Ref. Ares(2020)6084012 - 29/10/2020
LINES TO TAKE
I recognise the role of gas in the EU economy, including in power production.
Today gaseous energy consumption amounts to around 25% of the total EU
energy consumption. Gaseous fuels, are a source of flexibility for the energy
system increasingly based on intermittent RES generation and replacing more
polluting fuels such as coal. Oil and oil products keep our transport running.
Engine power plants could play an important role in the decarbonisation of
gases, in particular in replacing natural gas with biomethane, biogas and
hydrogen. I understand this was also the message EUGINE gave when
signing the “Bucharest Declaration” on "Sustainable and Smart Gas
Infrastructure for Europe".
Indeed, to remain credible and maintain a role in the future, natural gas has to
decarbonise and address urgently methane emissions across the life cycle.
Reduction of methane emissions and a low-emission gas infrastructure is
indispensable if gases in general want to remain part of the future energy mix
The Commission will deliver an integrated strategy to reduce methane
emissions. This will not only cover the energy sector but also emissions from
agriculture and waste. The strategy will focus on improved measurement,
robust and transparent reporting and credible verification of methane
emissions.
The upcoming Strategy for Energy System Integration (“smart sector
integration” announced in the Commission Work Programme for June 2020)
will outline a vision to create a smarter, more integrated and more optimised
energy system, in which all sectors can fully contribute to decarbonisation.
Hydrogen is an important enabler of the transition to a carbon-neutral
economy and can strongly contribute to the reshaping of the energy system in
a way that ensures a more integrated and sustainable approach. We see a
potentially important role for hydrogen to contribute to the energy system
integration, through integrating larger shares of renewables in heavy-duty
transport and carbon intensive industry, and providing a solution for large-
scale storage, among others. Clean Hydrogen will therefore be an important
element of that strategy, but its key role and its wider scope may deserve a
specific approach.
I am pleased to say that a specific hydrogen strategy is now envisaged to be
linked to the Energy System Integration strategy, to underline how to upscale
the demand and supply of renewable hydrogen, how to mobilise MSs,
deployment and industry, how to advance the regulatory framework, how to
strengthen the research agenda and how to positon internationally.
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29 June 2020 11:30
DEFENSIVE POINTS
What support is available for gas projects from EU
sources, including from the recovery package?
Gas infrastructure projects (e.g. transmission and
distribution, district heating) are eligible under some EU
budget programmes proposed within the Multiannual
Financial Framework for 2021-2027.
This would include gas projects from the
4th list of
Projects of Common Interest (PCI) that are to be
supported under Connecting Europe Facility.
In addition gas infrastructure may be eligible in the
following programmes that have been proposed by the
Commission:
InvestEU (e.g. transmission and distribution
networks, district heating) and under the second pillar of
Just Transition Mechanism (namely
“Just transition
scheme” – the same eligibility as in the InvestEU).
Under the recovery package, (which includes changes
to InvestEU and the Just Transition Mechanism) the
Commissioned proposed i.e. green transition as a priority
horizontally through the programmes that may support
energy-related investments.
In major grant/loan programme
– Recovery and
Resilience Facility – Commission proposed close
alignment of future investment projects and reforms with
the European Semester and the country specific
recommendations, the National Energy and Climate Plans
and the Just Transition Plans. All the projects that Member
States are going to submit in their recovery and resilience
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29 June 2020 11:30
plans will be assessed against the background of their
contribution to address challenges related to i.e. country
specific recommendations and green transition. It
considers also the assessment of gas related projects that
Member States may include in the plans (e.g. networks,
interconnectors, district heating).
[only if asked] The LIFE programme is not directly
envisaged to support gas infrastructure project. However,
if a gas related project contribute to energy efficiency and
demonstrates the net positive effects on climate (net GHG
emissions reduction), then some dedicated “enabling”
activities like capacity building, awareness raising,
investments mobilisation etc. might be funded.
[only if asked] In ERDF regulation: we have to wait for
conclusion of negotiations between the Council and the
European Parliament. The Council’s mandate envisages
possibility of support for the replacement of coal-based
heating systems by gas-based heating systems for climate
mitigation purposes; investment in the distribution and
transport of natural gas substituting coal.
What about the EIB and the financing of gas?
EIB has played a key role in leveraging low carbon
investments in the EU and beyond.
EU‘s climate and energy commitment needs is reflected in
their new Energy Lending Policy, agreed in autumn last
year. The EIB new Energy Lending Policy in relation to
natural gas infrastructure investments will help the EIB
fully align its activities with the climate ambition.
In general, this policy for gas excludes i.e. funding of new
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29 June 2020 11:30
traditional gas-fired power generation, and phases out
new natural gas pipelines. (In certain cases it allows for
CO2 abatement for instance or support for low-carbon
gases, like biogas, synthetic gas and hydrogen).
There will be a limited transition period for the EIB to finish
particular gas infrastructure projects that are under
appraisal by the end of 2021. This would include a small
number of gas projects from the 4th list of Projects of
Common Interest (PCI), co-financed with the EU budget
(e.g. the Connecting Europe Facility). Such projects need
to be completed, in order to ensure security of supply and
enhance competition.
What about funding of funding of gas projects through
CEF?
Electricity projects make up three thirds of the 4th PCI list
mirroring the need to integrate a growing share of
renewables to achieve carbon-neutrality. Most of the 32
remaining gas projects (out of 149 in total) were selected
because they address major security of supply challenges.
Any PCI can apply for funding from the Connecting
Europe Facility. However, no project on the 4th PCI list will
be automatically funded through CEF. Indeed, being on
the PCI list is a precondition for CEF financing, however it
is not a guarantee for funding.
The European Green Deal is clearly reflected in the
objectives for the on-going CEF Energy call for proposals.
The budget available under the call aims to maximise its
added value towards decarbonisation.
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Each project proposed for funding will undergo a thorough
external evaluation against the set TEN-E and CEF
criteria. CEF funding is a last resort for a project in case
no market based financing is possible.
The Commission does not decide alone on the funding of
the projects, the Member States will need to approve the
list of projects recommended for CEF funding.
The TEN-E review to be presented by the end of the year
will be crucial in ensuring that our infrastructure policy fully
supports the Green Deal, including through definition of
future funding priorities under CEF.
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