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EU’s ‘green’ gas and nuclear investment rules head for final vote
Global Banking & Finance Review®
Company
By Kate Abnett
BRUSSELS (Reuters) – A European Union plan to label investments in natural gas and nuclear power plants as climate-friendly faces a final vote on Wednesday when lawmakers decide whether to accept or reject proposals that have divided governments and investors.
The vote is the final hurdle in the EU’s long-delayed decision on whether to add the two energy sources to its “taxonomy”, a rulebook determining which investments can be marketed in Europe as sustainable.
Designed to guide private capital towards truly green projects, the rules aim to set a European standard for sustainable investment and stamp out greenwashing.
But the debate has grown into a broader political stand-off over which fuels Europe should invest in to fight climate change and replace Russian gas.
The invasion of Ukraine by Russia, Europe’s top gas supplier, has sharpened that debate.
Supporters say the proposal would aid infrastructure to import more non-Russian gas.
Critics point out the rules cover power plants, but not the liquefied natural gas (LNG) terminals that would facilitate extra imports.
EU lawmakers will debate the gas and nuclear rules on Tuesday and vote on Wednesday in what officials expect to be a tight ballot.
A majority of the European Parliament’s 705 lawmakers would be needed to block the rules.
Socialist lawmaker Paul Tang said labelling gas as green would undermine the credibility of the EU rules among investors.
“It doesn’t take a master’s degree to understand that natural gas is a fossil fuel, right? It’s not sustainable and it cannot be green,” added Left lawmaker Silvia Modig, another opponent of the rules.
European People’s Party lawmaker Christian Ehler, a supporter, said the taxonomy’s impact on future investment was not yet clear, but the limits on CO2 emissions and other criteria it placed on gas plant investments would ensure compliance with climate goals.
Rejection would be a blow to the European Commission, which has spent more than a year redrafting the rules amid lobbying from governments and the gas and nuclear industries.
Critics, including the Commission’s advisers, have said gas plants would need to meet far tougher emissions limits than those in the Commission proposal to align with the steep cuts scientists say are needed to avert severe climate change.
The Commission had included a lower emissions limit in an early proposal in 2020 but amended it after backlash from some of the bloc’s 27 member states.
($1 = 0.9595 euros)
(Reporting by Kate Abnett; additional reporting by Marine Strauss; editing by John Chalmers and Jason Neely)
Sustainable investment refers to investment strategies that consider environmental, social, and governance (ESG) factors alongside financial returns, aiming to support projects that contribute positively to society and the environment.
The European Commission is the executive branch of the European Union responsible for proposing legislation, implementing decisions, and managing the day-to-day operations of the EU.
Greenwashing is the practice of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product, often to appear more environmentally friendly than they are.
Natural gas is a fossil fuel composed primarily of methane, used as an energy source for heating, electricity generation, and as a fuel for vehicles.
Nuclear power is energy produced through nuclear reactions, typically via fission, where atomic nuclei split to release energy, used for generating electricity.
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