MidCat: Competing visions for Europe’s future energy mix
As Europe confronts a power crisis and is looking to reduce reliance on Russian gas, some on the continent are eyeballing the Iberian peninsula as a partial solution. In order to move away from Russian gas supplies, importing liquified natural gas (LNG) will be essential. But while LNG terminals in North Western Europe are running at almost full capacity, Spain’s are underutilized. The main reason is that with the existing pipelines, Spain is ill-connected to the European gas market.
MidCat, a stalled pipeline project between Spain and France, could provide additional capacity to pump gas from Spain and Portugal to the continent. The project, which links the Spanish city of Hostalric to the French city of Barbaira, would allow for an extra 7.2 BCM of natural gas to be exported from Spain to France, almost twice its current export capacity. Current pipelines are only able to handle about 10% of Spanish LNG import capacity.
In the last few months, it has been Germany together with Portugal and Spain that have pushed for the construction of such a pipeline. According to the Spanish environment minister Ribera, Spain's side could be finished in eight to nine months. Moreover, she argued that it could be used to export not only gas from LNG terminals, but also Algerian gas as well as hydrogen in the future.
France, however, opposed its construction as it argued that the project would not be viable. According to Macron, the existing pipelines are only running at half capacity (53%) and gas is mainly flowing from France toward Spain. On top of that, the pipeline would take years to become operational and, as such, would not offer a short-term solution. The French argue that Spanish claims about the project do not take into account opposition, which would negatively affect the construction timeline. Combined with the fact that the EU plans to phase out fossil fuels, the project, it is argued, seems unjustified.
The current debacle, however, could also very well be about French ambitions. It is likely that France wants in on the LNG imports and seeks to fend off Spanish competition. France would rather import the LNG themselves or build new terminals, than invest in a new pipeline. More importantly, France is seeking to protect its nuclear industry. In the long term, France is seeking to revive its nuclear industry in a bet for the green energy future. Maintaining the gas bottleneck between France and Spain, would allow for the French to produce hydrogen from nuclear energy, while minimizing Spanish competition of hydrogen made from renewables.
Cost could be another reason for French opposition. The French system has to be capable of handling the gas. Right now, however, the internal gas system is fragmented, and it would take a great effort to solve it. Moreover, the project is estimated to cost over 3 billion euros and additional investment between the Franco-German border will be required to make the gas suitable for German usage. Yet, the benefits tilt more toward the German and Spanish side. Hence, there seems no obvious reason for the French to bear the costs. Especially considering that the Germans are partly to blame for their own energy crisis, by closing down nuclear plants and having invested heavily in gas from Russia.
Some spanish officials believe Macron may also be looking for something in return. Funding may be one requirement. Back in 2019, the project was eligible for EU funding, but suspended because of (non-)profitability, costs, environmental reasons and lack of necessity. Another requirement may be German energy policy. Germany currently is a net electricity exporter to France, but is not helping in the current crisis by shutting down its nuclear reactors. European countries, including France, would be more inclined to help if Germany were to change its nuclear policy. Considering Macron’s statements that France would be open to changing its position on the matter, it would be likely they are angling for a quid pro quo.
Amidst Ursula von der Leyens’ calls for greater energy solidarity, the debacle around MidCat shows that there is competition between types of energy and that projects are not assessed on a laissez faire basis anymore. Pro-MidCat countries already announced that a sub-mediterranean pipeline between Barcelona and Livorno in Italy would be an alternative, albeit a more costly and impactful one. France and Spain are well aware of the consequences of lock-in. Hence, their quest for European energy security has almost inevitably led to competing visions.