Gas pipeline funds hit a snag as EU skips Malta project in 2020

€400 million pipeline is candidate for EU funds but Malta project has not been given final approval • Brussels now hit by Ombudsman inquiry into ‘sustainability’ of gas projects

Malta wants a gas pipeline to Italy so that it acquires natural gas directly instead of the LNG vessel anchored off Delimara
Malta wants a gas pipeline to Italy so that it acquires natural gas directly instead of the LNG vessel anchored off Delimara

Malta’s bid for millions in EU cash to finance its gas pipeline to Sicily has hit a snag, after failing to get funds from the 2019 round of disbursements under the Connecting Europe Facility (CEF).

The €400 million pipeline to Sicily would enable Malta to procure natural gas from the European mainland. Currently, its supply of gas to the Delimara power station is procured by a floating liquefied natural gas (LNG) vessel.

But although having been a candidate project for the €23 billion CEF funds, the latest round of grants skipped the Maltese pipeline.

Maltese government officials will now apply for the fourth, and final round, of cash under the current EU budget later this April in the hope of securing the millions needed to finance the pipeline to Gela.

Yet one Brussels source with knowledge of the Commission’s plans told MaltaToday the Maltese government’s hurdles could be higher than expected. “The new Commission’s appetite to finance gas projects may be changing, and might even de-prioritise the Malta pipeline to move fast on climate change targets.”

EU Ombudsman investigation

This week, the EU’s Ombudsman opened an inquiry into the Commission’s catalogue of priority energy projects, after green activists lodged a complaint about the inclusion of new gas infrastructure on the list of CEF projects.

Ombudsman Emily O’Reilly requested clarifications about the inclusion of gas projects in the so-called fourth EU list of Projects of Common Interests (PCI). The list includes the Malta pipeline. According to civil society group Food & Water Europe, the Commission has not adequately assessed the sustainability of the 32 gas projects, and as such broke EU law. But O’Reilly was spurred to do the investigation after the Commission’s reply to FEW was seen as “an admission that there were shortcomings in relation to past sustainability assessments of PCI status.”

Brussels has until 31 March to explain to the Ombudsman whether the gas projects had ever fulfilled the criteria included in the PCI list’s dedicated regulation.

From gas to hydrogen?

Additionally, the new Von Der Leyen executive is indicating a change in appetite for LNG, despite the EU’s stated preference to move away from dependence on Russian gas by funding new pipelines to acquire gas from other sources, such as Ukraine and Azerbaijan.

Earlier this week, MEPs voted overwhelmingly to approve the fourth PCI list – which includes the Malta pipeline – despite vociferous objections from Greens and left-wing MEPs.

MaltaToday’s source in Brussels says the vote reflects the kind of mood inside the EU capital.

“MEPs who approved the PCI list believe climate commissioner Frans Timmermans will keep his promise to find projects in line with the EU’s climate objectives, which would prioritise renewable energy. But the Greens think that this does not ban gas outright, which at the end of the day is still a fossil fuel.”

The intervention of the Ombudsman at this stage could be the last redoubt for opponents of gas projects.

Additionally, the new Energy Commissioner Kadri Simson has declared she intends to oversee a review of the funding rules for energy project, while the European Investment Bank will tighten up gas-criteria as of 2021.

Europe aims at becoming the first climate-neutral continent by 2050, but this requires moving towards cleaner energy infrastructure. Simson has said she will work with MEPs to deliver electricity infrastructures and innovative technologies such as smart grids, offshore wind and hydrogen.

Simson supports the 4th PCI list, although in statements she gave importance to key electricity interconnectors and energy transition projects such as the North Sea wind-power hub, smart green projects and new CO2 network projects.

If Malta misses the boat on the fourth round, the next PCI list in 2021 – the fifth – will be more stringent on gas projects. “This list is not a guarantee... Two years after the launch of the Green Deal, sustainability criteria will be thoroughly applied for any projects, including gas candidate projects.”

Malta gas pipeline

Malta’s natural gas pipeline between Italy and Malta should be operational by 2024, according to previous statements by ministers.

The pipeline is considered a high priority in the ongoing effort to link Malta to Europe’s energy network, and will end Malta’s “gas isolation”.

Malta’s electrical network was linked to Europe’s via Sicily in 2015, but remaining on the periphery from the EU’s natural gas networks affected the security of Malta’s energy supply.

This pipeline will also help Malta cut emissions from shipping, as the aim is to slash emissions by at least 50% by 2050.

The pipeline is also part of an ongoing effort for Europe to solidify and diversify their energy interests in the Mediterranean region. This is especially relevant for decreasing dependence on Russian imports, a high priority after gas shipments were stopped for two weeks during the Ukraine crisis.

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