Climate campaigners have long had a bone to pick with ENTSOG, the EU body that advises where money should be spent to upgrade and expand Europe’s gas infrastructure. But this month, the conflict broke out into the open.
The European Network of Transmission System Operators for Gas is made up of companies that transport gas throughout Europe via pipelines. Since 2009, it has been entrusted with developing the bloc’s long-term plan for investing in energy infrastructure. That advice is then used to dole out billions of euros in EU funding for gas infrastructure projects.
Go deeper with GlobalData
A report published by the NGO Global Witness on 18 June alleges that the gas companies which make up the body have used it to steer over €4bn in subsidies for their own projects by overestimating the need for gas in Europe’s energy mix — and have put the EU at odds with its own 2030 climate targets in the process.
“We’re not against companies collaborating and if they want to be lobbying companies, they’ve got freedom of speech, they can lobby away,” says Jonathan Gant, lead author of the report. “But it should be transparent so we can hold our officials to account if they make bad decisions as a result of that lobbying. ENTSOG’s regulatory authority needs to be removed and they should officially become the lobbying outfit that they are unofficially.”
The analysis found that almost 90% of all EU money for fossil gas went to ventures backed by the 44 companies that are members of ENTSOG. Looking at figures for the past five years, they conclude that Europe’s need for gas has been overestimated by 7% to 17%. (In contrast, analysts estimate that gas consumption should fall by 30% over the next ten years if greenhouse gas emissions are to be cut by the required target.)
But ENTSOG’s director-general, Jan Ingwersen, disputes this characterisation. “We don’t consider ourselves as a lobbying organisation,” he says. “We have these regulatory tasks, and we are very much aware that it puts some obligations on our side.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“But if discussions are coming up regarding our work and our members, we think we have a relevant voice in that, to participate in those discussions and debates.”
Scrap the system
ENTSOG isn’t the only EU body operating in this way. ENTSOE, its counterpart made up of electricity transmission operators, has the same advisory role. Because climate campaigners are in favour of electrification based on renewable energies, they have not gone after the electricity companies. But if the system is unfair for gas companies, it would logically be unfair for electricity companies as well.
The report consequently recommends transferring forecasting responsibilities to an independent public body and that the European Commission develops its own independent methodology for analysing the costs and benefits of all energy infrastructure projects applying for funding.
Their call got a high-profile backer this month: Connie Hedegaard, the EU climate commissioner from 2010 to 2014 who helped set up the ENTSOs. “Today, with the European Green Deal on the table and major institutions like the European Investment Bank already committed to divesting from all fossil fuels, it doesn’t make any sense to have fossil fuel companies embedded in the EU’s decision-making process for building new energy infrastructure,” she says.
In the European Commission’s review of the Trans-European Networks for Energy (Ten-E) regulation coming up later this year, Hedegaard wants ENTSOG to be replaced with “an independent governance group”.
According to a spokesman, Tim McPhee, the commission is “looking at the consultation process very broadly, looking at changes to make Ten-E support our aims of reaching climate neutrality by 2050.” Adding, “We’re looking at governance issues and the involvement of different stakeholders.”
The ENTSOs have provided an important advisory role, but final decisions about EU funding are made by the commission and elected co-legislators, McPhee says.
Fears of Russian disruption
In some ways, ENTSOG has been a victim of its own success. It was established when there were huge concerns about security of supply, after major disruptions caused by disputes between Russia and Ukraine. Linking up Europe’s gas grids over the past ten years has helped fix that problem.
But while Gant believes that issues of supply security no longer apply, ENTSOG’s Ingwersen disagrees: “There are still here and there some weak points, particularly in eastern Europe but also in a few other places.”
Ingwersen says that losing the expertise of the national transmission operators and instead only using in-house expertise in Brussels could result in infrastructure planning that doesn’t take local factors into account. “We are not talking about one public asset that can be administered and centrally planned. That has been done in other historical settings and that didn’t go very well.”
Ingwersen acknowledges that in some years gas need was overestimated, but says this wasn’t done on purpose. “It’s correct if you’re looking at the time period around 2013-2015, where we had a dip in gas consumption”. But he says that’s changed. “Recent scenarios are rather below actual gas demand.”
A slowed transition?
Right now there are internal debates in the commission about whether to expand the ENTSO regulatory model (including also distribution system operators), strip the regulatory role from the ENTSOs, or to leave them as is. But one of the main sticking points is whether reform would slow down the transition to cleaner forms of energy.
In its response to the consultation on the regulation’s revision, ENTSOE, which handles electricity transmission, said it believes its involvement helps increase electrification and decrease the use of fossil fuels. The concern is that if the ENTSOs regulatory role is removed, it could hurt electricity infrastructure as well as that for gas.
“ENTSOE members are regulated entities, independent from private interests,” the organisation says. “We are mandated to work in the interest of society by ensuring the security of the power system, in all time frames, in the most cost-efficient way, while facilitating power markets.”
ENTSOG, meanwhile, suggests that existing pipeline infrastructure could be used to transport green hydrogen gas, a developing low-carbon fuel technology that can be produced from renewable energies.
Climate campaigners would prefer to see only ENTSOG removed from this process, but EU sources say it would only make sense to remove the regulatory role for both, or neither.
Both ENTSOs warn that removing their regulatory role could mean essential infrastructure projects to transport renewable electricity and fuels are slowed down or not built at all. But campaigners believe that independent experts would be able to give more neutral advice.
