Energy infrastructure for a climate neutral Europe

If the EU is serious about decarbonising, it needs to stop funding new gas infrastructure projects, write Elisa Giannelli and Lisa Fischer from Brussels-based think-tank E3G. Members of the European Parliament have the chance on 12 December to stop this trend and move forward the energy transition

On 28 November 2018, the European Commission, the EU executive body, published its strategic vision for a Clean Planet for All. This sets the scene for a long-term pathway for the EU’s climate commitments. The document concludes that reaching net-zero emissions by 2050 is not only possible, but also the best option for European citizens. In order to deliver this transition efficiently, and with minimal stranded assets, the EU must not miss the opportunity to renew its infrastructure priorities. This update can be done through the proposed legislation for the post-2020 Connecting Europe Facility.

The prospect of climate neutrality by 2050 gives a clear idea of our future energy system. This will include a drastic decline in the energy intensity of our economy, an almost complete phase out of fossil fuels replaced by renewable energy supplies and an infrastructure that connects millions of consumers and suppliers virtually or physically.

Across all of the Commission’s scenarios, natural gas consumption is expected to significantly decline, from 345 million tonnes of oil equivalent (Mtoe) in 2015 to 273 Mtoe in 2030. In the scenarios that achieve climate neutrality by 2050, this falls to less than 54 Mtoe by mid-century. While renewable gases might make up for some of the shortfall, their potential future use does not justify additional gas infrastructure as sustainable supply is limited and costs are high. This means a complete re-shaping of the EU’s energy network. The current system supplied through imported natural gas must change to one dominated by domestically produced electricity, possibly supplemented by domestically produced renewable gas.

The Connecting Europe Facility provides financial support to build an integrated trans-European network for energy, transport and digital. At present, the criteria used to select projects, however, is not apt to deliver the transition to a zero-emission economy. They are geared towards infrastructure corridors that, in their majority, are for fossil fuels and include the expansion of the natural gas import network to bring gas to Europe from Central Asia and the Eastern Mediterranean. The current priorities used to choose projects will also fail to unlock investment to strengthen decentralised networks. Channelling money in this direction would have a double benefit for the EU: it would accelerate the shift from importing fossil energy to harnessing the EU’s renewable energy supply and create demand for the local manufacturing of smart systems and batteries. The EU’s infrastructure priorities need to be adapted to reflect these scenarios.

The Commission recognises that to implement the long-term strategy, public finances will not be enough. Private investments will lead this transformation, accompanied by an efficient spending of the EU budget and freed up resources from a reduction in the fossil fuel import bill, currently at €266 billion a year. The proposed EU budget for 2021-2027 is €43.3 billion, out of which €8.6 billion will go to energy infrastructure. By omitting to call for a modernisation of infrastructure investments in time for the next spending period, the EU would fail to send a strong signal to private investors about where they should put their cash. The credibility of Europe’s climate domestic and international commitments would also be at risk.

Members of the European Parliament could change this when they vote on the issue on 12 December. This will be the last chance to support three key amendments that will improve the environmental, financial and social sustainability of the proposed regulation governing infrastructure projects:

1. A call to update the guidelines that set the priorities for EU infrastructure, leading to a revision of investment needs. The implications of the Paris climate agreement, the G7 commitment to end fossil subsidies by 2025, the latest Intergovernmental Panel on Climate Change report, and the EU’s 2050 strategic vision should be taken into consideration.

2. The European Commission has stated repeatedly that ongoing infrastructure projects will be sufficient to complete the trans-European gas network. Considering the projected data for gas consumption by 2050, the EU budget should immediately stop funding fossil fuel projects. This can be done by excluding, or at least limiting, them as eligible infrastructure projects under the Connecting Europe Facility fund.

3. A clear definition of climate proofing must be included in the regulation governing EU infrastructure projects to ensure investments do not hinder the EU’s climate objectives

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