Irish Court of Appeal hears that Shannon LNG has "voluntarily" dropped its 4th PCI Project status of "overriding public interest" in its new planning application for a Fracked Gas Import Terminal on the Shannon Estuary

On January 27th, speaking about Shannon LNG's new planning application lodged on August 27^th 2021 with An Bord Pleanála,  Court of Appeal Judge, Caroline Costello,  said that  "the Developer was eschewing anything to do with PCI and was going in under SID" [Strategic Infrastructure Development]. The news that Shannon LNG has seemingly and surprisingly voluntarily disavowed being evaluated as a PCI project while still retaining PCI Status has been met with surprise by campaigners against the US fracked gas import terminal proposed in Tarbert, County Kerry by Shannon LNG's owners New Fortress Energy.

 
The Court of Appeal was hearing an appeal  by Friends of the Irish Environment on the legality of Shannon LNG being added to the 4^th PCI List without any sustainability criteria - which includes Climate Impacts -  being assessed by neither Ireland nor by DG Energy as was obliged under the EU PCI Regulation 347/2013 (also known as the TEN-E Regulation).

The Benefits of PCI Status

The main advantage for Shannon LNG being assessed as a PCI Project in its planning application is the status of "overriding public interest" that PCI accreditation affords.

Projects proposed in an EU-designated Special Area of Conservation (SAC) such as the Lower Shannon Estuary SAC, as is the case with Shannon LNG, have obligations not to damage protected habitats. Articles 6(3) and  6(4) of the EU Habitats Directive have the consequence that if the damage a project would do to an SAC area cannot be mitigated, then the projects can only get development consent if there are imperative reasons of overriding public interest. Article 7 of the PCI Regulation gives them that "overriding public interest" status automatically. The Irish Whale and Dolphin Group (IWDG) were contracted by Shannon LNG to assess the impact on the dolphins and its input will now be critical in determining if the level of damage that will be done to the habitat of the protected resident bottlenose dolphins by the proposed project can be mitigated, especially if it is true that, once disavowed, Shannon LNG cannot claim PCI status advantages at a later stage.

Further Evidence that Shannon LNG is not a PCI Project for planning purposes

On March 25th, 2021 in a pre-application meeting with Shannon LNG, An Bord Pleanála noted in the minutes  that the "Prospective applicant clarified that it is not a PCI project".

From further documents obtained under an AIE request it was revealed that on August 18th, 2021, An Bord Pleanála, the nominated Competent Authority for PCI projects in Ireland,  confirmed to the European Commission's DG Energy  that Shannon LNG was one of the

"Number of PCIs subject to Article 19 (second paragraph) of Regulation No 347/2013, i.e. PCIs for which an application file was submitted before 16 November 2013, and to which provisions of Chapter III do NOT apply"

Chapter III of the PCI Regulation concerns exclusively the permit-granting, public participation and priority status of PCI Projects.

Was Shannon LNG's disavowal of PCI advantages really voluntary?

It could be argued that An Bord Pleanála informed DG Energy that Shannon LNG, although on the 4th PCI list, would not qualify for the priority status advantages of a PCI project in the planning application because of Article 19 second paragraph of the EU PCI Regulation, which states:

 
"For projects of common interest in the permit granting process for which a project promoter has submitted an application file before 16 November 2013, the provisions of Chapter III shall not apply."

Shannon LNG lodged its new planning application on August 27th 2021 but its original planning application file had been submitted on September 24th, 2007, which was several years before the 2013 date after which it would automatically qualify as overriding public interest during the planning consent process. There are some suggestions that in disavowing PCI advantages the company was motivated by a concern that it could be used as grounds for losing development consent in a future judicial review of any development consent obtained. Others suggest that there is still a possibility that Shannon LNG can assert its PCI status at any stage because there is no provision under the PCI Regulation for a scenario in which a project promoter could automatically disavow its PCI Status, but this seems a problematic scenario. 

Yet another reason for Shannon LNG disavowing its PCI advantages may be that it de-risks a negative outcome from the case and renders the outcome of the case moot.

The Court of Appeal Case against Shannon LNG being added to the 4th PCI List

Judge Caroline Costello, along with Judge Brian Murray and Judge Séamus Noonan reserved judgement on the case. The judges requested input via an updated affidavit within 2 weeks on the advantages remaining  to Shannon LNG retaining 4^th PCI List status, once the new 5^th PCI list comes into force in the next few months.

However, questions arise as to whether or not Shannon LNG still retains any benefits once the 5^th PCI List comes into force. The case will not be referred to the European Court of Justice if the outcome is moot. 

EU Funding of Projects on the 4th PCI List

The European Investment Bank (EIB) ban on fossil fuel funding had a derogation up to the end of 2021 to continue funding projects on the 4^th PCI List.  The EIB states on its website (page 9):

"Can the EIB finance gas projects identified as EU Projects of Common Interest (PCI)?  The EIB can only finance gas PCI projects that were included in the 4th EU PCI list, provided they have EU co-financing and Board approval for their financing is obtained before the end of 2021".

In October 2019, the then Minister for Climate Action and Environment Richard Bruton, stated that The Irish Government would not support any grant application for EU funding by the Shannon liquefied natural gas (LNG) project until “a security of supply review has been completed and considered by the Government and by the Dáil”

Even though Shannon LNG may not have obtained funding from the Connecting Europe Facility (CEF), other projects on the 4^th PCI List have already received funding from the European Investment Bank (EIB) based on their PCI status. 

From the EIB list of projects the EIB has funded or is currently assessing it can clearly be seen that the EIB signed off on the Cyprus LNG floating terminal which was on the 4^th PCI list on November 30th, 2020 for a total funding of €150 million out of a total project cost of €312 million and the documents submitted by the project developers rely on its PCI status for funding.

Separately, it is reported that the Cyprus LNG terminal also obtained a €101 million grant for the CEF with the Electricity Authority of Cyrus contributing a further €43 million to the project and the European Bank for Reconstruction and Development (EBRD) providing another €80 million.

CEF can give up to 50% of the funding to PCI Projects. With the study by consulting firm Artelys for the European Climate Foundation published on January 20th 2020  finding that “the 32 natural gas infrastructure PCI projects combined are calculated to come at a cost of €29 billion” it is clear that there has already been a significant level of funding allocated for projects which have been added to the PCI list without any proper sustainability assessment, which includes climate impacts.

It is now a concern that the impacts of projects having been added to the 4^th PCI list could have resulted in a fraud which would have permitted funding from the European Investment Bank which they would otherwise not have been entitled to.

The EIB website states "The EIB has a zero tolerance policy on fraud or corruption. To report allegations of fraud and corruption relating to EIB-financed projects, please contact the Fraud and Investigation division. All complaints will be treated as strictly confidential and handled in line with the EIB investigation procedures and the Anti-Fraud Policy."

US Funding of US gas Projects in Europe

On March 25th, 2019 the U.S. House of Representatives passed a bill (the "European Energy Security and Diversification Act of 2019" ) that, would allocate hundreds of millions of US dollars in federal funding over two years to public and private energy development projects in Europe and Eurasia, including:  "natural gas infrastructure, such as interconnectors, storage facilities, liquefied natural gas import facilities, or reverse flow capacity" which " have already been identified by the European Commission as being integral for the energy security of European or Eurasian countries" and which "have the potential to use United States goods and services"

The United States' European Energy Security and Diversification Act of 2019 became law on December 20^th 2019 and targets PCIs as outlined in a January 2020 article by the Nato Association of Canada.

There are indications that even if the Gibbstown Logistics Center, owned by Shannon LNG's owners New Fortress Energy, and operated by their subsidiary Delaware River Partners, has not directly received funds  from the US government, nevertheless, public taxpayer  funds were used from a New Jersey State transportation fund to build a by-pass from the highway into the Gibbstown Logistics Center for the LNG trucks as well as other trucks to use to enter and leave the terminal - the same terminal that would export US fracked gas to Ireland.

Legal direct State Aid by the US government for fracked gas import terminals in Ireland and throughout Europe which are on the PCI list, leads even more weight to the argument that the PCI accreditation obtained via the PCI Administrative Act  have both legally binding and external effects on a worldwide, geopolitical scale and it would seem that this is a benefit that goes beyond the lifetime of their accreditation on the 4th PCI List.

Obligation of "highest possible priority" of PCI Projects in National Infrastructure Plans

Shannon LNG would seem to risk losing all the advantages of PCI status immediately once the 5^th PCI list comes into force as regards its current priority in the infrastructure plans and even county development plans?

Shannon LNG has been listed on the Gas Networks Ireland (GNI) Ten Year Network Development Plan 2020 (TYNDP) published in September 2021. Article 3(6) of PCI Regulation 347/2013 states

"Projects of common interest included on the Union list pursuant to paragraph 4 of this Article shall become an integral part of the relevant regional investment plans under Article 12 of Regulations (EC) No 714/2009 and (EC) No 715/2009 and of the relevant national 10-year network development plans under Article 22 of Directives 2009/72/EC and 2009/73/EC and other national infrastructure plans concerned, as appropriate. Those projects shall be conferred the highest possible priority within each of those plans." 

In its submission to the new planning application by Shannon LNG to An Bord Pleanála GNI refers to its long term resilience study 2018 in which LNG terminals are given priority. One has to wonder to what level this position was influenced by the PCI Status of Shannon LNG. PCI references to Shannon LNG must be removed from future TYNDPs as that is giving an unfair advantage to Shannon LNG. The Resilience Study states that its cost-benefit analysis is consistent with  the ENTSOG (European Network of Transmission System Operators) cost-benefit analysis as including sustainability. With the fact that there was no proper sustainability of any of the candidate 4th PCI Listed projects having now been blatantly exposed through the PCI case in the Court of Appeal there is now a clearly strong argument that this Resilience Study is distorted to the advantage of the proposed Shannon LNG fracked gas import terminal.

The resilience study stated: "The analysis, which provides a relative comparison of potential mitigation measures, is consistent  with the methodology used by the European Network of Transmission System Operators (ENTSOs) for gas and electricity. This ENTSOG methodology considers capital and operational costs, plus security of supply and sustainability benefits".

It now seems likely that An Bord Pleanála could decide to put the planning application in a holding pattern until the energy review is completed. This is expected to be completed sometime around July.