The role of Projects of Common Interest in reaching Europe's energy policy targets

The European Union aims to achieve climate-neutrality by 2050, with interim 2030 targets including 55% greenhouse gas emissions reduction compared to 1990 levels, 10 Mt p.a. of a domestic green H2 production, and 50 Mt p.a. of domestic CO2 injection capacity. To support these targets, Projects of Common and Mutual Interest (PCI-PMI) - large infrastructure projects for electricity, hydrogen and CO2 transport, and storage - have been identified by the European Commission. This study focuses on PCI-PMI projects related to hydrogen and carbon value chains, assessing their long-term system value and the impact of pipeline delays and shifting policy targets using the sector-coupled energy system model PyPSA-Eur. Our study shows that PCI-PMI projects enable a more cost-effective transition to a net-zero energy system compared to scenarios without any pipeline expansion. Hydrogen pipelines help distribute affordable green hydrogen from renewable-rich regions in the north and southwest to high-demand areas in central Europe, while CO2 pipelines link major industrial emitters with offshore storage sites. Although these projects are not essential in 2030, they begin to significantly reduce annual system costs by more than EUR 26 billion from 2040 onward. Delaying implementation beyond 2040 could increase system costs by up to EUR 24.2 billion per year, depending on the extent of additional infrastructure development. Moreover, our results show that PCI-PMI projects reduce the need for excess wind and solar capacity and lower reliance on individual CO2 removal technologies, such as Direct Air Capture, by 13 to 136 Mt annually, depending on the build-out scenario.

💡 Research Summary

This paper evaluates the strategic importance of the European Union’s Projects of Common and Mutual Interest (PCI‑PMI) for meeting the EU’s climate and energy policy targets, focusing on hydrogen and carbon dioxide (CO₂) infrastructure. The EU has set legally binding interim goals for 2030 – a 55 % reduction in greenhouse‑gas emissions relative to 1990, 10 Mt a⁻¹ of domestic green hydrogen production, and 50 Mt a⁻¹ of CO₂ injection capacity – and a net‑zero target for 2050. To achieve these, the European Commission has identified a set of large‑scale cross‑border projects (PCI‑PMI) that include electricity, hydrogen, and CO₂ transport and storage networks.

The authors use the sector‑coupled energy system model PyPSA‑Eur to simulate the European energy system from 2030 to 2050 under a non‑anticipative (myopic) planning approach, i.e., market participants do not have perfect foresight of future developments. The model integrates electricity, heating, transport, industry, and the emerging power‑to‑X sectors, with explicit representations of renewable generation, electrolyzers, batteries, carbon capture, utilisation, storage (CCUS), direct air capture (DAC), and, crucially, the actual PCI‑PMI pipelines and storage sites listed by the Commission in 2023 (14 CO₂ pipelines/storage sites and 32 hydrogen pipelines/electrolyzers).

Five long‑term scenarios are defined:

1. Decentral Islands (DI) – no hydrogen pipelines and no on‑shore CO₂ pipelines (baseline decentralised case).
2. PCI‑PMI (PCI) – on‑time commissioning of all listed PCI‑PMI hydrogen and CO₂ projects only.
3. PCI‑PMI national (PCI‑n) – PCI‑PMI plus additional national‑scale pipeline investments.
4. PCI‑PMI international (PCI‑in) – PCI‑PMI plus additional cross‑border pipeline investments.
5. Centralised Planning (CP) – no pre‑specified PCI‑PMI, but pipelines are built endogenously based on system needs.

To assess the impact of policy uncertainty, three short‑term “realisation” scenarios are combined with each long‑term plan in a regret‑analysis framework: (a) reduced climate targets (all but the GHG reduction target removed), (b) delayed pipelines (all pipeline projects shifted by one planning period), and (c) no pipelines (all pipeline capacities set to zero). This yields a regret matrix of 60 optimisation problems.

Key findings:

• Cost impact up to 2040 – In 2030 the presence of PCI‑PMI pipelines raises total system costs by less than 1 % because the model, lacking foresight, does not yet invest heavily in hydrogen or CO₂ infrastructure. By 2040, however, the required carbon budget shrinks dramatically (more than 1 600 Mt a⁻¹ reduction versus the final decade), driving system costs up to €912‑968 bn yr⁻¹.
• Cost savings from PCI‑PMI – Implementing the PCI‑PMI scenario from 2040 onward reduces annual system costs by over €260 bn compared with the DI baseline. The savings stem from efficient transport of low‑cost green hydrogen from renewable‑rich northern and southwestern regions to high‑demand central Europe, and from linking major industrial emitters to offshore CO₂ storage sites.
• Economic penalty of delays – If all PCI‑PMI pipelines are delayed by one planning period, the model must compensate with additional generation, storage, and conversion capacity, leading to an extra €24.2 bn per year (up to €242 bn in the worst‑case short‑term scenario).
• Reduced need for excess renewables – The presence of hydrogen pipelines cuts the required over‑capacity of wind and solar plants by roughly 5‑12 % across the transition horizon, because hydrogen can be stored and moved across borders, smoothing temporal and spatial mismatches.
• Lower reliance on DAC and other CDR – With CO₂ pipelines connecting emitters to storage, the model can meet the CO₂ sequestration target with far less reliance on direct air capture. Depending on the scenario, DAC deployment is reduced by 13‑136 Mt CO₂ yr⁻¹, translating into substantial avoided capital and operating costs.
• Policy robustness – Even when the 2030 climate targets are relaxed (reduced‑targets scenario), the PCI‑PMI infrastructure still delivers cost advantages in the 2040‑2050 window, though the magnitude diminishes. This indicates that the pipelines are valuable assets under a range of future policy environments.

The regret analysis demonstrates that the optimal first‑stage investment (PCI‑PMI build‑out) is relatively robust: the maximum regret (additional cost incurred by not following the optimal plan) is lower for scenarios that include the PCI‑PMI projects than for the decentralised baseline. Consequently, the authors argue that early commitment to the identified PCI‑PMI projects mitigates the “chicken‑and‑egg” dilemma of whether to build transport infrastructure before demand materialises.

In conclusion, the study fills a gap in the literature by explicitly modelling the actual EU‑approved PCI‑PMI projects within a sector‑coupled, long‑term energy system framework that incorporates policy uncertainty and non‑perfect foresight. The results provide quantitative evidence that PCI‑PMI hydrogen and CO₂ pipelines are not merely political symbols but economically essential for a cost‑effective, low‑carbon transition. Early implementation reduces total system costs, curtails the need for excessive renewable over‑capacity, and lessens dependence on expensive carbon‑removal technologies, thereby supporting the EU’s 2030 and 2050 climate objectives.