EU Council, Parliament reach provisional deal on new PCI funding rules

The EU Council presidency and European Parliament negotiators have reached a provisional political agreement on the criteria for funding key EU energy projects, the Council said Dec. 15.

The EU energy ministers had, in June, come to an agreement on a "general approach" to the funding of European energy projects under the TEN-E process, which defines the projects to be allowed to be subsidized under the Projects of Common Interest (PCI) program.

It was agreed to end support for new fossil gas and oil projects, but to allow a transitional period to the end of 2029 for funding of gas projects that would be converted to hydrogen.

The EU has already pledged Eur5.48 billion ($6.64 billion) in finance for the Connecting Europe Facility (CEF) for the 2021-27 period.

"The agreement makes sure that in the future, no new fossil fuel projects will receive funding from the CEF," Jernej Vrtovec, the minister of infrastructure of Slovenia, said in a statement.

Slovenia currently holds the revolving presidency of the Council.

PCI list

The fifth PCI list was published in November and included 67 projects in electricity transmission and storage, 20 existing projects in gas, six CO2 network projects and five smart grid projects.

No new gas infrastructure projects are on the list, and the few that remain from previous lists are viewed as necessary to security of supply.

The Council and Parliament also agreed to allow funding of dedicated hydrogen assets converted from natural gas to be used to transport or store a pre-defined blend of hydrogen with natural gas or biomethane.

Eligibility for EU financial assistance for such projects will end Dec. 31, 2027, it said.

In the case of Cyprus and Malta, which are still not interconnected to the trans-European gas network, the EU is to allow one interconnection per member state for a project granted PCI status.

"The revised regulation will continue to ensure that new projects respond to market integration, competitiveness and security of supply objectives," the Council said.

Under the first CEF -- which ran from 2014 to 2020 -- a total of Eur4.7 billion in funds were allocated to PCIs, with numerous gas infrastructure projects receiving grants.

These included the TAP gas pipeline to bring gas from Azerbaijan to Italy, the Balticconnector between Finland and Estonia, and the Baltic Pipe from Norway to Poland.