While the European Commission has just presented, on Tuesday 14 January, its proposal for a Just Transition Mechanism (see EUROPE 12403/1), EUROPE has been looking at where gas will fit into the framework of this mechanism.
With regard to the Just Transition Fund (see EUROPE 12403/2), one of the components of the Mechanism, the Commission proposal clearly states that money from this Fund cannot be used to support investments related to gas as well as those related to other fossil fuels (oil and coal).
However, the Just Transition Mechanism is not limited to this Fund. According to the Commission’s proposal, it would also include a “mechanism for just transition”, which would be part of InvestEU and would aim to generate additional investment for the benefit of the regions most affected by the transition.
However, under this scheme, it would be possible to invest in a wider range of projects than in the case of the Just Transition Fund, as the eligibility criteria for investments would be those of InvestEU. The Commission proposal thus foresees that InvestEU “will support the financing of, inter alia, energy and transport infrastructure projects, including infrastructure”.
Indeed, the European Union budget guarantee provided by InvestEU to support investment and access to finance in the EU is shared between the national development banks (25%) and the European Investment Bank (EIB) (75%). Therefore, the possibility to invest in gas projects under InvestEU is determined by the eligibility criteria provided by national development banks or by the EIB, explained a senior European official.
As far as the EIB is concerned, the Bank’s new energy lending policy foresees the phasing out of support for fossil fuels, including all natural gas infrastructure projects, after the end of 2021. Exceptions for gas were nevertheless maintained.
Adopted on 14 November 2019 (see EUROPE 12370/11), the Bank’s new energy lending policy states that the EIB will support power generation projects that result in emissions of less than 250 grams of CO2 per kWh of electricity produced. Very energy-efficient gas installations will therefore continue to be eligible for EIB financing.
In addition, the EIB “will continue to support the purchase of efficient gas boilers as part of wider energy efficiency programmes for buildings or SMEs”, provided that these boilers comply with EU eco-design standards.
Finally, until the end of 2021, the Bank will continue to approve any gas infrastructure projects already formally under appraisal and may still approve any gas infrastructure project on the fourth list of ‘Projects of Common Interest’ (PCIs).
Adopted on 31 October 2019 by the Commission (see EUROPE 12361/12), this list is currently being examined by the European Parliament’s Committee on Industry, Research and Energy (ITRE), many of whose members take a dim view of the number of gas projects on the list (see EUROPE 12384/12).
What about nuclear? The Commissioner for Cohesion and Reforms, Elisa Ferreira, made it clear that nuclear energy is excluded from the entirety of the Just Transition Mechanism, unlike gas.
On the other hand, this energy source is not excluded from other sources of financing from the European budget, as in the case of the ITER nuclear fusion research project, nor from EIB financing outside the Facility.
Finally, it is important to specify that, as the Member States alone are responsible for determining their energy mix, each of them is obviously free to invest in gas and/or nuclear projects. (Original version in French by Damien Genicot)