it will be up to the European Commission and EU countries to resist Parliament and “get Europe off gas once and for all”.

“MEPs have failed to stand up against fossil fuel lobbyists, and instead swallowed the gas industry’s desperate attempt to cling to public subsidies, status and support,” said Eilidh Robb, fossil fuels campaigner at Friends of the Earth Europe.

Support for carbon capture

In a move that was more warmly welcomed by environmental groups, lawmakers also voted to support funding for carbon capture and storage infrastructure.

This is an important step for industrial decarbonisation in Europe, said Lee Beck from the Clean Air Task Force, an environmental NGO.

“Carbon management technologies are an integral option for future-proofing decarbonisation of heavy industry like cement and steel, while safeguarding and creating jobs,” she said.

“With geologic storage resources inequitably distributed across the EU, providing support for CO2 infrastructure – geologic storage and CO2 transport modalities – means that all countries will have access to carbon management technologies to deliver on climate goals,” she told EURACTIV.

Carbon capture and storage is important for scaling up renewable and low carbon gas, said O’Hagan, adding that support for this technology will boost Europe’s blue hydrogen production and that will, in turn, help bring down the costs of green hydrogen.

Why CO2 transport and storage infrastructure is vital to reach climate neutrality

The large-scale deployment of cross-border CO2 transport and storage infrastructure is crucial for the EU to reach its 2050 climate target. To this end, all modes of CO2 transport – pipeline, ship, barge, truck, train – and CO2 storage should be included in the revised TEN-E regulation, writes Dr Graeme Sweeney.

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