Between 2014 and 2020, fossil gas projects in Romania and Poland received €230 million and €1.3 billion respectively from European funds, according to a report published by the CEE Bankwatch Network. The allocations planned by the two countries for the period 2021-2027 risk increasing their dependence on gas as well as undermining the energy transition, the report also said.

As the EU seeks to improve its emissions reduction targets to slow the climate crisis, the governments of two countries analyzed by the environmental organization plan to significantly increase investment from EU funds in fossil gas projects – by 400% in Romania and 50% in Poland . Reason? European Union gas financing rules are soft, says CEE Bankwatch Network.

European funds, such as the Modernization Fund, the Cohesion Funds and the Recovery and Resilience Fund, are designed to help countries improve their economic situation by, among other things, modernizing public infrastructure.

However, the allocations planned in Romania and Poland for the financial period 2021-2027, analyzed by Bankwatch, risk increasing their dependence on gas and undermining the energy transition.

In Romania, the authorities have committed at least 1.7 billion euros to projects based on fossil gas, such as the conversion of the power plant in Išalnica or the increase of gas storage capacity at the gas storage facility in Bilcureşti.

“For the period from August 2022 to January 2023, Romania managed to reduce fossil gas consumption by approximately 25%. This was an important achievement, but the government’s plans could reverse this trend. The investments we analyzed led to a fourfold increase in gas infrastructure financing through EU funds compared to the allocations of the previous period of the EU budget. This will be a risky decision that will significantly increase gas consumption. The government should review these plans and abandon projects that do not contribute to climate neutrality,” said Raluca Petcu, Fossil Gas Campaign Coordinator at Bankwatch Romania.

The full report can be read here

And in Poland, such gas projects as the import terminal in Gdańsk or the subsidy scheme for the installation of its own gas plants can receive more than 2 billion euros.

The last year and a half has shown us that fossil gas is not a safe or affordable source of energy. But governments still have the opportunity to use European funds to expand gas infrastructure, because European funding allows it. As long as EU funding laws allow gas projects to qualify, they will leave Europe vulnerable to future fossil fuel crises due to supply cuts or rising prices, according to an analysis by the CEE Bankwatch Network.

“Any project or scheme that adds new gas consumption runs counter to EU policy efforts to drastically reduce gas consumption by 2030,” the report said.

“Governments trying to use EU public money for fossil gas projects that will operate long after 2050 are doing so at the expense of their own citizens. Any fossil gas project paid for with European funds implicitly reduces critically needed investments in energy efficiency and renewables in Poland, Romania and across Europe,” explained Gligor Radecic, Fossil Gas Campaign Coordinator at CEE Bankwatch Network.

European public funds can play an important role in achieving the continent’s energy transition. For this to become possible, the European Commission must adopt rules that exclude from public funding investments in gas infrastructure or any projects that will lead to an increase in gas consumption.