The issue of energy interconnection is not new. As timely as it seems to have become following the Russian invasion of Ukraine, talks around the need to accelerate progress towards an Energy Union have been around for over a decade. In 2002, the European Commission recommended that Member States increase interconnections to a minimum of 10% of their total installed capacity. The subsequent Russia-Ukraine-Europe gas disputes in 2006 and 2009, and more particularly the invasion of Crimea in 2014, led the Commission to increase this target to 15% for 2030. In March 2015, then-leaders François Hollande, Mariano Rajoy, Pedro Passos-Coelho and Jean-Claude Juncker met in Madrid for the Energy Interconnections Links Summit. In their Madrid declaration, the European Commission, France, Spain and Portugal acknowledged the Iberian Peninsula as an electrical island and vowed to multiply their efforts to reach the abovementioned interconnection objectives. On the gas chapter, renewed diversification concerns in the wake of the Crimea invasion revitalised a long-pursued pipeline known as MidCat, conceived to connect the Catalan Pyrenees to France. All four parties recognised it as a “priority project” and committed EU funds to its completion. Eight years later, not only have works around the construction of MidCat not started, but subsequent government oscillations and backpedalling have since then left the pipeline project at the bottom of the drawer… until Germany laid eyes on it.
In 2022, diversification urges have brought the MidCat back into the spotlight. With Europe’s energy limitations exposed, Member States’ interconnection has emerged once again as a prerequisite to united energy markets. This time, however, the challenges to completing the MidCat are novel. Contrary to Hollande, President Macron has thus far questioned the project’s viability, stressing that current exchange infrastructures between Spain and France are underused and further underscoring the environmental impact of its construction. Additionally, the Commission has expressed contradictory views, with Von der Leyen going from vowing to sponsor the project to turning a deaf ear to it.
Worryingly enough, some Member States are hardly on the same page on the energy issue.
Spain is seeking to establish itself as a hub. The Iberian Peninsula currently has one-third of Europe’s total liquified natural gas (LNG) plants. Madrid and Lisbon defend the MidCat not only as a short-term response to Russian weaponisation of gas – it would, according to them, only take eight months to complete the pipeline should France greenlight it – but also as forming part of Europe’s long-term move towards green hydrogen. Relying on the two countries’ wind and solar capacity, the MidCat would allow Spain and Portugal to produce hydrogen at a very low cost, subsequently exporting it to Central and Northern Europe.
Germany sees the merit to this view. In a rare move, Chancellor Scholz invited Spanish Prime Minister Pedro Sánchez to an emergency cabinet meeting last August. Scholz described the pipeline as “vital” to move away from Russian supply and pledged to rally European support around its completion. In the last few weeks, German government officials have multiplied statements on the MidCat, raising pressure on France to re-examine it.
Few doubt there is more to France’s early opposition than environmental and efficiency concerns. Completing the MidCat pipeline would effectively imply more competition for French LNG terminals. Fully aware of the push for green hydrogen, France intends to rely on its nuclear energy capacity for hydrogen production. Iberian wind and solar-backed production would represent a new, competing alternative for northern European consumers. Moreover, many French officials have expressed an entrenched resistance to serving as a mere vessel for Spanish and Portuguese gas exports.
The Commission’s calls for a ‘united response’ to the energy crisis practically monopolized Von der Leyen’s State of the Union address in mid-September. Member state frictions at the height of the present energy crisis represent a particularly sensitive topic for Von der Leyen, who risks seeing her common response stance derail because of competing national priorities. Spain, France, and Portugal had announced their intention to initiate talks with Italy for a re-routing of the pipeline should Macron not reappraise his stance. Brussels therefore welcomed France’s recent announcement that it would ‘re-consider’ the project “with fresh eyes”.
In truth, this represents a vague U-turn for Macron, who might fear seeing his ‘Monsieur Europe’ persona diminished. It is still unclear, however, how far he will be willing to go and how quickly France will decide. The upcoming Scholz-Sánchez rendezvous this week will yet again put pressure on Paris. Germany and Spain will hold their first bilateral summit since 2014 in the Spanish coastal city of La Coruña, with energy as the main point on the agenda.
Coincidentally, Von der Leyen inaugurated last Saturday the Gas Interconnector Greece-Bulgaria, a project ten years in the making. The President of the Commission claimed that “Europe has everything it needs to break free from our dependency on Russia – it is a matter of political will.” It remains to be seen whether, on the issue of MidCat, political will and solidarity principles outweigh national considerations.
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, sustainability, and transport. This blogpost was written with input from Senior Advisor Carlos López Blanco and Partner & COO for Continental Europe Thomas Barres-Tastets. To find out more about how Flint can help you navigate the risks and opportunities of these developments, get in touch.