Questions and Answers on the fifth list of energy Projects of Common Interest (PCIs)
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-What are PCIs?
Projects of common interest (PCIs) are key infrastructure projects aimed at completing the European internal energy market in order to help the EU achieve its energy and climate policy objectives: delivering affordable, secure and sustainable energy for all Europeans and contributing to a climate-neutral economy by 2050.
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-Which projects are on the PCI list?
The 5th PCI list includes 98 projects: 67 electricity transmission and storage projects, 20 gas projects (listed previously in the fourth PCI list), six CO2 network projects and five smart grid projects.
The full list of projects can be found here.
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-Which criteria does a project have to meet to be included on the PCI lists?
Under the current TEN-E Regulation, for a project to become a PCI it should be an energy network infrastructure that has a significant impact on at least two EU Member States and contributes to at least one of the following policy objectives:
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a)enhances market integration and contributes to the integration of Member States' networks,
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b)increases competition on energy markets by offering alternatives to consumers,
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c)enhances security of supply,
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d)contributes to the sustainability objective, e.g. by supporting renewable generation and CO2 reduction.
In line with the existing trans-European energy networks (TEN-E) Regulation, only those electricity and gas projects that are included in the latest Ten-Year-Network Development Plans (TYNDPs) prepared by the European Network of Transmission System Operators for gas and for electricity (ENTSOG and ENTSO-E) can become PCIs, as these Plans highlight the projects' socio-economic benefits for the EU energy system.
The Commission has proposed a revision of the TEN-E Regulation which would exclude support for oil and gas infrastructure in future PCI lists, and create an obligation for all projects to meet mandatory sustainability criteria as well as to follow the ‘do no significant harm' principle as set out in the Green Deal i. However, this Regulation is still going through the legislative process in the European Parliament and Council, so the Commission is bound to use the existing legal basis for the fifth PCI list.
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-What are the benefits of being on the list?
PCIs benefit from a number of advantages:
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a)streamlined permit granting procedures (a binding three-and-a-half-year time limit);
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b)improved, faster and better streamlined environmental assessment;
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c)a single national competent authority (one-stop-shop) coordinating all permit granting procedures;
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d)a procedure allowing for the allocation of investment (construction) costs among Member States benefiting from the PCI;
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e)eligibility for financial assistance under the Connecting Europe Facility (CEF) in the form of grants and innovative financial instruments.
It should be noted that there is no guarantee of EU financing for projects on the PCI list.
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-The fourth PCI list contained 149 projects. Why are there fewer projects this year?
The fifth PCI list reflects the evolving policy priorities related to meeting the EU's climate neutrality goals and the clean energy transition: it does not contain any new gas infrastructure projects, nor any oil projects and, thus, firmly shifts the priority to infrastructure most supportive of the EU's decarbonisation aims.
With regard to electricity, the list contains 61 transmission and six storage projects. The projects have been selected with the aim to fill the remaining infrastructure gaps and allow for a smooth transition towards climate neutrality. The lower number compared to the 100 projects included on the fourth PCI list can be explained by the completion (or near completion) of 14 interconnection projects and by the change in status of the UK from a Member State to a third country, which led to the ineligibility of 12 projects which had been on the fourth list.
Electricity interconnections are key to achieving the 2030 targets and the climate-neutrality objective at the least cost for society. The Commission put an even stronger focus on electricity transmission in the proposal for a revised TEN-E Regulation, notably through dedicated provisions that would allow for an ambitious scale-up of offshore grids across sea-basins in Europe. We expect to see more of these projects in future PCI lists once the new rules enter into force.
The number of gas PCIs is reduced from 32 projects in the previous list to 20. These projects are necessary to ensure security of supply for all Member States. Once these advanced projects are completed, there is no longer need to support gas projects with PCI status. No new gas infrastructure projects are supported by today's proposal. This underlines the robustness and resilience of the existing EU gas grid, as well as the EU's resolve to phase out support for fossil fuel infrastructure. The low number of gas projects on the list is also the result of the strengthened sustainability assessment applied to candidate PCIs in gas.
The list includes five smart grid projects and six CO2 network projects. Their relative importance as a share of all projects on the PCI list is expected to grow and these projects are expected to play an increasing role in the future.
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-Why are there still fossil fuel projects in the fifth PCI list?
The Commission is committed to aligning all of its energy and climate legislation with the objectives of the Green Deal. Last December, we presented a proposal for a revision of the TEN-E Regulation, which would no longer allow oil and natural gas infrastructure to become Projects of Common Interest (PCIs). This policy shift mirrors the achievements of the TEN-E policy in securing a robust and shock resilient infrastructure and the uptake of renewable gases. It would also oblige all future projects on the PCI list to meet mandatory sustainability criteria.
In the meantime, the Commission is required by law to present the fifth list of PCI projects by the end of this year based on the current TEN-E Regulation, which includes in its scope natural gas infrastructure.
Natural gas is a transition fuel and we should make sure that the infrastructure which transports natural gas today also serves our Green Deal and energy security goals in the future. Today it replaces more polluting and CO2 intensive fuels such as coal, oil shale and peat. It also serves as a flexibility provider in the EU energy system, backing-up the renewable energy production and contributing to energy security.
Until the new TEN-E rules are in place, to the extent the current framework allowed for it, the Commission has strived to ensure the alignment of the 5th PCI list with the Green Deal objectives.
The strict assessment of infrastructure needs across the EU and strengthened sustainability assessment applied to candidate PCIs in gas has led to a further reduction of gas projects on the list, from 32 to 20. The list contains no new natural gas projects, all of the projects included were already in the fourth PCI list.
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-How was the sustainability of projects assessed in the fifth PCI list?
The Commission has worked very closely with all stakeholders in the process, including ENTSO-G, ACER, and the TEN-E Regional Group members, to strengthen the sustainability assessment of candidate projects in gas infrastructure and align the process with our Green Deal objectives.
A study for the Commission on the sustainability impact of gas infrastructure was finalised in June 2020. This study looked at the shortcomings of the existing ENTSO-G sustainability indicator and proposed ways for its improvement. The Commission has used the recommendations of this study to improve the PCI assessment methodology for assessing gas projects for the fifth PCI list. All gas candidate projects have been subject to this assessment.
First, the methodology allows for either a positive or negative net impact assessment on CO2 emissions. A project can show positive CO2 savings when gas replaces coal or oil. However, if the main effect of the project is to lead to increased natural gas consumption rather than phasing out more polluting sources, it will result in a negative assessment.
Second, the allocation of CO2 savings (if there are any) to individual gas projects is based on actual gas flows and infrastructure use. The method prioritises the use of already existing infrastructure over the new assets. If the increased gas demand can be met by existing infrastructure, the project in question shows no sustainability benefit. The sustainability indicator focuses on CO2 impact but it also includes an assessment of a project's impact on air quality (i.e. non-GHG emissions, such as NOx, SOx and particulate matter).
The Commission's proposal for a revised TEN-E Regulation, tabled last December, makes the sustainability assessment mandatory for all projects, meaning that no project would be eligible for PCI status unless it can prove a significant contribution to this criterion.
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-Will the projects on the list automatically get EU funds?
Projects selected as PCIs can automatically benefit from many advantages stemming from the TEN-E Regulation, including an accelerated permit granting and improved regulatory treatment.
However, while PCI status is a precondition for grants under the Connecting Europe Facility (CEF), it does not guarantee the award of a CEF grant. All PCIs can apply for grants to support studies. However, when it comes to grants for works, only some projects included on the PCI list will need - and will be eligible for - financial assistance; many of them can be implemented on a commercial basis without EU funds or other public subsidies.
Projects selected as PCIs, upon meeting specific additional criteria, will be able to apply for the CEF support in a separate procedure.
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-When will PCIs be able to apply for EU funding?
The next call for proposals for PCIs to receive grants under the Connecting Europe Facility (CEF) is planned for the first half of 2022. Project promoters will be able to apply for grants for studies and for construction works.
Grants for works, however, will be available only to those PCIs that are not commercially viable despite their positive impacts, such as solidarity, security of supply or technological innovation. An objective cost-benefit analysis will be used to determine these parameters.
In addition to CEF funding, PCIs can also apply for support under other EU programmes, such as the European Fund for Strategic Investment (EFSI), and the European Structural & Investment Funds (ESIF), in particular the European Regional Development Fund (ERDF).
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-Which projects have received co-funding under CEF?
In the 2014-2020 budget period, 107 PCIs have benefited from the CEF programme. The allocated grants for works and studies are worth €4.7 billion in total.
When allocating CEF Energy financial assistance, the Commission has given particular consideration to electricity projects, with the aim of making the major part of the CEF Energy financial assistance available to these projects over the period 2014 and 2020. So far, the majority of CEF financial assistance has been allocated to electricity projects (including smart grids), which represent around 65% of total funding, double the amount dedicated to gas infrastructure.
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-When will the next (sixth) PCI list be adopted?
The TEN-E Regulation stipulates that the Commission adopts every two years the Union list of PCIs in the form of a delegated act.
Subject to the timely conclusion of the co-legislation process, the revised TEN-E Regulation will be the legal base for the adoption of the sixth Union list of PCIs, which is planned to take place by the end of 2023. The Commission proposal for the revised TEN-E Regulation maintains the legal provision to adopt the Union list of PCIs every two years.
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-How is the PCI list established?
In a first stage, promoters submit their projects for selection as PCIs. After that, so-called Regional Groups (chaired by the Commission and including representatives from the Member States, transmission system operators and their European networks, project promoters, national regulatory authorities, as well as the Agency for the Cooperation of Energy Regulators (ACER)) assess the projects' compliance with the criteria and their European added value.
Stakeholders are invited to take part in these meetings and bring their insight on infrastructure bottlenecks and on the candidate PCIs. Based on this assessment, the Regional Groups propose regional lists of PCI candidates. The Commission then adopts the final draft list of PCIs, in the form of a delegated regulation.
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-What are the next steps?
Published as a delegated act, the list of PCIs will be submitted by the Commission to the European Parliament and Council, who have two months to decide whether to accept or object to the list. This period of two months may be extended by an additional two months upon their request. If within this timeframe neither the Parliament nor the Council rejects the list, it will enter into force. It should be noted that Parliament or Council can only accept or reject the list as such, but not request amendments to it.