Recovery Watch – How fossil fuel lobbying is siphoning Covid recovery funds through hydrogen

Over €8 billion is being invested in hydrogen and “renewable gas” projects in southern Europe using EU Covid-19 recovery funds, thanks to extensive lobbying by the fossil fuel industry, a new report has found.

Recovery Watch is a collaborative project between the European Network of Corporate Observatories and the Fossil Free Politics Campaign

Read the full report here


Summary of the report

EU Covid-19 recovery funds are supposed to drive the ‘green transition’ and move us beyond fossil fuels – but industry lobbying at both national and EU level has ensured oil and gas firms and utilities remain some of the biggest beneficiaries in Italy, the Spanish State, Portugal and France.
The European Commission said it wanted to avoid giving billions in bailouts to the fossil fuel industry. Despite sending mixed signals, to its credit, in these four cases it has tried to exclude direct financing for fossil fuel projects. However, the hugely outsized role for hydrogen and renewable gases in national recovery plans has thrown a lifeline to the fossil fuel firms involved, as well as their main product: fossil gas. Fossil fuel companies are already involved in more than 80% of Europe’s renewable-based hydrogen projects and see the technology as a trojan horse to usher in fossil-based hydrogen.
At least €8.3 billion is available for hydrogen and renewable gas projects across the four countries, thanks to a concerted lobbying effort by the fossil fuels industry including a prolific number of lobby meetings, high-profile events with decision makers and actually being invited to draft – and implement – national recovery plans. Not only is this handing public money to an industry notorious for trying to block and delay climate action, but an over-emphasis on hydrogen could lock Europe into decades of fossil fuels.
In Italy:

Spending on hydrogen in the recovery plan quadrupled between drafts thanks to fossil fuel lobbying for ‘blue’ fossil hydrogen with carbon capture and storage (CCS), before the Commission pulled EU funding for fossil fuel projects. However the Italian government is expected to still fund them.

The government is spending more than €4.5 billion of EU funds on hydrogen and biomethane but only €4 billion on improving Intensive Care Units (ICUs) and medical equipment.

The Italian government had at least 100 meetings with the fossil fuels industry regarding the recovery funds, with Eni, Enel and Snam accounting for half of them.

Eni has been lobbying for ‘blue’ fossil hydrogen to decarbonise transport, but in fact admitted it would use the fuel in its refineries, ie. to create petrol and diesel.

In the Spanish State:

The Renewable Hydrogen Roadmap has €1.6 billion dedicated to it, 50% more than the budget for improving the national health system. But overall, companies could look for funding for hydrogen projects from a pot of €17.8 billion (not specifically dedicated to hydrogen but open to it).

The Big Four accountancy firms have been involved in drafting how the recovery funds will be spent at national level and will now be involved in implementing plans. As their clients include the same big energy companies applying for funds, this represents a glaring conflict of interest.

Endesa, Naturgy and Iberdrola alone have proposed projects worth €53 billion, which if built would account for more than 70% of Spanish recovery funds.

The drafting of the spending plan has excluded civil society while the result is strikingly similar to the draft proposed by the country’s main business lobby.

In Portugal:

-The implementation of the national recovery plan, which was drafted by an oil and gas executive, will now be overseen by that same executive.

Only 18.4% of Portugal’s recovery plan is specifically targeted towards a ‘green transition’, despite the government and EU claiming a total of 38%.

The high frequency of meetings between the country’s biggest fossil fuel firms and ministers raised enough suspicion to open a criminal investigation into one of the biggest proposed hydrogen projects.

In France:

According to the President of France Hydrogène, the main trade group coordinating hydrogen lobbying in France, “the key aspects” of its hydrogen-heavy recovery plan roadmap “were taken up by the French government”.

Lobby spending by France Hydrogène has doubled year-on-year since 2017, reaching €200,000-€300,000 in 2020, while yearly registered lobby activities around hydrogen have increased five-fold from 9 in 2017 to 47 in 2020.

France is not spending any of its EU recovery funds on additional renewable electricity to meet the demand from its ‘green’ hydrogen programme.

The fossil fuels industry is playing a major role in France’s recovery plans and is strongly behind hydrogen, thanks to the government creating numerous public-private partnerships such as the all-industry National Hydrogen Council.

At the EU level:

Fossil fuel lobby groups in Brussels are making extensive use of the revolving door, hiring staff previously with the European Commission, European Parliament and EU Permanent Representations.

The industry has been pushing the Commission to adopt a ‘technology neutral’ approach to recovery fund spending so their pet projects, like Carbon Capture and Storage (CCS) and ‘blue’ fossil hydrogen, can receive public money.

Despite the Commission u-turn on allowing EU funds for Italian ‘blue’ fossil hydrogen with CCS, EU Commissioners for Climate and Energy have both publicly backed the technologies.

Freedom of Information requests have revealed that high-level European Commission staff and the EU Recovery Task Force team have been regularly sharing platforms with the oil and gas industry, as well as encouraging their participation in the recovery funds.

As the report shows, industry has been aggressively lobbying at the national and EU level not just for ‘green’ hydrogen and biomethane but also for ‘blue’ hydrogen and CCS. And despite the Commission appearing to exclude them from EU recovery funds, there are still other European and domestic funds available to support these fossil fuel projects. Expect lobbying at the national level to intensify, with recovery funds being released by the EU from the second half of July.

The only path to a fossil-free recovery that prioritises social and environmental justice, rather than pouring more public funds into polluting corporations’ pockets, is to cut the fossil fuel industry out of public decision-making processes at the national, EU and international level, similar to existing restrictions on the tobacco industry.

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