HIDING IN PLAIN SIGHT HOW THE EU’S GAS LOBBY IS AT THE HEART OF EU ENERGY POLICY MAKING EXECUTIVE SUMMARY INTRODUCTION The central role given to the gas industry in identifying Europe’s gas 2016 was the warmest year on record – a remarkable 1.1°C above pre- infrastructure needs clearly skews the Project of Common Interest (PCI) industrial period temperatures.2 In 2015 the European Union (EU) signed process in favour of gas projects – at a time when the EU’s climate up to the Paris Agreement, committing to keep global warming “well below commitments mean that EU countries should be moving away from gas. 2 degrees” and ideally within 1.5 degrees.3 This requires a global shift from dirty fossil fuels to zero carbon. To implement the Paris Agreement, this The European Network of Transmission System Operators for Gas zero carbon goal must be at the heart of energy policy in the EU, and must (ENTSOG), one of the key vehicles of the gas lobby, has a double conflict drive every investment decision. of interest in this process. Firstly, it is tasked to prepare decarbonisation of its energy systems while this is clearly not in the interest of its The urgency of this shift cannot be over-stated. New research has shown members. Consequently, ENTSOG keeps on exaggerating figures there are just four years left before we reach the 1.5°C tipping point,4 the for projected gas demand and the need for new gas infrastructure. point at which carbon dioxide concentrations in the atmosphere make a 1.5 Secondly, it has a key role in giving gas projects access to billions of degree temperature increase inescapable. The typical lifespan of fossil fuel euros of financial support while its members are the main beneficiaries infrastructure is 40-50 years.5 That means that new public investments in of these public subsidies. This deprives fossil free energy infrastructure the energy sector must be exclusively in fossil-free energy. of resources, and risks locking the EU into gas dependence for the Within the EU, the direction of public investments in the energy sector is decades to come. driven by a process under the Regulation on guidelines for trans-European The EU needs to move away from gas – and to urgently reform the energy infrastructure (the so-called ‘TEN-E’ Regulation6). Every two years, PCI process so that projects that support a fossil-free future are given a list of priority trans-European energy projects is drawn up, known as support. Projects of Common Interest (PCI). This list sets the direction for the biggest energy investments in Europe, and provides access to billions of Based on these observations, Friends of the Earth Europe recommends: euros of public money. The European Commission should develop its own in-house system Under the TEN-E Regulation, priority is given to projects which contribute able to provide reliable and independent data regarding EU gas pipeline to the integration of distributed renewable electricity sources, but gas and network capacity and gas demand forecasts; some oil projects are also considered. The most recent PCI list includes The EU should amend the TEN-E regulation to remove the statutory role 195 projects, with 108 electricity, 77 gas, 7 oil and 3 smart-grid projects. A of ENTSOG in the process of deciding future infrastructure priorities; new PCI list is scheduled to be formally agreed in October 2017. The EU’s planning models for the energy (for renewable, CO2 emissions While the European Commission holds discussions with member states to and energy efficiency) and transport sectors, should be based on climate design this list, it is primarily based on the Ten-Year Network Development targets; the EU 2030 and 2050 climate objectives and the 1.5° targets; Plans (TYNDPs) drawn up for the electricity and gas sectors by the European Network of Transmission System Operators for Electricity Following its commitment to end fossil fuel subsidies by 2025,1 and (ENTSOE) and European Network of Transmission System Operators for to avoid the risk of supporting new fossil fuel lock-in, the EU should Gas (ENTSOG).7 immediately stop financing new fossil fuel infrastructure, including gas. These bodies play a central role in the process to develop the PCI list. ENTSOG is a lobbying organisation representing the gas infrastructure Yet, while they deny using their position to lobby, ENTSOG essentially industry instead of a public interest organisation and should be represents gas infrastructure companies, and the organisation has a recognised and considered as such by European institutions. vested interest in promoting gas infrastructure. Their constant grossly The EU should end the privileged position of ENTSOG and no longer give inflated predictions on future gas demand in Europe shows the risk of it a role in decision making. putting people or organisations whose business model is based on building new gas infrastructure in a central position to determine how much gas infrastructure should be built. While not yet final, the 2017 PCI list looks set to include a significant number of gas infrastructure projects which have been put forward by the gas industry, represented by ENTSOG, even though none of these new projects correspond to an increased demand: Gas consumption in EU-28 dropped by 14% since 2010. These projects risk distorting the European gas market, locking European countries into on-going dependence on dirty fossil fuels, and distancing the EU away from its crucial climate objectives. The world is on track to global warming in Friends of the Earth Europe campaigns Friends of the Earth Europe gratefully excess of 3˚C, yet the commitments made for sustainable and just societies and acknowledges financial assistance from by political leaders fall far short of what for the protection of the environment. the European Union. The contents of this is needed to protect vulnerable and poor We unite more than 30 national groups document are the sole responsibility of Friends people across the world. But it doesn’t with thousands of local groups and are of the Earth Europe and cannot be regarded have to be this way. part of the world’s largest grassroots as reflecting the position of the European environmental network, Friends of the Union. The European Union cannot be held Friends of the Earth Europe is working to Earth International. responsible for any use which may be made create the much-needed, fair and urgent of the information this document contains. transition to a fossil fuel free Europe by 2030. This means dismantling the fossil fuel system and creating the just, clean energy future that people want and need. 1 THE GAS LOBBY IN DISGUISE WHAT IS ENTSOG? REPRESENTING GAS INDUSTRY INTERESTS The European Network of Transmission System Operators for Gas Though the members and staff of ENTSOG come from the EU gas industry, (ENTSOG)8 was established by the EU as part of its 2009 third energy it still presents itself publicly as an independent entity without financial or package. It brings together gas distribution companies from across private interests. EU member countries to “promote the completion and functioning of In the EU transparency register, while its electricity counterpart, ENTSOE, the internal market in natural gas and cross-border trade and to ensure is registered as “In-house lobbyists and trade/business/professional the optimal management, coordinated operation and sound technical associations”,13 ENTSOG is registered as a non-governmental organisation. evolution of the natural gas transmission network”.9 According to the entry, they “consider that [they] do not do lobbying activities One of ENTSOG’s key activities is putting together ‘Ten-Year Network as such”.14 Development Plans’ (TYNDPs). Produced every two years, these provide Yet, ENTSOG’s role in lobbying for its members certainly seems clear from ENTSOG’s vision of future EU gas infrastructure, including models of the the comments made by one former board member, Harald Stindl, the integrated gas network based on a range of development scenarios for managing director of Gas Connect Austria and an ENTSOG board member the following 20 years. from 2009 to 2013. He said: AN INSTITUTIONALISED “We need to show the economic superiority of our product. FOSSIL FUEL LOBBY GROUP Gas can transport much more energy than electricity. It is ENTSOG is a hybrid body, established through EU legislation. But in reality it is an industry association, representing the interests of its 45 member affordable, abundant and environmentally friendly. We have companies, most of which run national gas distribution systems in EU member states. to convince consumers and policymakers of this. We have Many of these members are international players in the energy sector, to show the way to new products and processes. We have to with a financial interest in expanding their operations – and in some cases, they belong to larger international oil and gas companies. lead the way to a standardisation of the transportation of our For example, Hungarian member FGSZ is owned by the oil and gas multinational MOL Group, French member product. That will improve its overall attractiveness. This is the GRTGaz is 75% owned by Engie, Austrian member Gas 15 Connect Austria is predominantly owned by the oil and basic job of ENTSOG.” gas company OMV and the Portugese member REN - Gasodutos, S.A. is entirely owned by private gas company REN - Redes Energéticas Nacionais. The It is clear that ENTSOG sees its role as representing the interests of the private Spanish gas grid operator, Enagás, which industry, rather than the public interest, and is seeking to convince the floated on the Spanish stock market in 2002, also EU institutions of the need for the gas supply industry.