EU stumps up cash to connect infrastructure The European Commission’s Connecting Europe Facility could see more projects to tie together gas infrastructure among member states.

Plans to build an EU-wide energy union won’t work without physical links between countries. That means digging trenches, welding pipe and installing pressure gauges and other equipment to allow gas to flow freely from the North Sea to the Balkans and from the Baltic to Spain.

To connect the continent, the European Commission has identified 248 Projects of Common Interest, a term for plans important enough to security of supply and market competition to benefit from less red tape and access to EU financial support called the Connecting Europe Facility.

The financing is worth €5.9 billion between 2014 and 2020 for gas and electricity projects, including transmission links, storage facilities and liquid natural gas terminals. The condition is that the plans fulfill a number of feasibility criteria, ranging from a project’s maturity, to its market benefits to the need to overcome financial hurdles.

“CEF grants for works are meant to be a last resort measure,” where the investment cannot be leveraged in the absence of incentives or the appropriate regulatory framework, the Commission says, adding that such situations should be inherently rare because of the high societal benefits of the projects should make them commercially viable.

A first funding round closed ended in 2014, allocating €647 million. A second round worth €650 million is planned for 2015.

“Gas infrastructure will play a key role across different areas of the energy union,” the bloc’s energy and climate chief Miguel Arias Cañete said in a recent speech in Dublin. He also wants Europe to have access to more external suppliers, breaking the EU’s current dependence on Russian gas.

The idea is for the facility to kick-start projects and then for private investors to cover the rest. “Our strategy is to leverage as much private investment as possible from as little public funding needed,” Cañete said.

The EU is hoping that the available cash and the promise to slash paperwork will get more of these projects completed.

“Sometimes these projects don’t have a good market rationale,” said a senior EU official, adding that even if they get built, the interconnectors aren’t always used because there is little demand outside of emergencies.

Some never evolve much past the initial press conferences. “The Prime Minister says ‘we need an interconnector as an absolute priority,’ so the project exists but nothing more happens,” said the official.

But the political pressure to at least show that something is being done is strong. Countries in central Europe, like Poland and the Czech Republic, also have to reassure their voters that steps are being taken to insulate energy markets from potential Russian cutoffs or blackmail.

In May 2014, the Commission published a list of 33 projects, mostly in the Baltics and south-eastern Europe considered key to European energy security.

According to the Commission, three gas projects have been completed as of the end of 2014 — the Klaipeda LNG terminal in Lithuania, reverse flow between Bulgaria and Greece and the LNG terminal in Świnoujście, Poland (due to be in operation later this year). Reverse flow between Hungary and Croatia, which was supposed to be finished in 2015 is progressing slowly. A gas interconnector between Slovakia and Hungary, due to be completed by 2015, is on target.

The other projects with commissioning dates from 2016 to 2020 are on schedule, the Commission says.