Natural gas projects as a transitional energy source will be financed by the Fair Transition Fund

Investments in facilities that use gas as a transitional energy source will be among the main activities for financing under the Fair Transition Fund. Bulgarian MEPs are satisfied with the compromise reached with the EC to use the funds from the Fair Transition Fund in gas facilities as a transitional fuel in the most coal-dependent regions. This was announced by Tsvetelina Penkova from the Party of Socialists and Democrats (S&D), who together with MEP Andrey Novakov from the European People's Party (EPP) took part in an online briefing related to the discussions in the European Parliament on the Fair Transition Fund. The fund is one of the EU's main instruments for supporting regions in their climate-neutral transition to 2050.

The Fair Transition Fund for Bulgaria is worth 1.3 billion euros. Half of the funds are under the EU Multiannual Financial Framework under the operational programs, and the other under the Recovery Plan, or these are the unprecedented budget of 17.5 million euros for Bulgaria.

Bulgaria is one of the countries that will receive large financial assistance for the most coal-dependent regions. With the prior approval of the EC, these are Pernik, Stara Zagora and Kyustendil. It is possible to expand this scope with the regions of Sliven and Varna, Penkova said. Bulgaria had proposed the inclusion of 8 more in the original three. But the regions were chosen depending on where the investments would have the strongest effect, Penkova recalled. If many regions are added, we will not be effective, we must think about the solutions strategically, she stressed.

The transition to hydrogen is not in the near future, it will take at least 7-10 years

The purpose of this compromise to use gas as a transitional fuel is to be able to gradually develop the infrastructure to such an extent that it can be used to transport hydrogen to ensure safety and energy efficiency to a sufficient extent, said Penkova. It is important that we have enough time to carry out adequate retraining of employees without closing jobs. The truth is that the opportunity to switch entirely to hydrogen, however, is not seen in the next 10 years, Penkova commented. The non-legislative report on the European Hydrogen Strategy will also be discussed this week. Currently, 90% of production in Europe is due to fossil fuels. The most serious developments for hydrogen storage are currently in Germany. Resolving the uncertainties surrounding the storage and transport of hydrogen will not happen in the next 7-10 years, she stressed.

The prospect in the future - TPP to close anyway

That is why it is especially important to see in the strategy that the use of transitional fuel is necessary. One of the specifics of the European Hydrogen Strategy is the creation of a common system for the certification of hydrogen and how it is produced, because much of it is still due to fossil fuels. Serious funding for research and innovation will be needed in this direction.

Legislation establishing the Fair Transition Fund will be voted on Tuesday. According to Andrei Novakov, there is still an opportunity to make a smooth transition. At present, 50% of electricity is still generated from coal. The prospect of giving up coal and using it in thermal power plants is not in the near future, Novakov believes. The point is not to be green and poor, but to be able to keep everyone employed in the energy sector in Bulgaria. Unfortunately for some environmentalists, the wind is erratic, solar energy is only during the day. Therefore, currently investing in gas pipelines and in gas as a transitional fuel is the best approach until we build the infrastructure for gas and hydrogen after a long enough time without specifying what is its forecast when we will switch entirely to hydrogen.

One thing is clear, the perspective is that the TPPs should close and this will undoubtedly happen, because the goal is to move completely to a carbon-neutral Europe, Penkova stressed.

For what investments should the funds go to the fund

Funds from the Fair Transition Fund can be directed to small and medium-sized enterprises for energy efficiency and the use of alternative energy sources in production, better technologies to reduce losses. Another feather would be to invest in batteries to store electricity. More opportunities lie in modernizing existing power plants than building new ones, Novakov said. The goal is to have targeted investments in these three regions. Solar and wind farms are playing an increasing role in the energy transition, so it is imperative to consider options for storing this energy, such as batteries. According to him, this depends on two factors whether the government will decide to invest in such pilot projects and do these regions have the opportunity to do so. Last but not least, funds will be used to retrain those employed in the coal regions.

For the direct support of TPPs

According to Novakov, the fund could finance investments in thermal power plants to capture and store carbon dioxide, which is more environmentally friendly than the use of coal. Asked by 3eNews whether and to what extent investments of private companies in this field should be supported due to the criticism of environmentalists and energy experts, Novakov commented that people do not care if they are employed in private or state TPP if they lose their jobs. Therefore, he sees nothing wrong with supporting business ventures in this direction.

The point is not so much to avoid direct state aid as to prepare a mechanism for business financing of these initiatives. President Rumen Radev's cabinet should not neglect this issue, but pay serious attention to it, Novakov said. According to Penkova, businesses are much better prepared for this transition, in progress to use alternative energy sources. She sees nothing wrong with supporting the private sector to move forward.

For the retraining of employees

However, why the transition was not smooth for the region of Kyustendil and TPP "Bobov Dol" and many people lost their jobs is perhaps a question of the fact that the management of the sites did not act in the most adequate way, Novakov believes. The transition concerns all employees, regardless of whether the TPP is private or not. When applying for investments, the state will have an advantage and will receive free technical assistance from the European Investment Bank, Novakov stressed.

Mistakes should not be repeated, a strategic program should be prepared for the retraining of people in these regions, added Penkova. What part would be affected, how many of them are likely to remain employed in the sector and what part need to be retrained, in which sectors, especially in the field of innovation, are all questions that have yet to be answered. At the moment, the MEPs do not have information whether they are working on strategies for economic development of the regions. But it is likely that these strategies will be prepared at the regional level, participants in the briefing said.

The Fair Transition Fund is part of the Growing Regions program, which is being prepared by the Ministry of Regional Development and Public Works, and its funds will only be used once the program is approved. The positive thing is that it will be implemented by the managing body of the program, and will not pass through other institutions and funds, Novakov believes.