EU set to deny gas power plants a green investment label - draft

EU set to deny gas power plants a green investment label - draft

Reuters  | Oct 29, 2020 19:00

EU set to deny gas power plants a green investment label - draft

By Kate Abnett and Simon Jessop

BRUSSELS/LONDON (Reuters) - Power plants fuelled by natural gas will not be classed as a sustainable investment in Europe, unless they meet an emissions limit that none currently comply with, according to draft European Union regulations seen by Reuters.

The landmark EU rules, due to be finalised this year, will force providers of financial products to disclose from the end of 2021 which investments meet climate criteria, and can therefore be marketed as "sustainable".

The aim is to steer billions of euros in much-needed private funding into low-carbon projects to help the EU hit ambitious climate goals, and limit so-called greenwashing by stopping the labelling of investments that do not meet the criteria as "green".

The draft rules say that to be classed as a sustainable investment - one that makes a "substantial" contribution to curbing climate change - gas power plants must not produce more than 100 grams of CO2 equivalent per kilowatt hour.

Even Europe's most efficient gas plants produce more than three times this limit, according to estimates by industry and independent climate think tank Ember.

To comply, plants could use carbon capture and storage (CCS) technology - currently, no European gas plants do so, although companies such as Equinor (OL:EQNR) and Shell (L:RDSa) are developing local CCS projects in industrial sectors.

"The gas lobby has had its core request conclusively rejected," said Rebecca Vaughan, an analyst tracking industry lobbying for InfluenceMap.

Gas industry groups ramped up lobbying efforts after most gas plants and pipelines were excluded from a provisional list published in March. Companies including BP (L:BP), Total (PA:TOTF) and Equinor signed an open letter to EU leaders this month calling for the green finance rules to build on the existing gas market and network as the backbone of the bloc's future energy system.

The Commission declined to comment on the draft rules, which are subject to change before publication.

The rules would not ban companies from investing in projects that don't meet the EU's "sustainable" criteria but industry groups have warned that excluding gas plants could mean they will struggle to raise finance - even for investments to reduce emissions.

The EU rules use a tighter emissions limit than the 250g of CO2 per kwh threshold used by the European Investment Bank to screen investments. The EIB will stop financing unabated fossil fuel projects by end-2021.

"Having a threshold that is not in line with the EIB suggests a lack of joined up rules between public and private lending, which is perverse," Eurogas Secretary General James Watson told Reuters.

The draft rules would label certain pipeline investments as sustainable - including refurbishments to enable gas pipelines to carry more low-carbon gases like hydrogen, or repairs to plug methane leaks.

However, investments in new pipelines would only count as sustainable if they are dedicated to transporting low-carbon gas.

© Reuters. European Union flags flutter outside the European Commission headquarters in Brussels

Rules on nuclear power investments will be added following a Commission analysis.

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Polski Português (Portugal) Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
Saving Changes


Download the App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors. is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.