The European Union has adopted new rules for trans-European energy networks
On May 30, 2022, the European Union (“EU”) adopted the revised Trans-European Energy Infrastructure Guidelines Regulation (No. 2022/869) (the “2022 TEN-E Regulation”), which replaces the previous rules laid down in Regulation 347/2013 (the “TEN-E Regulation 2013”) which aimed to improve security of supply, market integration, competition and sustainability in the energy sector. The TEN-E Regulation 2022 aims to better support the modernization of European cross-border energy infrastructure and the objectives of the EU Green Deal.
The three most important things you need to know about the TEN-E Regulation 2022:
- Projects can qualify as Projects of Common Interest (“PCI”) and be selected from an EU list if they (i) fall within the identified priority corridors and (ii) contribute to the achievement of the objectives of EU energy and climate policy in terms of security of supply. and decarbonization. The 2022 TEN-E Regulation updates its priority corridors to meet the objectives of the EU Green Deal, while widening their scope to include projects connecting the EU to third countries, namely projects of mutual interest (“PMI”).
- PCIs and SMIs registered on the EU list must benefit from priority status in order to ensure rapid administrative and judicial processing.
- PCIs and SMIs will be eligible for EU financial assistance. Member States will also be able to grant financial support subject to state aid rules.
Trans-European Energy Networks (“TEN-E”) is an EU policy which aims to achieve a more integrated internal energy market by linking energy infrastructure between Member States and with third countries.
In order to pursue this objective, the 2013 TEN-E Regulation identified priority corridors through different geographical regions in the field of electricity, gas and oil infrastructure in order to strengthen cross-border interconnection and help integrate renewable energies. Member States then selected and implemented PCIs within designated “priority corridors”. PCIs could then benefit from specific funding from the EU budget and an accelerated authorization procedure. This process has helped most EU Member States meet their 2020 interconnection targets and contributed to energy market integration and security of supply.
The revised TEN-E Regulation 2022 continues to work towards the development of better connected energy networks while updating the TEN-E framework to focus on the latest environmental objectives and ensure consistency with the climate neutrality objectives set out in the pact. EU green.
Towards a better integrated and greener European energy market
The 2022 TEN-E Regulation reallocates and identifies 11 priority corridors with the aim of achieving the objectives of (i) reducing carbon emissions by 55% by 2030 and (ii) achieving carbon neutrality by 2050. Priority corridors focus on upgraded infrastructure categories such as offshore power grid corridors and renewable and low-carbon gases, eg hydrogen and electrolysers. Natural gas infrastructure and pipelines will no longer be eligible for PCI status. The 2022 TEN-E Regulation also identifies new priority thematic areas: (i) adopting energy networks equipped with IT technologies (“smart networks”) for electricity and gas, respectively, and (ii) developing cross-border networks of carbon dioxide.
Proponents of energy infrastructure projects can apply for PCI status with regional priority corridor groups. PCI status can be obtained for projects focused on promoting greener and cleaner energy sources such as offshore wind capacity and renewable/low carbon hydrogen (note that hydrogen can either be blended with other gases (e.g. natural gas or biomethane) or as a carrier-sole source of energy). As part of the TEN-E 2022 regulation, PCIs concerning smart grids (gas or electricity) and the transport and storage of carbon dioxide are also encouraged.
In addition, the TEN-E 2022 regulation extends the borders of the EU energy market to third countries by introducing a new cooperation mechanism for so-called projects of mutual interest (“PMI”). Like PCIs, they can be selected if they contribute to the overall EU energy and climate policy objectives in terms of security of supply and decarbonisation.
The European Commission will adopt a list of PCIs and SMIs every two years (the “EU list”), with the first EU list to be adopted by 30 November 2023.
The TEN-E 2022 regulation also imposes a new obligation for all projects on the EU list. PCIs and PMIs must meet mandatory sustainability criteria and, in accordance with the “no significant harm” principle under the EU taxonomy regulation, they must be implemented in a way that does not impede the achievement of objectives environmental.
“Fast-track” administrative and judicial procedures for projects on the EU list
Member States must grant PCIs and SMIs the status of highest national importance, which benefits from simplified administrative processes, for example, accelerated project implementation, shorter authorization procedures, greater transparency and greater participation in consultations. To this end, Member States must designate a competent national authority responsible for facilitating and coordinating the permit granting process.
Litigation proceedings involving any dispute over a project on the EU list should be treated as urgent.
In order to achieve the targets set in the EU Green Deal, significant public investment and funding will be needed to develop the necessary energy infrastructure. For example, it is estimated that it would cost €800 billion to increase the uptake of offshore renewables in line with EU Green Deal targets, two-thirds of which will be used for associated grid infrastructure. An additional average annual investment estimated at €50.5 billion will be needed for electricity transmission and distribution networks to meet the 2030 targets alone.
Thus, to meet the significant costs, IPCs and PMIs on the EU list may be eligible for financial assistance:
- Financial support under the Connecting Europe Facility (“CEF”). For the period 2021-2027, the CEF program (Regulation n°2021/1153) has allocated 5.84 billion euros of its budget to the energy sector (see our blog post on cross-border projects in the field of renewable energies). Promoters of projects identified in the EU list can submit a request for financial support to the European Climate, Infrastructure and Environment Executive Agency (“CINEA”). Note that de-listing from the EU does not affect EU funding already granted, but may prevent future funding being sought.
- State aid. EU Member States can provide financial assistance subject to state aid rules. To this end, they could assess their financial support under the General Block Exemption Regulation (“GBER”) or obtain Commission approval under the new guidelines on state aid for climate, Environmental Protection and Energy 2022 (“CEEAG”, see our blog post). Energy infrastructure projects could also be funded by EU member states if they meet the criteria defined in the IPCEI guidelines.