Plans for building pipelines and drilling for gas in the Eastern Mediterranean are currently developing at an extreme pace. The European Union is strongly supporting the gas expansion in the region, also with the financial support of the European Investment Bank (EIB). This support openly ignores the huge climate cost of controversial fossil gas projects.

The Eastern Mediterranean is home to one of the world’s largest deep water hydrocarbon reserves. These reserves have been unexploited for decades due to a mix of technological, economic, financial and geopolitical challenges that prevented the fossil fuel industry from expanding in the region.

Recent discoveries of gas fields and more concrete plans to develop a web of gas infrastructure in the region - including the massive EastMed pipeline - are causing the situation to rapidly change. However, in addition to creating severe geopolitical tensions, they are also threatening the prospect of a cleaner future for the region, and Europe at large.

The EastMed pipeline could trigger a new carbon bomb

A joint NGO report published today highlights the significant risks linked to the construction of the EastMed gas pipeline, calling it a new “carbon bomb”.

If built, the pipeline would be 1900 kilometres long, of which 1300 kilometres offshore, and would cost around € 5 billion. The key governments promoting EastMed are Greece, Cyprus and Israel, and it is primarily aimed at transporting 10 billion cubic meters of gas from Israel and Cyprus into the European market.

Earlier this year, Global Witness published a damning report “Pyrrhic victory” highlighting the harmful climate impacts of the project:

  • At full capacity, between now and 2050 the EastMed pipeline could produce more greenhouse gasses than France, Spain and Italy emit combined per year
  • At full capacity, in one year the EastMed pipeline would emit more greenhouse gases than Europe’s worst polluter - the Bełchatów coal-fired power plant in Poland
  • Between 2025 to 2050, if operating flat out, the pipe’s emissions would be greater than all of Germany’s coal plants over four years combined

The EU already has enough gas to meet current demand and its gas infrastructure is largely under-used. In order to reach its decarbonisation objectives and contribute to the Paris Agreement, the European Commission even predicts a 90% reduction in gas consumption by 2050.

It is highly problematic that the same European Commission - who is supposed to be the architect of the European Green Deal - has already identified the pipeline as “strategic” for Europe, as part of the so-called list of Projects of Common Interest (PCI). This PCI status makes it eligible for subsidies from the EU budget and loans from the EIB. The project has already benefited from a € 36,5 million grant for feasibility studies under the Connecting Europe Facility.

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EIB support to a dodgy LNG terminal locks Cyprus in the fossil fuels’ era

In addition to the European support to the Eastmed pipeline, worrying news came during the past year concerning the so-called “CyprusGas2EU” project in Cyprus. Indeed, the EIB adopted a € 150 million loan in June - and then signed it in November 2020 - for the construction of Liquefied Natural Gas (LNG) import, regasification, storage and pipeline infrastructure off the coast of Limassol.

According to the EIB, the project “is a critical component of the country's energy strategy in line with the EU regulations. It will introduce for the first time natural gas with a view to enable the country to enhance its energy security, reduce cost of energy, whilst at the same time meeting its energy mix objectives and reduce CO2 and other air pollutant emissions”.

What the bank omits to mention is that the project largely contradicts its own commitment to end financing fossil fuels, a commitment the bank took at the end of 2019 with great fanfare and chest pounding. This project was financed using the “transition” period allowing the EIB to still support gas projects that are part of the PCI list until the end of 2021 (see our article on the loopholes of this fossil fuels ban).

Therefore, the EIB that is currently portraying itself as the ‘EU Climate Bank’ will end up locking Cyprus into a fossil gas future for the next foreseeable decades. Indeed, financing such polluting projects means completely missing the opportunity to increase renewable energy and to work towards national and international climate goals. It is difficult to understand why fossil gas is being prioritised in a country like Cyprus when it is very far from meeting its renewable energy targets despite high levels of sunshine.

Then, the EIB shareholders approved this loan despite earlier revelations from the French newspapers Liberation (see here and here) about the tender procedure for the LNG terminal. The articles pointed out on the one hand at the dubious financial viability of the project because of its very high cost, and on the other hand at the controversial tender process for the project which resembles a no-bid contract. The proposal of an industrial consortium led by a Chinese public company allegedly won the contract against two offers rejected “before any detailed, technical and financial assessment” was carried out. These elements cast a shadow on the robustness of the due diligence performed by the bank before deciding to back the project.

Ultimately, looking at the broader picture, it is highly disturbing to see that the EU institutions keep promoting the drilling and exploitation of new fossil fuels reserves in the Mediterranean, despite this approach directly accelerating the climate emergency and fuelling geopolitical tensions.

While science shows that fossil fuels should stay in the ground, it is urgent for the European Union to truly fight climate change. A preliminary step is definitely to stop its political and financial support to climate-wrecking projects like the EastMed pipeline or LNG terminals which are bringing us every day further from a genuine energy transition.

Xavier Sol

Xavier Sol