A coalition of investors which manages over fifty trillion euros has recently warned the European Union not to label natural gas investments as sustainable, as it would damage Brussel’s plan to become world leaders on green finances. Last year, the European Commission created a draft plan in which some gas and nuclear investments were labelled as green.
The Institutional Investors Group on Climate Change (IIGCC for those who find that a mouthful) said this draft report undermined the Union’s message of credible, science-based standards for green investments. Particularly the reports comments on some gas reports, with IIGC Chief Executive Stephanie Pfeifer announcing the group opposes “any inclusion of gas” in such reports. Despite taking a position similar to many scientists, supporters of the Union initial report cite the fact that natural gas emits half the carbon dioxide emissions of coal when used in power plants. With many EU member states looking to reduce their reliance on coal, some argue that natural gas may be the best way to achieve this.
As the main supplier of gas to Europe, such reports would put Russia in a powerful position. Increasingly, countries in the EU have turned against gas due to heightening tensions with Russia over their actions towards Ukraine. Overall, it has sparked considerable debate and controversy, with both sides being able to competently argue their case. Considering the issues democratic countries are currently having with Russia, it may be best not to invest more money into its economy. However, with the end goal of creating a greener world, introducing gas could reduce carbon emissions in member states currently struggling to end their reliance on coal.
To counteract the Commissions original plans, experts have suggested that gas plants cannot be labelled as green investments unless they meet a 100g CO2e/kWh emissions limit.
This proposal in itself has faced opposition from Poland and Hungary, and thus in the latest draft, the Commission has compromised and set the limit at 270g, at least until 2030. The IIGCC has said that this would allow energy companies with no realistic chances of reaching net-zero emissions by 2050 to label themselves as green investments. With fifty trillion euros behind them, the IIGCC holds real economic, and therefore political, weight, and their criticisms will likely concern the Commission.
Whilst the Commission has said that what ultimately matters is that the trading bloc reaches its climate goals, the International Energy’s Agency’s calculations suggested this did not support the draft. They said that to reach net-zero emissions by 2050 globally, demand for natural gas must drop 8% below 2019 levels before 2030. Under considerable pressure, the bloc may be forced to give in and again re-assess the draft, but this is the nature of running the world’s biggest trading group.
Written by Adam Caudle
Research compiled by Kristina Njeru