Europe is planning to end financial support for oil and gas infrastructure projects as it drives forward its carbon neutrality plans.

The European Commission has proposed reforms to the Trans-European Networks for Energy (TEN-E) regulation which oversees cross-border energy projects across electricity, gas, smart grids, oil, and CO2 networks. Known as Projects of Common Interest (PCI), they are eligible for billions of euro in European Union (EU) funding and faster planning permits. Under the changes, oil and gas infrastructure projects will be excluded from funding, which amounted to almost 1 billion euro ($1.22 billion) this year. The EC stated that "considering that the future natural gas demand is estimated to significantly decrease in line with the Green Deal objectives, natural gas infrastructure no longer needs support through the TEN-E policy." This year, 998 million euro ($1.21 billion) was awarded to 10 PCIs: two for electricity transmission, one for smart electricity grids, six for CO2 transport (including five studies) and one for gas. The number of gas infrastructure projects receiving support has fallen sharply in recent years. In 2016, grants were allocated to 27 PCIs--15 of which were in the gas sector.

Executive Vice-President for the Green Deal Frans Timmermans said: "Now is the time to invest in the energy infrastructure of the future. The revised TEN-E rules will allow clean technologies to be plugged in to our energy system -- including offshore wind and hydrogen. We need to update and upgrade now to achieve the Green Deal's goal of climate neutrality by 2050." European Commissioner for Energy Kadri Simson added: "The current TEN-E framework has been fundamental in creating a true single energy market, making it better integrated, more competitive and secure. But our ambitious climate targets demand a stronger focus on sustainability and new clean technologies. This is why our proposal prioritises electricity grids, offshore energy and renewable gases, while oil and natural gas infrastructure will no longer be eligible for support."

With non-abated natural gas projects out of the picture, the EC plans to increase its finding for cleaner fuels and more renewable energy. Some of the key proposals include:

  • a new focus on offshore electricity grids with provisions facilitating more integrated onshore and offshore infrastructure planning and implementation through the introduction of offshore one-stop-shops;
  • a new focus on hydrogen infrastructure, including transport and certain types of electrolysers;
  • upgraded rules to promote the uptake of smart electricity grids to facilitate rapid electrification and scale up renewable electricity generation;
  • new provisions on smart grid investments for integrating clean gases (like biogas and renewable hydrogen) into the existing networks.

The changes were welcomed by Gas Infrastructure Europe (GIE), the European association of gas infrastructure operators that control transmission pipelines, storage facilities and LNG terminals. The GIE said its members and facilities will be key to developing a new hydrogen market. "To deliver the ultimate decarbonisation goal, a future-proof solution is needed. And the gas infrastructure remains a pillar component of such an action plan," said Boyana Achovski, GIE Secretary General. "Today, we are already teaming up with the wind and solar power generation. By doing so, we will massively contribute to accelerating the deployment of renewable hydrogen in the near future thanks to our technical capacities and ability to innovate."

The GIE claimed that the gas transmission system can transport "enormous quantities of green molecules over long distances with relatively few additional investments" while underground gas storage facilities can provide large seasonal storage of renewable and low-carbon energy, including hydrogen. It added that "imports of liquid hydrogen through the LNG terminals will be necessary to complement domestic hydrogen production in a similar way to natural gas imports today."

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