Investor group warns EU against green labeling of gas investments

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Austria’s largest natural gas import and distribution station is pictured behind a rapeseed field in Baumgarten, May 2, 2014 REUTERS / Heinz-Peter Bader

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  • IIGCC writes open letter to EU policymakers
  • Strongly opposes the decision to label gas as sustainable
  • This would ‘seriously compromise’ the EU’s green credentials

BRUSSELS, Jan. 12 (Reuters) – A coalition of investors managing € 50 trillion ($ 56.81 trillion) has warned the European Union not to label natural gas investments as sustainable, arguing that the draft Brussels plan would weaken its global leadership in green finance.

The European Commission drew up a plan late last year to label certain gas and nuclear investments as green in the EU’s “taxonomy”, a long-awaited rulebook for defining which investments can be labeled as eco-friendly. climate in Europe.

The Institutional Investors Group on Climate Change (IIGCC), whose 370 members include most of the world’s largest asset managers such as BlackRock (BLK.N) and Vanguard, said on Wednesday it would undermine the EU’s attempts to lead international efforts to establish scientific standards for green investments.

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“We remain firmly opposed to any inclusion of gas in the scope of taxonomy,” said IIGCC chief executive Stephanie Pfeifer in an open letter to European Union member states and policymakers. of the block.

“We believe the proposals … would seriously undermine Europe’s status as a world leader in sustainable finance, potentially triggering a ‘race to the bottom’ that could dilute the level of climate ambition within jurisdictional taxonomies emerging. “

Natural gas emits around half of the CO2 emissions of coal when it is burned in power plants, and some EU states see it as essential in reducing their dependence on coal. But gas infrastructure is also associated with leaks of methane, a powerful gas that warms the planet.

EU countries’ gas debate has intensified in recent months, as gas prices hit record highs and amid tensions with Russia, the EU’s largest gas supplier.

Experts had advised the Commission not to qualify gas plants as green investments unless they reach an emission limit of 100 g CO2e / kWh. The Commission’s original proposal for the rules included this limit, but it faced opposition from countries like Poland and Hungary.

The latest draft proposal, seen by Reuters, would set conditions, including a limit of 270g CO2e / kwh for gas plants until 2030. read more

The IIGCC said this would allow energy companies to use the green taxonomy label although they are not on track to achieve net zero emissions by 2050 – target scientists say the world must achieve to avoid disastrous climate change.

“This in turn hampers the ability of our members to align their portfolios to net zero, thus undermining the whole purpose of taxonomy,” he said.

The letter cited the International Energy Agency’s calculation that to achieve net zero emissions by 2050 globally, demand for natural gas must fall 8% below 2019 levels by 2030.

A Commission official said it had taken scientific advice into account along with comments from member states and that ultimately what mattered was for the bloc to meet its climate targets.

“The inclusion of nuclear or natural gas comes with clear and strict conditions associated with its use in accordance with our climate goals and guarantees against significant environmental damage,” said the official.

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Editing by Bernadette Baum

Our Standards: Thomson Reuters Trust Principles.

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