In less than a decade, the European Union has invested 440 million euros in gas pipelines that have never been finished or whose projects are in danger of failing, according to a research published on Monday 22 February.
According to the study by the NGO Global Witness that deals with sustainability and respect for human rights, the EU has invested almost 5 billion euros of EU public money in 41 infrastructure projects such as gas pipelines or import terminals, known as “Projects of common interest “(PCI). Approximately 440 million, in particular, was allocated to seven projects that failed or were suspended.
The vast majority of this sum – over 430 million euros – was spent on the BRUA gas pipeline, intended to connect Bulgaria, Romania, Hungary and Austria to gas reserves in the Black Sea. Offshore gas exploration in the Black Sea Economic Zone under the jurisdiction of Bulgaria and Romania it has been a topical issue in recent years, but in the case of Bulgaria the work is completely stopped.
Designed to limit Europe’s dependence on Russian gas, the BRUA pipeline aims to transport 1.75 billion cubic meters of gas in its first phase, at an estimated cost of € 479 million. A first section of the work was completed in November 2020, but it is located entirely in Romania and does not reach either the Black Sea or neighboring countries.
Investors are now worried that BRUA will end up not carrying Black Sea gas at all, after US multinational Exxon – which had led most of the project so far – announced it would sell its license. Plans to extend the pipeline to Hungary were canceled in April last year, and now the project no longer reflects the initial plans, which prompted the EU to include it as a common interest one.
The other six PCI that have received funding, but whose works have never started or are currently blocked, are these:
The selection of projects is under examination
With its report, Global Witness wants to warn the European Union against repeating the same mistakes when selecting the next batch of projects to be implemented under the new regulation on trans-European energy networks (TEN-E).
According to the NGO, the failure of the listed projects is largely explained by the fact that the TEN-E regulation directly attributes to gas companies – represented by ENTSOG, the association of gas transmission system operators (TSO) -, and not to a third authority, the role of selecting the infrastructure projects selected to receive EU funding.
“It is incredible that the Commission considers this to be a fair process for deciding how to spend public funds. When companies that can directly benefit from it are involved in the decision-making process, it is no surprise that so much of this vital money is wasted, ”said Jonathan Gant, Senior Gas Campaigner at Global Witness. Asked by EURACTIV, the European Commission did not respond to a request for comment.
The new update of the TEN-E regulation excludes gas and oil pipelines from the possibility of receiving EU funding for the first time, but leaves the door open to the financing of hydrogen networks, which can be built by adapting gas infrastructure already existing.
EU funding under TEN-E rules aims to use money from national governments and the private sector as leverage to mobilize the massive investments needed to achieve Europe’s climate goals – including € 65 billion investments in hydrogen infrastructure between now and 2030.
By that year, “the total need for investment in hydrogen electrolysers is estimated to be between € 24 and 42 billion,” the European Commission said last year when it presented the updated TEN-E regulation. In addition, “about 65 billion euros will also be needed for the transport, distribution and storage of hydrogen”.
According to Global Witness, however, the hydrogen projects will come entirely from ENTSOG’s Ten Year Grid Development Plan (TYNDP), drawn up by member companies. As part of that plan, gas network operators will identify infrastructure gaps, which the NGO says will be used to push for further investment in pipelines.
In addition, while the new TEN-E regulation eliminates EU funding for oil and gas infrastructure, it also introduces the new category of “smart grids”, which includes gas grids that use digital solutions to integrate gas low-carbon and renewable.
In this way, according to Gant, “the Commission’s proposal fails to address the fundamental conflict of interest created by leaving ENTSOG responsible for the key parts of the project selection process”.
ENTSOG dismissed the conflict of interest allegations, stating that its tasks “are based on EU legislation” and grid development plans aimed at addressing security of supply problems. The financial support, the association of gas companies told EURACTIV via email, “is a natural consequence of the structure under which the TSOs are building the gas transportation infrastructure, and of the fact that all TSOs are obliged to be members of ENTSOG “.
Looking ahead, ENTSOG says it is preparing “for a gas infrastructure transition” to move from today’s natural gas transportation “to a future with renewable, low-carbon gases”, and explains that its Roadmap 2050 highlights “the key role of the existing gas infrastructure as an efficient means of transporting hydrogen”.
For this reason, according to ENTSOG, “it will still be important that there are gas infrastructure projects to potentially be included in the PCI list, both for reasons of security of supply or market functioning, and – in the future – for reuse and the adaptation of existing networks to transport hydrogen “.
Updates to the TEN-E regulation are currently under discussion by the European Parliament and EU Member States in the Council of Ministers. A political agreement on the proposal is expected towards the end of this year.