Under pressure from lobbies, the European Commission considers including gas in the EU Taxonomy

It has been weeks since gas manufacturers - supported by some Member States – have actively sought to change the EU Taxonomy, and they seem to have won. A proposal of delegated acts drafted by the European Commission was leaked to the French online [MOU1] journal Contexte, and mention the inclusion of gas. This would amend the original draft that was unveiled at the end of 2020.

The new proposal introduces the possibility of replacing equipment for the generation of heat and electricity from fossil fuels with the same equipment running on fossil gas itself, whether renewable or bio-based. The proposal outlines certain conditions, including using equipment that generates at least 50% fewer emissions than what was previously used, and direct emissions not exceeding 270 grams of CO2 per kWh. The delegated acts add that the use of gas is only possible in just transition regions within the EU and for those in which there is no technological and economic alternative.

The European Commission also seems to submit to Nordic countries' complaints about forest management. According to Greenpeace, the new delegated act proposal makes it possible to include all forest management activities in the EU Taxonomy, not just the most sustainable ones. The delegated acts also add the air transport sector to the list of transitional activities.

Greenwashing

Greenpeace believes that as it stands, the EU Taxonomy is greenwashing other green activities. “Gas is a fossil fuel – the simple idea of classifying it as environmentally sustainable is a disgrace,” says Sébastien Godinot, an economist at WWF Europe and member of the EU Platform on Sustainable Finance.

For the WWF, European leadership in sustainable finance is at risk of being left behind by other parts of the world. “If the Commission completely rejects the TEG science-based recommendations and the long consultation process, what was the point of consulting them in the first place”?

The European Commission appointed the Technical Expert Group (TEG) in the development of a green activity taxonomy based on scientific facts. Gas was excluded because it could be replaced by other low-carbon energies, such as solar, wind, and electricity storage. For Godinot, the inclusion of gas into the EU Taxonomy goes against scientific facts.

Defending the EU Taxonomy

Several voices have spoken out in recent months to defend the idea of an EU Taxonomy that is based on science. Eurosif – the leading European Sustainable and Responsible Investment association - recently drafted an article recalling what the EU Taxonomy is all about: a tool to determine what is green. Gas lobbies raised arguments over the risk that the EU Taxonomy would cut funding to their industry, which Eurosif strongly refutes.

Philippe Zaouati, CEO of Mirova, recalled in an interview for Novethic’s Essential Aspects of Sustainable Finance [MOU2] that the EU Taxonomy must "set the course". On the subject of gas, Zaouati added that "the fact that it is a transitional energy in some cases, why not, even if this is less and less the case. But it would make no sense to point it out as a target to be reached!"

The European Commission plans to unveil the final delegated acts in mid-April. From that date, the European Parliament will have two months to issue an opinion, after which the act will be definitively adopted. Debates surrounding this issue are sure to be tough.

Arnaud Dumas