The European Investment Bank (EIB) approved a €1.5 billion loan for the Trans-Adriatic Pipeline (TAP) on Tuesday. The project is the final section of a planned Southern Gas Corridor stretching from Azerbaijan to Italy.
The Southern Gas Corridor includes several different energy projects with a total investment of around €32 billion. The project aims to improve the security and diversity of the European Union’s energy supply by expanding infrastructure that can bring gas to the EU from different regions, including the Caspian Basin, Central Asia, the Middle East, and the Eastern Mediterranean Basin.
Currently, Russia’s Gazprom supplies one-third of Europe’s gas market, and dominates markets in the East. The EU has raised concerns that Gazprom is taking advantage of this position and overcharging central and eastern European countries.
EIB Vice President Andrew McDowell told Reuters the bank was persuaded by the argument “that it is simply not fair to leave large parts of Europe, particularly central and south eastern Europe, at the mercy of a single supplier”.
McDowell also said that TAP would displace coal-fired power generation in central and south eastern Europe, offset declining European production, and reduce the EU’s dependence on Russian gas. The project would be Europe’s first non-Russian gas pipeline in ten years.
However, some are sceptical about TAP’s benefits. Last week, European environmental group CEE Bankwatch released a study questioning claims that TAP would help the EU meet its climate goals. The study found that the Southern Gas Corridor would have a climate footprint comparable to or even larger than that of coal power, largely due to unintended releases of methane and other potential leaks.
Anna Roggenbuck, EIB policy officer at CEE Bankwatch, commented in a press release that the findings of the study “cast serious doubts over the EU’s commitment to tackling the climate crisis as a party to the Paris Agreement”.
According to Forbes, TAP said it was not consulted for the study and questioned the data used, saying it does not appear to be aligned with their data. The company stands by its claim that the pipeline will benefit the environment by displacing coal power.
Campaign groups also expressed concerns that pumping more gas into Europe could disrupt EU efforts to increase the share of renewables in its energy mix. They have said that funding the project, which is backed by Azerbaijan, would go against the European Bank for Reconstruction and Development and EIB’s principles. Months of protests stemming from environmental concerns caused delays for the project in Italy. Critics have pointed out that neither the EIB nor the European Commission have published any climate impact assessment for the project.
Despite the criticism, the European Bank for Reconstruction and Development is expected to approve a similar loan for TAP in the next few months. In October, it approved a loan of nearly €410 million for the Trans-Anatolian Natural Gas Pipeline, through which the first gas flows are expected later this year.
The EIB’s announcement could also prompt further investment from the private sector. McDowell said he hoped the decision would pave the way for the pipeline to seek further financing from the market in the next few weeks.
Although the TAP project is in a strong position to move ahead, environmental campaigners have said they will continue to fight the pipeline’s construction.