EU bank courts controversy with € 1.5 billion investment in gas pipeline

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The European Investment Bank (EIB) decided this week to invest 1.5 billion euros in a gas pipeline connecting Italy, Greece and Albania, although MEPs have called for a vote on such treatment preferential granted to fossil fuel gas projects.

The bank’s move was heavily criticized by environmental groups, who said it was “one of the largest loans ever made by Europe to one of the largest fossil fuel projects in the world. the EU “.

One of the concerns is that the project will increase greenhouse gas emissions and the use of the gas will be extended beyond what some scientists see as the final gas phase-out deadline if Europe wants to keep its promises of the Treaty of Paris.

The project is called the Trans-Adriatic Pipeline (TAP), and it is part of a larger concept, the southern gas corridor.

The latter would transport natural gas from Azerbaijan, via Turkey, to Europe. The TAP would be the last stop on the gas route.

The southern gas corridor project (Photo: © Trans Adriatic Pipeline)

An environmental assessment published by the EIB last week acknowledged that the project “has attracted close scrutiny from stakeholders, the press and civil society, including international NGOs”.

According to a separate declaration on the EIB website, supporting TAP would increase security of gas supply and reduce energy dependency.

It would be an alternative to natural gas coming from Russia via Ukraine – and would reduce the geopolitical risk of Russian gas sanctions against Europe.

According to the European Commission latest gas market report, Russia supplied 44% of the gas imported from the EU in the third quarter of 2017, followed by Norway with 33%.

The TAP pipeline would transport ten billion cubic meters (bcm) of natural gas per year, according to the estimate.

Forecasts by the International Energy Agency say the EU will need 464 Gm3 of natural gas in 2018, but only 459 Gm3 in 2021 and 458 Gm3 in 2022.

The EIB assessment, however, pointed out that domestic production of natural gas in the EU was declining faster than demand, so imports had to increase.

Some NGOs question whether relying on Azerbaijan and Turkey for gas is much better than relying on Russia, given their human rights record.

But the EIB statement noted that the EU “has a policy of constructive dialogue and engagement with Azerbaijan, and maintains continuous political dialogue on issues such as human rights and civil society organizations. civil society “.

Low in carbon?

The EIB also said in the statement that natural gas is “a relatively low carbon fossil fuel”, ie compared to coal or petroleum power plants.

The EIB’s environmental assessment indicated that the annual greenhouse gas emissions resulting from the gas flowing through the pipeline would be the equivalent of 476,000 tonnes of CO2.

According to the Environmental Protection Agency (EPA) emissions calculator, which is roughly equivalent to burning a million barrels of oil, or an average car driving a stretch of 1.9 billion kilometers – or nearly 47,000 road trips around the equator.

But some say the way the CO2 equivalent is calculated for gas pipelines is underestimated, due to the poorly documented phenomenon of methane leaks – a very potent greenhouse gas that traps around thirty times more heat than gas. CO2.

A report by the civil society group CEE Bankwatch and the Spanish research foundation Debt Observatory in Globalization said total emissions up to 2050 for the entire southern gas corridor – the entire stretch from Azerbaijan to Italy – could amount to between 3.9 and 6.5 billion tonnes of ‘CO2 equivalent.

The “shameless” European Investment Bank

There are also concerns about the relationship between the expected lifespan of the pipeline and long-term climate action.

At the international climate conference in Paris in 2015, the EU and 195 other countries pledged that they would do everything possible to limit global warming to 2C, and if possible to 1.5C – currently the average increase temperature compared to the pre-industrial era is already at 1.1C.

According to Colin Roche, activist for the environmental lobby group Friends of the Earth Europe, the EIB “shamelessly locked Europe into decades of dependence on fossil fuels even as the window for fossil fuel use is closing.

The company behind TAP expects it to be operational in 2020 and will operate until at least 2070.

However, a recent study by two researchers from the University of Manchester and the University of Teesside said that if Europe was to keep its Paris promise, it would have to stop burning fossil fuels by 2035.

The study was commissioned by the Friends of the Earth Europe group (which responded to a request from this website to provide the tender for the study – which did not seem to guide researchers in any way. direction.)

The EIB assessment indicated that TAP’s emissions would be lower than increased gas imports from Russia, “due to the age and design of Ukraine’s transport system.” .

He also assumed that Nord Stream 2, which would bring Russian gas through the Baltic Sea to northern Europe, would not be more climate-friendly than TAP.

The environmental assessment did not compare the carbon footprint of the project if natural gas were replaced by another fuel.

Supporters of the Commission

Another justification given in the EIB press release was that the TAP project is classified as a project of common interest (PCI).

The PCI list contains energy-related projects which are considered to be of pan-European importance and therefore deserve expedited treatment by the authorities, for example when applying for a permit.

The European Commission updated the PCI list last November, and indeed TAP is still there.

However, the list must be approved by the European Parliament before it becomes law.

Last month, the MEP lodged a request with the parliamentary committee on the environment vote on the listbecause they felt it was too focused on supporting gas projects.

That vote did not take place, which in theory means the committee could still remove TAP or other gas projects from the PCI list and submit a new one to parliament.

On the other hand, TAP and the wider Southern Gas Corridor enjoy great support among the two main energy officials of the commission – the vice-chairman of the Energy Union commission, Maros Sefcovic, and Climate Action Commissioner Miguel Arias Canete.

Following an access to information request by the environmental and development NGO Counter Balance, the commission published a letter written by Sefcovic and Canete.

In July 2017, the duo wrote directly to EIB President Werner Hoyer, stressing the importance of the Southern Gas Corridor, and TAP in particular.

“Now that the projects have successfully reached the capital-intensive construction phase, their promoters urgently need to secure adequate funding; therefore, Europe’s commitment must not wane,” they wrote.

Council minutes will be published – possibly

The decision to invest 1.5 billion euros was taken on Tuesday by the EIB’s board of directors, which consists of 29 members – one appointed by each EU member state and the European Commission.

According to the press release issued this week, the decision was taken after “detailed discussions”.

EUobserver asked the bank’s main spokesperson to describe the arguments used for and against the project during these discussions.

“Discussions within the Board of Directors and between Board members and civil society prior to the Board meeting focused on considerations related to EU energy policy, climate, human rights, transparency and compensation related to resettlement, “said spokesman Richard Willis.

When asked to clarify, he said he could not comment on board discussions and procedures.

The EIB keeps the minutes of the board meetings, but these were not yet available as they had to be approved by the 28 Member States and the Commission.

Willis said minutes from a board meeting are usually released at the next meeting – which is scheduled for March 15.

But on Friday 9 February, the minutes of the last six meetings had still not been published on the EIB website.

Even if they were, it is not clear whether they would provide much information about the debate and the considerations made.

Last minutes available, for the meeting of July 17-18, 2017, gave no details on the loans approved, merely to say that the president “took note that the board of directors approved the financing proposal”.

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