Power plants fueled 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.
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.
[Kate Abnett and Simon Jessop]