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EU proposes end to gas infrastructure funding, shift to hydrogen and renewables

December 16, 2020

S&P Global Market Intelligence ($):

The European Commission has proposed to reform regulation covering cross-border energy infrastructure projects that are eligible for financial support, including a plan to exclude oil and natural gas infrastructure from EU funding in the future.

In the proposed reform to the Trans-European Networks for Energy, or TEN-E, regulation, the commission said Dec. 15 that unabated natural gas projects were not compatible with the EU’s carbon-neutrality goals. Instead, it plans to shift more money to electricity grids, including for the connection of new offshore wind farms.

However, funding could be made available for infrastructure projects for the supply and trade of hydrogen, which would also include assets converted from gas, it said. That could open the door for projects to convert or upgrade existing gas infrastructure, such as pipelines, storage facilities and LNG import terminals. Utilities, oil companies and other investors have launched a flurry of hydrogen projects in recent months to benefit from renewed interest in the fuel.

The proposal comes a year after the European Investment Bank decided to stop financing most fossil fuel projects from the end of 2021, highlighting how gas is increasingly moving into the spotlight of the climate debate.

Under the TEN-E regulation, priority energy projects are compiled into a list of so-called projects of common interest, or PCIs, which means they qualify for billions in EU funds.

The revised TEN-E also reflects an increased role for renewable and low-carbon gases by creating a new category of infrastructure for smart gas grids, which the commission said would support distribution and transmission investments to integrate green gases such as biogas and biomethane, but also hydrogen.

[Stuart Elliott]

More ($): EU proposes to stop funding natural gas infrastructure, shift focus to hydrogen

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