European Commission’s taxonomy branded a ‘robbery’ over role of gas in climate neutral target
The European Commission has published its new taxonomy for sustainable finance, which allows for private investment into nuclear and gas moving forward, a decision that has irked green groups.
The Commission presented its Taxonomy Complementary Climate Delegated Act on climate change mitigation and adaptation on Wednesday afternoon (2 February). By the Commission’s own admission, the EU Taxonomy “aims to guide private investment to activities that are needed to achieve climate neutrality”.
The document states that both gas and nuclear activities can be backed by private investment across the bloc, provided they “contribute to the transition to climate neutrality”. For nuclear, this means meeting new environmental safety requirements while gas projects will have to contribute to a “transition” away from coal to renewables.
For the Commission’s lead on financial services, stability and capital markets, Mairead McGuinness, the new taxonomy sets out “strict conditions” to help move away from coal.
“The EU is committed to achieving climate neutrality by 2050 and we need to use all the tools at our disposal to get there. Stepping up private investment in the transition is key to reaching our climate goals,” McGuiness said.
“Today we are setting out strict conditions to help mobilise finance to support this transition, away from more harmful energy sources like coal. And we are boosting market transparency so that investors will be able to easily identify gas and nuclear activities in any investment decisions.”
In April, the European Union (EU) agreed on a landmark climate law, which commits to a reduction in greenhouse gas emissions to net-zero by 2050, and a 55% cut by 2030. According to the Commission, achieving this new goal “would result in a new and greener energy mix,” with oil and gas consumption reduced “by more than 30% and 25% respectively” by 2030 compared to 2015 levels.
Gas has been a contentious negotiating point between the Member States in the build-up to the creation of the taxonomy. Germany was one of the supporters for the inclusion of gas, while many other EU nations had challenged it.
The Commission has also amended the Taxonomy Disclosures Delegated Act, so that investors can identify which investment opportunities include gas or nuclear activities and make informed choices.
The European Parliament and Council will now undergo a four-month review process, with the option to add an extra two months to scrutinise the document and potentially object to it. At least 72% of the Member States representing at least 65% of the EU population would need to object to the Act.
Response to the announcement has been largely negative, with Greenpeace labelling it an “attempted robbery”.
Greenpeace’s EU sustainable finance campaigner Ariadna Rodrigo said: “I’d like to report an attempted robbery, please. Someone is trying to take billions of euro away from renewables and sink them into technologies that either do nothing to fight the climate crisis, like nuclear, or which actively make the problem worse, like fossil gas. The suspect is at EU Commission HQ and has disguised herself as someone to be taken seriously on the climate and nature crisis.”
“This anti-science plan represents the biggest greenwashing exercise of all time. It makes a mockery of the EU’s claims to global leadership on climate and the environment. The inclusion of gas and nuclear in the taxonomy is increasingly difficult to explain as anything other than a giveaway to two desperate industries with powerful political friends.”
The European Climate Foundation’s chief executive Laurence Tubiana said: “The EU Taxonomy was envisioned as a vital tool to align financial flows with the Paris Agreement. Instead, Europe is undermining its climate leadership and lowering standards in the EU and beyond. When a gold standard does emerge elsewhere, this Taxonomy will be left behind.”
“In recent weeks, we have heard the financial sector, scientists and sustainable finance experts all calling for a science-based EU Taxonomy. Instead of listening, the European Commission weakened the criteria further.”
“Labelling gas as “green” is greenwashing. The financial sector needs clarity: this weak compromise on gas undermines the EU’s entire ambitions for the Taxonomy, and will lead investors to seek more reliable science-based criteria.”
“Using the EU Taxonomy to guide investments is voluntary. The value of the tool is to drive the deep change we need, to reach net-zero emissions by 2050. It is not about stabilizing the energy mix like it is now.”
The International Energy Agency has stated that, if global warming is to be held to 1.5C, electricity produced with gas would need to peak in the early 2030s, followed by a dramatic fall over a decade. Indeed, the Agency states that no new gas production projects would be compatible with the 1.5C target.
The taxonomy has raised questions as to the speed of the oil and gas sector’s transition to clean energy. In 2020, the world’s largest oil and gas companies increased investment in clean energy by 34%, despite a 6% fall in global energy demand caused by the coronavirus pandemic.
Investment in renewables was the least affected by spending cuts and emerged as the most resilient during the Covid-19 crisis, with oil and gas majors investing $8.8bn in 2020, compared with $6.6bn the year before.
If the same pace of investment is maintained, peak oil will happen “around 2030,” according to CMS research, the global law firm that commissioned the analysis.
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