The (in)visible hand of the gas lobby in Brussels

A natural gas compression plant

The Covid-19 pandemic has brought many events in the EU bubble to a halt and slowed down — at the beginning at least — the legislative machinery in Brussels. But it has certainly not stopped the activity of the gas lobby, which has only intensified its pressure on the European institutions. Its current goal? To profit from a portion of the €750 bn pledged by EU member states as part of their Coronavirus recovery fund, also called Next Generation EU.

A report, published in October by an umbrella of NGOs united around the “Fossil Free Politics” campaign, denounced the gas lobby’s influence. “The Commission’s top levels have had three meetings a week with fossil fuel lobbyists while several European countries were in lock-down,” it said.

European Union
Ms Ursula von der Leyen, President of the European Commission with Mr Charles Michel, President of the European Council, on the last day of discussions about the Coronavirus relief package, in July 2020

In the coming days, member states will send their national plans, proposing how they would like to receive the recovery funds, to the European Commission. Millions of euros of public subsidies for the fossil industry are at stake. And this summer, the gas lobby had already scored two tangible victories.

On July 8 2020, the European Commission presented its Hydrogen strategy. It declared the ambitious goal of producing 40 Giga Watts of Green Hydrogen by 2020. And yet, it left the door open for the use of fossil gas (also known as ‘Blue Hydrogen’), without any deadline for phasing out these fossil-based projects.

Later, on September 16,  the European Parliament plenary agreed to include natural gas projects within the scope of the Just Transition Fund, one of the financial legs of the Green deal. This is despite the fact that both of the European Commission and the Council (represented by member states) had already made it clear that this fund should not finance fossil energy projects.   The final text says, “For regions heavily relying on the extraction and combustion of coal, lignite, oil shale or peat, the Commission may approve territorial just transition plans which include investments in activities related to natural gas.

This is just the tip of the iceberg. The gas lobby invests colossal sums of money and legions of specialists in Brussels, and, for ten years now, has had free rein to influence all major decisions on the development of fossil gas. Corporate Europe Observatory recently quantified this lobby’s influence — in terms of money and resources — in the reportGreen (or grey) Deal’. Pascoe Sabido, one of the report’s authors, explained that this how the lobby “buys access and influence”.  

Silvia Pastorelli, Climate and Energy Campaigner at Greenpeace, described to Investigate Europe how the industry has changed tactics over the years, from climate change denial to “trying to weaken legislation and sabotage it as much as they could”. This influence, she says, is very apparent in the championing of gas as a ‘bridge fuel’, touted as an energy source that could help the transition to renewable sources. But, as Pastorelli points out, it is a bridge that leads “to a worsening of the climate emergency”.

A place on the list

The main focus of the gas lobby is a list of projects, created by the Commission in 2013 to develop a strong, integrated, energy market in Europe. Titled the ‘Projects of Common Interest’, it is updated every 2 years.

Being included on the PCI list gives a project access to European public money, through the Connecting Europe Facility’s (CEF) €30 bn fund (EU budget), the European Investment Bank (EIB) and the European Bank for Reconstruction and Development (ERDB).

Crucially, it also gives the project a ‘European stamp’: if a national project is included on the PCI list, this approval makes it easier to access more funding through private credit and public guarantees. The PCI list is, therefore, the result of a heated behind-the-scenes battle between members-states, companies, and stakeholders of all sorts.

Controversy abounds

On February 12 2020, the European Parliament approved the fourth PCI list, to strong criticism from parliamentarians levelled at the new Von Der Leyen Commission whose responsibility it was to select the projects.  
32 out of the 149 proposals for energy projects were, in fact, connected to fossil gas infrastructure. Among these are the TAP-project in Italy and the EastMed pipeline aimed at transporting gas from the Levantine Sea to Greece (the latter has caused strong tensions between Greece and Turkey).

European Union
Kadri Simson, Commissioner for Energy, promised that the next PCI list would have no gas projects

While some Members of Parliament tried to eliminate these 32 natural gas projects from the list, they failed to do so, as the list can only be accepted or rejected in its entirety. Commissioner for Energy Kadri Simson promised in the hemicycle that “the next list will have no natural gas projects”.

But it’s not certain that Simson can keep that promise. Commission Deputy Director-General for Energy, Klaus-Dieter Borchardt, told Investigate-Europe in an interview in September, that there might still be some fossil gas projects in the next, fifth, PCI list (to be presented in Spring 2021). “There are legal commitments we must respect,” he admitted. 

Borchardt also said, “The Commission can’t do a lot in the PCI list: before the Commission can adopt the final PCI list, the draft list is discussed in a high-level meeting with representatives from the member states who need to endorse the draft list by unanimity. There are still quite some projects on the list that are selected because of a political nature, and they should not remain on the list.”

In response to Borchardt’s statement, Frida Kieninger from the NGO, Food & Water Europe, said, “It is a scandal that the EU Commission — [unstopped] by the Member States — still supports mega pipelines and dodgy gas import terminals, wasting scarce EU tax money on fossil gas projects. It even acknowledges that a number of these ‘top priority projects; are useless, without changing course. How can the very same institution that adopted the EU Green Deal months ago still listen to fossil fuel interests more than to the alarm bells of the climate crisis?”

Strength in numbers

At the heart of the PCI process stands a lobby group — EntsoG. It was created in 2009 by the TEN-E regulation that led national network operators — such as GRTgaz from France, Thyssengas from Germany, Snam from Italy and Enagas from Spain — to form an umbrella organisation to provide data and gas demand scenarios to the Commission. In 2013, the Commission even created a direct link between gas operators’ scenarios and the list of projects of common interest: The TEN-E Regulation, under which the process of identification of PCIs is now established, required the inclusion of candidates’ electricity and gas projects in the TYNDP (EntsoG’s 10 year scenarios) as a pre-condition for their inclusion in the Union-wide PCI list.

The PCI list was born. And along with it, a conflict of interest.

‘Sitting on data’

Frida Kieninger from Food & Water Europe has been attending meetings for priority gas projects for years, as an observer. Her analysis is worrying. “The process of arriving at new gas projects is opaque, governments and stakeholders meet in ‘regional groups’ with the promoters of gas projects, often sitting next to representatives of the ministry. In some meetings, it seemed that one country was only represented by one gas company. There are no minutes, no lists of participants. And ENTSO-G always sits on the podium, next to the Commission, answering most of the questions and accompanying all stages of the process.”

EntsoG plays a crucial role in the analysis of gas market development in Europe, and is privy to information at the highest levels of decision making. “They are sitting on data,”  said Green Party MEP Bas Eickhout to Investigate-Europe.

The result is that the EntsoG scenarios published since 2010 have always shown an overestimation of gas demand (as compared to Eurostat data). It defends this high level of demand based on two assumptions: that we need gas, especially in this transition phase, and in particular for those regions which will find it easier to switch from coal to gas instead of ‘coal-to-clean’. And, secondly, the gas industry claims that we need gas as a ‘stable’ energy, useful in case low rates of production from renewable sources lead to a possible blackout.

Jan Ingwersen, EntsoG director general said to IE, “In some parts of Europe, the gas development is too weak, so there is a potential for gas substituting coal and lignite. Poland, Czech Republic, Hungary, Greece are among them. In these countries, gas will play a major role and will help reducing CO2 consistently. You will then have some regions which will need to build new infrastructures, for the coal-to-gas switch and for security supply.”

‘Security of supply’ is the keyword used by the industry to justify more gas.

“The current approach of the gas lobby is not selling energy anymore — it is selling energy security, energy safety and keeping everything in balance, while it is supposed to get miraculously clean,” said Jonathan Bonadio, from the European Environmental Bureau(EEB). “But in reality, gas is now depicted not as an energy carrier, but as a transition. This is something we hear from the gas industry and from the Commission — that gas is the perfect transition between coal and oi to renewables.”

And indeed this is what Jan Ingwersen from EntsoG told IE. “The pipelines will be there, and it’s not a marginal cost. So, better to use them. For the transition period, in our TYNDP, you will find a lot of transition projects, with Hydrogen. We are gradually moving from natural gas projects towards transition projects .”

In this manner, EntsoG scenarios justify the use of fossil gas even after 2030. While the Commission has, since 2018, kept repeating that natural gas demand will decrease by up to 85 per cent, in the new 2020 TYNDP, Entsog plans a slower decrease: there will be a gas demand decrease of up to a maximum of 41%.

The Hydrogen Eldorado

In the past months, hydrogen has become the new ‘Eldorado’ for the gas industry. The objective of the European Commission, now enshrined in the Hydrogen Strategy published in July, is to produce only hydrogen that is based on the surplus of renewable energy — and is, therefore, entirely green. But, at least for now, this is very expensive for the consumer — 40 times more than oil. And only 5 per cent is really green hydrogen. The rest, according to industry promises, can be obtained by “cleaning” the gas, or by imprisoning CO2 emissions underground and transforming the remaining amounts into hydrogen. A promise that distracts institutions from a debate on how and when to decommission the existing pipelines.

Current events show that the power of the industry also extends to this process. On June 24, the industry rejected the Commission’s draft on the Hydrogen Strategy. The European gas lobby, Eurogas, sent a letter to European Commission President Ursula Von Der Leyen, calling for a ‘technology-neutral approach’ in the EU’s hydrogen strategy. Among the co-signatories were Equinor, GE, ExxonMobil and Eni. In the letter, the oil and gas companies asked for the adoption of a more “inclusive approach” from the Hydrogen Strategy. “Hydrogen from natural gas will be needed to create the necessary scale and make hydrogen applications cost-competitive,” they wrote. “Today, it is two to five times cheaper than renewable hydrogen and its deployment will help reduce the latter’s cost”.

The letter ends with a clear appeal to the Commission: “We thus urge the EU to create a strong policy framework in support of all forms of clean hydrogen.” The Commission took heed by extending its objectives to low-carbon hydrogen. By the time the Hydrogen Strategy was presented on July 8, Blue Hydrogen — the production of which involves the storage of CO2 — was labelled as a necessary tool to achieve 2030 goals. “The priority of the EU is to develop renewable hydrogen,” it read. “However, in the short and medium-term, other forms of low carbon hydrogen are needed.” To do that, the Hydrogen Strategy plans to rely on a ‘Clean Hydrogen Alliance’, an industry platform that can rapidly take decisions about the infrastructure required to make the Eldorado become a reality.
The problem is that this new platform is made up almost entirely of industry actors, with no representatives from the renewable sector, and almost no climate NGOs. And, as Investigate-Europe has been able to show, its creation and its secretariat are ensured by the largest hydrogen lobby in Brussels, Hydrogen Europe, which brings together the top oil and gas actors, and even European heavy industry players.

The mission for the Clean Hydrogen Alliance is laid out in the commissions’ strategy. It follows the (criticised) patterns of the past, referring to the EntsoG model of the gas infrastructure planning: “Sound infrastructure planning, such as on the basis of ten year network development plans (TYNDP), is needed on the basis of which decisions to invest can be taken.”

The climate NGOs are ringing the alarm. “We are very worried the same mistakes made with gas governance and EntsoG superpowers, are now again duplicated with hydrogen,” says Tara Connolly from Friends of the Earth.