Reshuffled MidCat pipeline puts sustainability first - at the cost of energy independence?

From MidCat to H2Med

One of the biggest challenges for Europe to replace Russian gas is to get gas and hydrogen from southern to central Europe. When pressure from Berlin and Madrid at the height of the energy crisis brought the MidCat pipeline back into the spotlight after years at the back of the drawer, very few believed the project would be greenlit in its original shape and form as rapidly as many demanded – especially given Macron’s frontal opposition. As initially designed, the gas pipeline would connect Spain and France through the Pyrenees, inaugurating a new gas export route from the infrastructure-ready Iberian Peninsula to the rest of the continent. This way, Europe would use Spain’s six regassifying plants (out of Europe’s total twenty) to import liquified natural gas (LNG) and diversify away from Russian supplies. Madrid found an ally in German Chancellor Scholz, who quickly vowed to sponsor the project and elevated pressure on France to greenlight its construction, in spite of the environmental and competition considerations that held Paris back.  Despite promises by the French government that it would reconsider the project, Paris, Madrid and Lisbon announced in October that they were abandoning the MidCat project to replace it with a blurred underwater “green energy corridor” between Barcelona and Marseille, which was subsequently renamed BarMar.

The corridor was initially designed for the transportation of natural gas in line with plans for the diversification of energy sources. Following technical consultations, and in yet another turn of events, Spain, France and Portugal rebaptised the project as “H2Med”, scrapping its gas focus altogether. The 400 km-long, 2 km-deep hydrogen corridor will now only transport green hydrogen (in hopes of receiving up to 50% EU financing) and come into operation in 2030, at the earliest. It will be accompanied by a second interconnection, the so-called CelZa, between the Portuguese city of Celourico da Beira and the Spanish city of Zamora.

Third time’s a charm – or is it?

As Emmanuel Macron, Pedro Sánchez and Antonio Costa met last Friday in Alicante and agreed on the calendar and sources of financing for the infrastructure, one thing became clear: there are winners and losers to the burial of MidCat and the redesigning of BarMar. On the one hand, there is France, which has not hidden its satisfaction at the paralysation of the gas pipeline and its reconceptualization into a green hydrogen infrastructure. Officially, France is hiding behind the environmental impact of the project, but in reality, Paris is not unhappy to have interrupted Iberian plans to make Spain and Portugal an energy hub from 2030. On the other hand, there are Spain and Portugal, which, encouraged by Scholz’s unequivocal backing, underestimated the strength of France’s disapproval. Their overconfident bid to invest in gas infrastructure is unlikely to position the Iberian Peninsula as an LNG entryway into Europe. Then there is Germany, whose persistent attempt to seal a deal on MidCat to get their hands on gas from non-Russian sources has crystallized a deeper isolation among EU partners. Finally, the European Commission can congratulate itself as H2Med fits the hydrogen focus entrenched in RePowerEU. It is estimated that the corridor could potentially transport as much as 10% of the total renewable hydrogen set as a target for 2030. In other words, H2Med might be just what Commission President von der Leyen needed to demonstrate to her detractors that her hydrogen ambitions set forth in RePowerEU are in fact not as unrealistic as many claim. Yet not all is won for the Commission. Von der Leyen has also witnessed how, on this project specifically, domestic considerations have prevented a quicker agreement to more swiftly respond to Russia’s energy blackmailing.

So, is H2Med real? The EU has a history of ambitious political projects which never materialised, the failed Nabucco gas pipeline just being one example. In the end, markets will decide. For now, the project will still need to overcome a myriad of trans-European regulatory and impact assessment hurdles, including clearing doubts concerning the effects on maritime biodiversity. While MidCat was never going to solve the crippling energy crisis alone, H2Med will certainly not represent a short-term contribution to Europe’s energy independence.

Pepe López-Rúa Taboada is a consultant based in Brussels. He has a background in Law and International Relations and has specialized in EU Competition Law. At Flint, he works in a range of sectors with a focus on energy, competition, sustainability, and transport. This blog post was written with input from Partner and MD Europe Gregor Kreuzhuber and Senior Advisor Carlos López Blanco. To find out more about how Flint can help you navigate the risks and opportunities of these developments.

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