Billions of euros ringfenced for Europe’s post-Covid restoration may very well be diverted right into a raft of recent fossil-fuel infrastructure tasks, offers which can lock Europe into contracts for the subsequent 20 years and threat undermining its inexperienced transition efforts.
After hours of heated discussions, within the early morning of 15 December, negotiators reforming the Recovery and Resilience Facility (RRF) regulation, the monetary leg of the EU’s €750bn post-Covid fund, got here to a conclusion.
The European Parliament, EU Fee and European Council, the so-called trilogue, agreed that restoration funds may very well be used for Repower EU initiatives.
Unveiled in March in response to Russia’s invasion of Ukraine and power provide fears, Repower EU goals to “quickly scale back dependence on Russian fossil fuels and speed up the ecological transition, whereas strengthening the resilience of the power system at EU stage”.
At a November vote on amending the RRF regulation, the European Parliament agreed to briefly put aside the ‘do no vital hurt’ precept that ensures funded tasks trigger no environmental injury.
In doing so, dozens of fossil gasoline infrastructure tasks proposed throughout Europe at the moment are eligible to obtain cash initially put aside for post-Covid restoration initiatives.
“We face a European power disaster and the options have to be European,” stated Siegfried Muresan, Romanian rapporteur for the centre-right European Folks’s Get together (EPP) group within the European Parliament. “Member states shall tackle as a matter of precedence the prevailing bottlenecks by way of power transmission via cross-border and multi-country tasks. Repower EU can carry actual added worth and help us via this disaster.”
The fee and council needed to go even additional, eradicating the cap on the quantities that may very well be mobilised for oil and gasoline, and together with oil in new infrastructure tasks. In the long run all grants from restoration plans, regional funds and the Innovation Fund had been excluded from the RRF reforms and cannot be diverted into Repower power tasks .
Nonetheless, as much as 30 p.c of the super-subsidised loans offered by the restoration plans, round €67.5bn out of the €225bn of accessible loans, would nonetheless be allowed to finance pressing tasks associated to the power disaster.
Investigate Europe has recognized plans for a minimum of 41 liquefied pure gasoline (LNG) terminal or gasoline pipeline developments, a lot of which may now partly be funded with the diverted Covid restoration cash.
Olivier Vardakoulias of Local weather Motion Community (CAN) Europe says the reforms are “a disastrous determination local weather sensible and pointless power safety sensible.” He added: “As an alternative of genuinely repowering the EU, the monetary leg of Repower EU is fueling the permanence of the EU’s dependence on imported fossil fuels, which led us to the present disaster.”
The necessity for a substitute for Russian gasoline justifies Europe’s new fossil gasoline investments, according to the Czech Republic’s finance minister Zbyněk Stanjura.
“The Czech presidency is now delivering on one among our key guarantees: ending the EU’s dependence on Russia’s fossil fuels and paving the best way for a radical overhaul of the Union’s power sector. Repower EU goes to allow us to finance the mandatory investments and reforms.”
When influential Brussels foyer group Eurogas held its annual convention in December, president Didier Holleaux, who can also be vp of French large Engie, known as on the EU for help: “We hope the European Fee will assist us resolve this power provide disaster.”
EU governments have till March to ship Brussels new proposals for his or her Nationwide Restoration Plan, together with the gasoline tasks they need funding for. Supported tasks should be operational by 2026 below the phrases of the Repower EU scheme.
34 LNG tasks, seven gasoline pipelines
Based on the Global Energy Monitor database, for the reason that starting of the conflict in Ukraine, plans for a minimum of 34 liquefied pure gasoline developments and 7 gasoline pipeline tasks have been introduced in Europe.
The tasks, which embody new builds, in addition to expansions of present websites and a number of tasks at particular terminals, are deliberate in 10 international locations. They embody 26 offshore or floating bases (FSRU and FSU) and eight onshore terminal tasks. It’s estimated the tasks would prices tens of billions of euros.
Germany is concerned in 11 tasks, 5 of that are mounted terminals and 6 floating terminals. A rush for gasoline, lately sanctioned by its ministry of economics, which admitted in an inside report that the deliberate LNG terminals in Germany “will result in overcapacity”.
“The event of FSRUS LNG infrastructure and FSRUS leasing are important for power safety,” a German authorities spokesperson advised Examine Europe. “Specifically, the discount after which elimination of Russian gasoline provides make them crucial”. The spokesperson added that the development interval would final till 2038 with an estimated value of €9.7bn.
Italy is subsequent with six tasks deliberate, adopted by Greece with 5 and two every in Estonia, Latvia and the Netherlands.
Final Could, the European Fee printed a map with solely 13 LNG tasks prone to be financed by the Repower EU scheme. Since then, the EU govt has not up to date its forecasts. “We’re ready for up to date plans from the governments,” a spokesman advised Examine Europe.
CAN Europe and Meals & Water Motion Europe collected data from the varied European states concerned.
Based on their calculations, there are a minimum of 34 LNG tasks that would obtain subsidised European loans, via the Repower EU initiative.
To those are added mega tasks for brand new pipelines, such because the underwater hyperlink between Barcelona and Marseille, the so-named H2MED, because the governments of Spain, France and Portugal promise it can solely transport inexperienced hydrogen.
It will not be operational till 2030 and there’s no certainty that the inexperienced hydrogen market — for now accounting for less than 5 p.c of all hydrogen produced — can justify such an funding.
“The EU dangers deblocking billions of euros to fund new gasoline pipelines and LNG terminals below the pretext of short-term power safety causes,” says Esther Bollendorff, senior gasoline coverage coordinator at CAN Europe. “That is sheer nonsense and won’t assist substitute Russian gasoline this winter. Any short-term actions shouldn’t lock-in tens of thousands and thousands of individuals in Europe, already dealing with a local weather, power and social disaster, into future fossil-fuelled crises.”
Frida Kieninger, director of EU Affairs at Food & Water Action Europe, provides: “The size of contracts, 10 to fifteen years, worries me. We’re sending a foul sign to producers everywhere in the world, that they may make investments and sustain their soiled enterprise with Europe. It is positively throwing a powerful lifeline to frackers within the US, making export enticing in Nigeria or Qatar. What’s going to occur then? In 10 years we might be in 2033, we should always have a fairly appreciable lowered gasoline demand and we’ll nonetheless have these contracts with LNG firms”.
On prime of the prolonged contracts, Europe could have constructed 1000’s of kilometres of pipeline, probably partly funded with Repower EU cash.
The Spanish firm Enagas and Italy’s Snam are carrying on a feasibility research to construct an undersea connection to move gasoline (which arrives on ships as LNG) to Livorno in Italy and the remainder of Europe.
An enlargement of the Trans-Adriatic Pipeline (Faucet) working from Azerbaijan via Turkey, Greece and Italy is one other potential mission. Repower EU funding may even stretch to Africa and finance a part of the Trans-Saharan Pipeline mission deliberate between Algeria, Niger and Nigeria.
The 2 NGOs calculated how a lot the operational prices of every LNG terminal or pipeline could be.
The Greek Alexandroupolis LNG terminal mission, for instance, would value €19m per yr; the Eastmed pipeline an estimated €90m; Croatia’s Krk LNG enlargement an estimated €34m and Poland’s Baltic Sea Coast LNG mission €64m per yr.
This public cash would weigh on residents for the whole existence of the fossil infrastructure. “The European fossil gasoline tasks are an actual assault on the EU’s local weather targets,” French Inexperienced MEP Marie Toussaint says.
“With a short-term imaginative and prescient, we’re giving in to those that will profit from the exploitation of gasoline, with out guaranteeing in any means that this can make it doable to struggle in opposition to the inflation of power costs.”
Final Could, Toussaint, along with 48 representatives of the European Parliament and the US Congress, together with main Democratic Get together figures reminiscent of Alexandria Ocasio-Cortez and Bernie Sanders, wrote a joint letter to US president Joe Biden and Ursula von der Leyen, asking for “the elaboration of a plan guaranteeing the absence of any new financing, any new exploration license or any new allow for the extraction, exportation, importation and infrastructures of coal, petroleum or gasoline”.
Nobody has responded to the letter thus far.