Transalpine oil pipeline expansion: REPowerEU funds must not swell the coffers of energy crisis profiteers

published 03.05.2023
authors: Eva Mariničová – project coordinator, Eva Pastorelli – national campaigner at Bankwatch
Using EU funds, the Czech government plans to provide EUR 114 million for the expansion of the Transalpine (TAL) oil pipeline, which links the Italian port of Trieste with refineries in Austria, Germany and the Czech Republic. The project raises concerns about its compliance with EU legislation as well as its environmental and economic sustainability.

Scope of TAL+ project remains unclear

Established in 1967, the TAL Group, which operates the existing pipeline, is made up of three oil companies: Austria’s Transalpine Ölleitung in Österreich GesmbH, Germany’s Deutsche Transalpine Ölleitung GmbH and Italy’s Società Italiana per l’Oleodotto Transalpino SpA (SIOT).
The TAL pipeline serves 100 per cent of Bavaria’s needs, 90 per cent of Austria’s and 50 per cent of the Czech Republic’s. In the Czech Republic, the pipeline is connected to refineries in Kralupy and Litvínov through the Ingolstadt–Kralupy–Litvínov (IKL) oil pipeline.
Since the beginning of Russia’s full-scale war in Ukraine, there have been discussions about increasing TAL’s supply to help the Czech Republic and other countries diversify from dependence on Russian oil. The Czech government plans to use a REPowerEU loan to finance the expansion of the pipeline through the TAL+ project, which aims to: 
  • increase TAL capacity by an additional 4 million tonnes of oil per year to replace Russian oil supplying the Czech market (in 2021, the Czech Republic imported about 6.8 million tonnes in total, about half via this route); 
  • increase the oil storage capacity of tank farms along the IKL pipeline, which connects TAL with the refineries in Kralupy and Litvinov; and
  • modify the Druzhba pipeline to replace Russian oil with supplies from other sources and to eventually transport fossil gas or non-fossil fuels (despite the fact that the technical and economic feasibility of this plan remains unproven).
The Italian government is also looking to develop its fossil energy generation capacity as part of the TAL+ project, possibly also courtesy of REPowerEU funds. However, due to an overall lack of transparency, it is unclear whether the Italian arm of the project will receive any form of public subsidy.
Plans for the Italian section of the pipeline, which flows through the Friuli Venezia Giulia region, involve the construction of four fossil gas combined heat and power (CHP) plants at pipeline pumping stations – each expected to produce 7.7 megawatts (MW) of electricity and 7.2 MW of heat – along with investments in Trieste’s port and storage facilities.
While the generated electricity will be used for the pumping stations along the pipeline, the generated heat is planned to raise the temperature of crude oil by 1 °C to increase flow speed, delivering supposed energy savings and environmental benefits. The investment is reported to cost EUR 58 million.

Feeding the fat cats

By including this project in the REPowerEU chapter of its recovery plan, the Czech government will be using EU money to subsidise even further the already highly profitable oil industry. In particular, this will benefit the TAL Group, whose shareholders include some of the largest oil companies in the world, such as OMV, Shell, Rosneft, ENI, C-BLUE BV (Gunvor), ExxonMobil, Mero, Phillips 66/Jet Tankstellen and Total. 

Perpetuating fossil fuel lock-in

The increased capacity planned for the Czech Republic aims to replace the oil currently imported from Russia, which represents 50 per cent of the total oil supply. But simply changing one oil source for another will do nothing but prolong the ongoing climate crisis, which has already severely impacted the country’s environment, economy and society. This course is also incompatible with the EU’s goal of reducing greenhouse gas emissions and achieving climate neutrality by 2050. 
The Czech Republic needs to substantially step up efforts to decrease oil demand, not to satisfy it. An analysis by Charles University in Prague, which, among other things, examined projected fuel consumption by the transport sector in the Czech Republic between 2015 and 2050, found that there is unlikely to be almost any decrease in the need for fossil fuels by 2025 and only a small decrease by 2030. Instead of supporting a project that effectively leads to carbon lock-in, the Czech Republic should use REPowerEU money to finance measures that decarbonise the transport sector. 
Likewise, the Italian arm of the project substantially undermines Friuli Venezia Giulia’s regional decarbonisation strategy to 2045. In fact, the additional greenhouse gas emissions from the four new cogeneration plants would be equivalent to the emissions of about 40,000 households of four or more people per year.

Inadequate environmental assessment

On 22 September 2022, the environmental organisation Legambiente sent a letter to the former Italian Minister for Ecological Transition requesting the revocation of authorisations granted to three of four ‘high-efficiency cogeneration projects’ submitted by SIOT to the regional administration in Friuli Venezia Giulia.
The TAL+ project and connected investments have been split into individual units for the purpose of environmental assessment. However, this prevents a comprehensive evaluation of the project’s cumulative impacts on the environment, with no consideration given to costs, benefits or reasonable alternatives.

Lack of consultation results in public opposition

Local concerns over the expected environmental and climate impacts of the project and the absence of any public consultation with affected municipalities have led to protests and the submission of petitions to the regional administrative court in Friuli Venezia Giulia and to the Italian government. The court recently rejected an appeal filed by the municipality of Cavazzo Carnico requesting the annulment of the authorisation for the construction and operation of the cogeneration plants. Despite this, Legambiente, supported by local communities and activists, is set to file a new appeal on different grounds.
On 24 March 2023, the current Italian Minister for the Environment and Energy Security, Gilberto Pichetto Fratin, issued a statement, claiming SIOT’s plans are ‘consistent with energy-saving objectives and with no detrimental effects from an environmental point of view, being also necessary and strategic in view of the critical situation caused by the Russia–Ukraine conflict’.

Recovery funds must not be used to undermine climate action

Overall, there is a high risk that the project will undermine the climate commitments of both the Czech Republic and Italy. Using public money to back a private consortium made up of some of the biggest oil companies in Europe is not acceptable. Recovery and resilience funds must not be allocated for this project.
The Czech recovery plan lacks a concrete strategy for the decarbonisation of the transport sector. This project will not contribute to reducing oil consumption but do the opposite. EU money must not be spent on projects that go against Green Deal objectives.
The European Commission, which is responsible for assessing whether the initiatives proposed under the Czech and Italian recovery and resilience plans achieve the objectives of green transition, must not allow recovery funds to be used for these projects.
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