The Commission's energy infrastructure package
Why do we need new pipelines
and electricity grids?
Energy infrastructure – pipelines, electricity
grids – are key to all our climate and energy
- To increase the share of renewable energy to
20 percent of our final energy consumption by
2020, we need to bring the energy generated by
wind parks and solar power stations to the
consumers. For this, we need a more integrated
and powerful network than exists today.
- To save 20 percent of our estimated energy
consumption in 2020 via technology, we need
smart meters and smart grids, which allow
consumers to control exactly their power
consumption and to save money and energy by
changing their habits.
- To secure gas supply also in the event of a
crisis, we need to diversify our sources and new
pipelines which bring the gas from new regions
directly to Europe.
- To have a functioning internal market with
competition and fair and competitive prizes, we
need the interconnections between member states,
allowing companies to offer their energy in all
How much investment is needed in the EU?
In the next ten years, around Euro 200 billion (bn)
are needed for the construction of gas pipelines
and electricity grids. More specifically: € 140
bn for high-voltage electricity transmission
systems, storage and smart grid applications,
€70 bn for gas pipelines, storage, Liquefied
Natural Gas (LNG) terminals and reverse flow
infrastructure (to allow gas to flow in both
directions), and € 2.5 bn for CO2 carbon dioxide
This means that current investment levels have
to be increased considerably. Compared to the
period 2000 to 2010, this would result in a 30%
increase in investments in the gas sector, and a
100% increase in the electricity sector compared
to the same period before.
Why is there a need for the EU to become
It is estimated that the investments needed to
achieve the 2020 goals will not be made or not
be made on time, mainly because of two reasons:
1. Building permits take too long to obtain.
Currently, it can take more than 10 years to
build an overhead electricity line.
2. Not all the investments needed are
commercially viable. Some electricity lines and
gas pipelines may not be commercially viable
because the market alone does not offer a good
return on investment. It makes a difference if
you plan a gas pipeline for a region where
annual gas consumption is only about 10bcm, as
in the case of the three Baltic States and
Finland or for a country such as Germany where
annual consumption is about 80 bcm. Still, these
countries should be linked to the European
energy market to foster competition and fair
prices for the consumer and guarantee that
different gas suppliers can step in, in the
event of a gas crisis.
In some cases, two countries are concerned: one
has the costs, but the other the benefits. This
is the case, when compressors are installed to
make gas flow in two directions to help out the
neighbouring country in the event of a gas
crisis or when electricity lines are built in
one country to accommodate excess wind
generation from another country.
What is new?
The Commission proposes to select a number of
projects of "Common Interest" which are
important to reach its climate and energy goals.
Projects having obtained this label have two
they benefit from a special permit granting
procedure which is easier, faster and more
transparent than normal procedures: Each member
state will designate a single competent
authority responsible – "a one stop shop " – for
the completion of the entire permit granting
process. The whole permit granting procedure
will not exceed 3 years.
They are eligible for EU funding, be it grants,
project bonds or guarantees. In the period 2014
– 2020 € 9.1 bn is earmarked for energy
infrastructure under The "Connecting Europe
Did the EU finance energy infrastructure
This is the very first time that the EU is
co-financing the construction of large energy
infrastructure from its regular budget. In the
past financial period (2007-2013), the EU
financed mainly feasibility studies with a total
amount of Euro 155 million. Euro 3.85 billion
were invested into energy projects under the
European Energy Plan for Recovery, set up in the
context of the economic and financial crisis.
These were one-off amounts.
Which are the selection criteria for projects
of common interest?
They should display economic, social and
environmental viability and involve at least two
Member States. Additional sector-specific
criteria will ensure that projects notably
strengthen security of supply, enable market
integration, foster competition, ensure system
flexibility, and allow transmission of renewable
generation to consumption centres and storage
How are the projects of common
The selection is done in a two stage process:
1. The Regional level: The project promoter will
submit its proposal to the relevant regional
group. These groups bringing together Member
States, regulators, transmission system
operators and project promoters draw up their
2. The EU Level: The final decision on the
Union-wide list of projects of common interest
will be taken by the Commission. The first list
will be adopted by 31 July 2013 and then updated
every two years.
How much funding can a project get?
The EU will co-finance up to 50% of the costs
for studies and works and in exceptional
circumstances up to 80% for projects that are
crucial for regional or EU-wide security of
supply or solidarity, require innovative
solutions or have cross-sector synergies.
Do all projects of common interest get
automatically the EU funding?
No. Once they have the status, they can apply
for EU funding. To be considered for grants for
works, they will have to prove that they are
commercially not viable. Being selected "project
of common interest" is no guarantee for EU
funding. It does however mean that the project
will benefit from the faster permit granting
procedures and specific regulatory treatment
foreseen for these projects.
Can you give examples of projects financed in
The EU could finance
- An offshore grid in the Northern Seas to
transport electricity produced by offshore wind
parks to consumers in the big cities
- Innovative projects to store electricity
- Complex gas pipeline projects that allow
bringing gas from new supply sources, such as
the Caspian region into the EU
- Compressors which enable gas to flow in both
directions. This would allow countries to help
each other out in the event of a gas crisis.
What new instruments does the financial
portfolio include for energy infrastructure
The instruments will include equity instruments
(e.g. investment funds) and risk-sharing
instruments (e.g. loans and guarantees, and
notably project bonds), which create a bigger
multiplier effect than grants. By combining
various forms of support, it will be possible to
tailor the financial assistance provided to the
particular needs of a project. Risk-sharing
instruments are likely to be suitable for larger
project-financed investments, such as big gas
import pipelines involving numerous
shareholders. Highly innovative projects with a
significant technological risk, notably in
offshore transmission, might require grant
support to get off the ground.
How exactly would the permit granting
The completion of energy infrastructure
projects, particularly in the electricity
sector, can take more than ten years. This is
mainly due to long and complex permit granting
procedures which take up about 2/3 of this time.
Projects of European interest will benefit from
faster permit procedure which will not exceed 3
years. In addition, project developers will not
have to address several authorities for permits
but only one single national competent authority
coordinating the permit granting process and
issuing a comprehensive decision.
The proposed procedure will cut administrative
costs for a given project throughout Europe by
on average about 30% on the promoters' side and
about 45% on the authorities' side.
If permits are given in 3 years, does that
mean that citizens will not be heard?
The new rules improve the possibility of
citizens to get involved in a project and their
voice to be heard. The Regulation says that
citizens have to be involved at a very early
stage of the permit procedure. The regulation
says that this needs to be done BEFORE the
project developer submits his formal application
for the permit. In this way, citizens concerns
can still be taken into account in the planning
phase of the project. In many Member States it
is currently practice that public consultation
is held AFTER the submission of the file to the
Will the EU environmental standards, and in
particular the protection of Natura 2000 sites
Environmental standards, in particular standards
set by the Natura 2000 directive, will be fully
respected, and in particular the need to carry
out appropriate impact assessments and to
minimise the impact on protected habitats. In
addition, the new system will contribute to
improve the quality of these assessments, as
environmental concerns will, through better
public and stakeholder involvement, be
identified and taken into account at an earlier
stage of the process.
When it comes to the preservation of
biodiversity and the environment, existing
standards will be maintained. Where there are
crucial projects that need to be built despite
adverse impacts on a site, it will be ensured
that the least harmful route is granted the
authorisation, that there are no alternative
routes, and that the necessary compensation
measures are taken, as foreseen in the Natura
What is the timeline for the adoption of the
draft regulation and the related process of call
The Regulation should be adopted by the European
Parliament and the Council by the end of 2012
for an entry into force at the beginning of
2013. This will leave enough time for the
establishment of the first Union-wide list of
projects of common interest, in view of their
possible financing under the CEF, which will
enter into force in 2014.