On 30 May 2022, the European Union (“EU”) adopted the revised Regulation on guidelines for trans-European energy infrastructure (No. 2022/869) (the “TEN-E Regulation 2022”), which replaces the previous rules laid down in Regulation No. 347/2013 (the “TEN-E Regulation 2013”) that aimed to improve security of supply, market integration, competition and sustainability in the energy sector. The TEN-E Regulation 2022 seeks to better support the modernisation of Europe’s cross-border energy infrastructures and the EU Green Deal objectives.
The three most important things you need to know about the TEN-E Regulation 2022:
- Projects may qualify as Projects of Common Interest (“PCI”) and be selected on an EU list if (i) they fall within the identified priority corridors and (ii) help achieve EU’s overall energy and climate policy objectives in terms of security of supply and decarbonisation. The TEN-E Regulation 2022 updates its priority corridors to address the EU Green Deal objectives, while extending their scope to include projects connecting the EU with third countries, namely Projects of Mutual Interest (“PMI”).
- PCIs and PMIs on the EU list must be given priority status to ensure rapid administrative and judicial treatment.
- PCIs and PMIs will be eligible for EU financial assistance. Member States will also be able to grant financial support subject to State aid rules.
Background
The Trans-European Networks for Energy (“TEN-E”) is an EU policy that aims to achieve a more integrated internal energy market by linking the energy infrastructures between Member States and with third countries.
In order to pursue this objective, the TEN-E Regulation 2013 identified priority corridors across different geographic regions in the field of electricity, gas and oil infrastructure to strengthen cross-border interconnection and help integrate renewable energy. Member States then selected and implemented PCIs that fell within the designated “priority corridors”. The PCIs could then benefit from specific funding from the EU budget and from a fast track permitting procedure. This process helped most EU Member States to reach their 2020 interconnection targets and contributed to energy market integration and security of supply.
The revised TEN-E Regulation 2022 continues to work towards developing better connected energy networks while updating the TEN-E framework to focus on the latest environmental targets and ensuring consistency with the climate neutrality objectives set out in the EU Green Deal.
Towards a better integrated and greener EU energy market
The TEN-E Regulation 2022 reallocates and identifies 11 priority corridors with the purpose of meeting objectives to (i) reduce carbon emissions by 55% by 2030 and (ii) achieve carbon neutrality by 2050. The priority corridors focus on updated infrastructure categories such as offshore electricity grid corridors and renewable and low-carbon gases, e.g., hydrogen and electrolysers. Natural gas infrastructure and oil pipelines will no longer be eligible for PCI status. The TEN-E Regulation 2022 also identifies new priority thematic areas: (i) to adopt energy networks equipped with IT technology (“smart grids”) for electricity and gas, respectively, and (ii) to develop cross-border carbon dioxide networks.
Promotors of energy infrastructure projects may apply for PCI status to the regional priority corridors groups. PCI status may be obtained for projects focused on promoting greener and cleaner sources of energy such as offshore wind capacities and renewable / low carbon hydrogen (note that hydrogen may either be blended with other gas (e.g., natural gas or biomethane) or as a stand-alone source of energy). Under the TEN-E Regulation 2022, PCIs regarding smart (gas or electricity) grids and the transport and storage of carbon dioxide are also encouraged.
Additionally, the TEN-E Regulation 2022 extends the EU energy market boundaries to third countries by introducing a new cooperation mechanism for so-called Projects of Mutual Interest (“PMIs”). Similar to PCIs, they can be selected if they contribute to the EU’s overall energy and climate policy objectives in terms of security of supply and decarbonisation.
The European Commission will adopt a list of PCIs and PMIs every two years (the “EU list”), with the first EU list to be adopted by 30 November 2023.
The TEN-E Regulation 2022 also imposes a new obligation for all projects in the EU list. PCIs and PMIs must meet mandatory sustainability criteria and, in compliance with the “no significant harm” principle as per the EU Taxonomy Regulation, they must be implemented in a way that does not hinder the achievement of the environmental objectives.
“Fast track” administrative and judicial procedures for projects on the EU list
Member States must grant PCIs and PMIs the status of the highest national significance, which benefits from simplified administrative processes e.g., accelerated project implementation, shorter permitting procedures, and greater transparency and participation in consultations. To this end, Member States must designate a national competent authority responsible for facilitating and coordinating the permit granting process.
Litigation procedures involving any dispute on a project on the EU list must be treated as urgent.
Public funding
In order to meet the targets set out in the EU Green Deal, large amounts of investments and public funding will be required to develop the necessary energy infrastructure. For example, it is estimated to cost EUR 800 billion to increase the uptake of offshore renewable energy according to the EU Green Deal objectives, of which two thirds will be used for the associated grid infrastructure. A further estimated annual average investment of EUR 50.5 billion will be needed for electricity transmission and distribution grids to achieve the 2030 targets alone.
Accordingly, to assist with the significant costs, PCIs and PMIs on the EU list may be eligible for financial assistance:
- Financial support under the Connecting Europe Facility (“CEF”). For the 2021-2027 period, the CEF programme (Regulation No. 2021/1153) has allocated EUR 5.84 billion of its budget to the energy sector (see our blog post on cross-border projects in the field of renewable energy). Promoters of projects identified in the EU list may submit to the European Climate, Infrastructure and Environment Executive Agency (“CINEA”) an application for financial support. Note that removal from the EU list does not affect any EU funding already granted, but may prevent future funding sought.
- State Aid. EU Member States may 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 comply with the criteria laid down in the IPCEI Guidelines (see our blog post).