Thu. Jan 20th, 2022

The purpose of the European Commission’s green taxonomy is clear. To achieve its ambitious climate targets – to achieve net zero greenhouse gas emissions by 2050 – the EU needs a flood of capital to finance the necessary investment, by tilting bank loans, bond investors and stock markets to environmentally friendly “green” technologies and away from unfriendly “browns”. However, where it is best to draw the line is much less simple. The scope of the task requires a radical approach; to achieve its goals, the EU must now quickly begin phasing out fossil fuels. But it also requires an acknowledgment of how difficult it will be to deploy sufficient renewable energy.

Inclusive natural gas as a “transition fuel” is justified, but only temporarily and with strict conditions. The reason for labeling the fossil fuel as “green”, in a proposal published by the new year, is partly political. The commission foresees the need for a big bargain between nuclear-dependent France and more coal-dependent countries in the east, which will need natural gas to switch away from black fuel, as well as Germany, where skepticism about nuclear power, which the commission also correctly classified as green, is widespread. While the scheme only needs to achieve a qualified majority to succeed, the commission does not want to dominate any major countries. Pursuing a compromise is the best way to make progress.

Europe must immediately start moving away from coal and using natural gas as a temporary bridge. Yet about a quarter of the European Union’s total energy currently comes from gas, and the trade bloc says that, in order to meet its 2050 target, it will have to reduce emissions by at least 55 percent by 2030. The Commission is therefore ready to insist on conditions for any new natural gas infrastructure to actually reduce emissions, rather than be used as an additional power source.

Natural gas power plants can qualify for the label in one of two ways. One is if they produce less than 100g of carbon dioxide equivalent for every kilowatt hour of electricity over the life of the project – the average carbon intensity of EU energy is 230 grams of greenhouse gases for every kilowatt hour. The second is if they meet several conditions, including being built before 2030, emitting less than 270g of CO2 per kilowatt hour and not providing a significant amount of additional electricity capacity compared to the plants they are replacing. Such conditions mean that gas will eventually have to be combined with carbon capture technology once its role as a “bridge” is over.

These conditions must be tightened in the future. The taxonomy should not be rigid and should recognize that instead of a binary distinction between green and brown, technologies for mitigating climate change are rather on a spectrum that includes “olives” along with the bright green and dark brown. Technological advances, especially in terms of carbon capture and storage, may eventually change the justification for some investment projects. EU policy must keep pace.

After all, natural gas is not a green source of energy. Including it on the list – which is meant to be the international “gold standard” – could jeopardize Europe’s climate leadership, and encourage countries elsewhere to continue building new gas plants (South Korea included liquefied natural gas in its taxonomy last week). However, natural gas plays a temporary role during the transition. Rich, democratic countries, such as those in the EU, must demonstrate how to achieve the best to net zero, not only from a technological point of view, but also politically, by managing and distributing costs.

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