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3rd Jul 2022

Labelling gas as 'green' clashes with EU law, NGO says

  • The taxonomy was designed to address so-called greenwashing in financial markets, but experts now fear that it might end up becoming a greenwashing tool itself (Photo: European Parliament)
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Environmental lawyers from NGO ClientEarth have warned the European Commission that labelling some types of natural gas facilities as "green" investments in its upcoming sustainable finance rules would clash with EU laws and international commitments.

The EU unveiled, last April, its so-called Taxonomy Regulation - a classification system of economic activities considered as an "environmentally sustainable investment," which aims to push private capital into transition projects.

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But it postponed a separate decision on whether to classify gas and nuclear as a green investment, now expected this autumn.

As the date draws nearer, ClientEarth's lawyers urged the EU executive to exclude all types of gas industries from the regulation, pointing out the risk of creating incentives for additional gas-fired power generation in times of severe climate change.

Labelling some types of natural gas facilities as "green" would be "in total contradiction with the commitments undertaken by the European Commission both at international and EU level," they said in a letter sent to EU climate commissioner Frans Timmermans last Thursday (7 October).

Such a decision would be at odds with the EU's obligations under the 2015 Paris Agreement and the commitments under the EU climate law, they said, as well as the Treaty on the Functioning of the European Union, which requires the EU to "pursue a high degree of environmental protection and international cooperation to combat climate change".

Natural gas also failed to fulfil the requirements of the EU 'taxonomy' itself, ClientEarth added, because the regulation explicitly says green activities must "contribute substantially to the stabilisation of greenhouse gas emissions at a level that prevents dangerous climate change" and have no low-carbon alternative.

This classification system was designed to address greenwashing in financial markets, but experts now fear that it might end up becoming a greenwashing tool itself.

"Labelling gas as sustainable is misleading and only encourages further greenwashing by industry players. Doing so will only pave the way for yet another era of fossil fuels, as opposed to clean and efficient energy," said Marta Toporek, a lawyer at ClientEarth.

"Gas is a fossil fuel - classifying it as environmentally sustainable is not only absurd, it's also unlawful. The European Union cannot keep its climate promises and give gas a free pass at the same time," she added.

Earlier this year, a leak of the EU Commission's proposal revealed that some gas plants that generated power and also provided heating or cooling could be deemed as a "sustainable", under certain conditions.

For example, the green label would apply to new co-generation gas plants if they stopped also burning coal and oil, leading to a cut of emissions of at least 50 percent per kWh of energy.

But experts have urged Brussels to resist political pressure from EU capitals and gas lobbyists and listen to science.

Meanwhile, EU member states remain divided on the role of gas in cutting emissions.

A number of countries is not willing to approve the overall architecture of the taxonomy, until they review the upcoming proposal on gas and nuclear - calling into question whether rules can start applying from 1 January 2022, as proposed initially by Brussels.

A majority of EU countries or the European Parliament could object and revoke the decision.

A European Commission spokesperson said they had received ClientEarth's letter and would respond "in due time".

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Nine members of the expert group advising the European Commission on sustainable finance rules say criteria for gas, forestry and bioenergy are "a clear contradiction to climate science" - threatening to step down if lobbying and politics prevail over science.

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