After several hours of difficult discussions punctuated by breaks, the Energy Ministers of the EU Member States finally reached a political agreement (‘general approach’), on Friday 11 June, on the revision of the European Union Regulation (347/2013) on the Trans-European Energy Network (TEN-E).
The compromise, which was reached with great difficulty (Germany, Austria, Spain and Luxembourg abstained), did not arouse great enthusiasm among the national delegations, as shown by the hesitant applause after the announcement of an agreement by the Portuguese Presidency of the EU Council.
Continuation of the transitional period
In the end, the Commission had to rework twice its draft compromise proposed before the ministers’ meeting (see EUROPE 12738/34) because of the persistence of major divisions on certain major points, in particular the question of the existing gas infrastructures retrofitted for the transport or storage of a predefined mixture of hydrogen and natural gas or biomethane (blending) (see EUROPE 12727/4, 12732/16).
Following an outcry from eleven Member States (see EUROPE 12731/9), the Portuguese Presidency of the EU Council proposed to include this category of projects in the Regulation with a transitional period until 31 December 2029.
This means that, during this period, cross-border blending projects could be eligible for ‘project of common interest’ (PCI) status under the TEN-E Regulation and thus potentially benefit from a number of advantages, such as European funding.
According to our information, the text finally adopted (which was not yet available at the time of going to press) maintains this transitional period until the end of 2029, but sets 31 December 2027 as the deadline for project funding.
Speaking at a press conference, Portugal’s Minister for the Environment and Climate Action, João Pedro Matos Fernandes, said that this date was chosen because it corresponds to the end of the 2021-2027 Multiannual Financial Framework (MFF).
In addition, the selected projects will have to demonstrate how, at the end of this transitional period, these natural gas assets will become dedicated hydrogen assets.
The wording has also been changed. The term ‘retrofitting’ no longer appears in the text and the wording ‘assets converted’ was given preference. This is probably a way of taking a step towards Austria and Luxembourg, which were particularly opposed to the definition initially proposed by Lisbon (see EUROPE 12727/4).
Exemption for Malta and Cyprus
While natural gas infrastructure is excluded from the regulation (except for those that would be “adapted”), the EU Council decided to maintain the exemption proposed by the Presidency for Cyprus and Malta.
According to the latter, projects under development or planning in these countries that have been granted PCI status under the current TEN-E Regulation will retain this status until the interconnection of these island States to the trans-European gas network is completed.
“The purpose of this exception is to end the isolation of these two Member States and to give them access to future energy markets, including hydrogen”, the EU Council press release said.
Electrolysers
With regard to the category of electrolyser projects, the EU Council decided to include certain types of electrolysers that contribute to sustainability in the scope of the Regulation.
These electrolysers shall account for at least 100 MW capacity in a project. In addition, the production of hydrogen, particularly of renewable sources, from these electrolysers, shall comply with a life cycle greenhouse gas emissions savings requirement of 70 % relative to a fossil fuel comparator of 94 grams of CO2 equivalent per Megajoule.
These are the conditions already proposed in the draft compromise presented before the meeting.
Deep divisions persist
While the ministers reached a compromise, the debate that preceded the agreement showed the extent of the differences between the Member States.
The tone was set before the discussion even began, with the eleven countries opposed to blending (Austria, Belgium, Germany, Denmark, Estonia, Spain, Ireland, Luxembourg, Latvia, the Netherlands and Sweden) showing their unity in a photo posted on Twitter.
During the debate, they reiterated their fears that EU funds would be used to finance fossil fuel projects while maintaining the transition period, while the Czech Republic, supported by Bulgaria and Slovakia, called for the transition period to be extended to 2035.
Another divisive issue is the proposed sustainability criterion for electrolysers, which requires the project to reduce greenhouse gas emissions and promote the deployment of low-carbon or renewable hydrogen.
Supported by Denmark, Austria, Germany, Latvia, Belgium and Ireland, Luxembourg also tried, until the last minute, to change this part by introducing a mention to emphasise the development of renewables.
While expressing sympathy for the Luxembourg proposal, Sweden, the Netherlands and Estonia preferred to support the Portuguese compromise in order to reach an agreement.
It should also be noted that the European Commission did not welcome the agreed compromise with great enthusiasm either. At a press conference, the Commissioner for Energy, Kadri Simson, recalled that the institution had proposed to exclude all natural gas projects, without providing for a transition period or exemption for certain countries.
The EU Council will now enter into negotiations with the European Parliament, once the latter has adopted its position on the subject. (Original version in French by Damien Genicot)