EU to boost funding for energy projects

BRUSSELS, Oct. 21 (UPI) -- The European Commission has proposed new energy infrastructure regulations aimed at boosting funding for projects that serve the European Union's common interest.

Commission President Jose Manuel Barroso and EU Economic Commissioner Olli Rehn told reporters in Brussels Wednesday they're launching an ambitious bid to overhaul and refocus EU rules on electricity transmission systems and natural gas pipelines.

The centerpiece is the creation of a $69 billion "Connecting Europe" financing facility -- $12 billion of which would be used to encourage energy grid projects the EU deems necessary to contribute to the growth of a trans-European infrastructure.

Such infrastructure efforts, the commission said, "would lead to more secure supplies at affordable prices, while helping the EU reach its climate change objectives."

"Targeted investments through the Connecting Europe Facility will help to close the missing links in Europe's infrastructure," he said.

The $69 billion fund would be used to encourage investors from the private and public sectors to help finance such projects, some of which would otherwise not be built, and would also help achieve the EU's growth and jobs goals contained in its Europe 2020 strategy.

The EU is "making a down payment for Europe's future growth and jobs" through the infrastructure investments, as well funding for cross-border transport links and high-speed digital networks, Barroso said.

Planners, he added, have "identified 11 energy corridors that cover all parts of the EU" that will receive priority consideration for new project funding, including efforts related to a new "southern corridor" natural gas pipeline and offshore wind farms in the North Sea.

London oil and gas analysts ICIS Heren reported the EU has designated north-south interconnections in Western Europe as well as north-south and east-west interconnections in central and southeastern Europe as high-priority electric grid corridors.

Its favored natural gas corridors, meanwhile, include north-south interconnections in western Europe as well as in central, eastern and southeastern Europe, with pipelines running through the Baltic, Adriatic, Aegean and Black seas.

The commission also announced Wednesday it had launched the Europe 2020 Project Bond Initiative, in which it will partner with the European Investment Bank to offer a risk-sharing element for private investors.

A pilot phase will be undertaken in which up to $316 million from the EU budget will be used to leverage private investment up to $6.2 billion for up to 10 projects in the energy, digital broadband or transportation fields, the Sofia News Agency reported.

Those chosen, it said, would be at a relatively advanced stage in the financing process or would be looking refinancing after the construction phase. The European Investment bank would manage the pilot projects.

ICIS Heren reported the new regulations are likely to be adopted by the end of 2012 and come into effect the next year. Portions of the bill, however, could be scrapped during negotiations between the European Council and the European Parliament.