The European Commission is trying to “greenwash” gas, and MEPs should use their power to stop it. That is T&E’s message ahead of publication of a delegated act updating the EU’s Taxonomy Regulation.
The update is expected to confirm that investments in gas fuelled businesses can be labelled as environmentally sustainable.
The word ‘taxonomy’ has taken on a new meaning in European governance to denote investments that can be encouraged as the EU seeks to shift Europe’s economy into areas that will be sustainable in the long term.
Its Taxonomy Regulation sets out the industries that can be labelled ‘green’ in ethical and environmental investment portfolios, and the second delegated act updating the regulation is due to be published early next month.
Until the delegated act is published, it cannot be confirmed that gas will be named as a sustainable source for investment. But the Commission’s support for gas and other environmentally questionable practices caused a walkout by NGOs – including T&E – from the EU Expert Group on sustainable finance in April.
If the Commission does include gas industries in the taxonomy update, it would go against the advice of the Expert Group, contravene the conclusions of several scientific studies, and be pushed through without a public consultation.
T&E’s director of sustainable finance Luca Bonaccorsi said: “The taxonomy law was supposed to be the gold standard of sustainable finance, yet the Commission has over several months shown a willingness to greenwash gas-fuelled practices and gas industries when it knows investing in this industry will push the EU further away from its climate objectives. Gas is a fossil fuel, and it’s now accepted that we must leave most fossil fuels in the ground, yet the Commission doesn’t seem to have made the link with the taxonomy regulation.
“The European Parliament now has up to six months to scrutinise the delegated act, and when it comes to a vote next year MEPs can accept or reject it. It is vital that they reject this harmful and unjustified proposal.”
The pressure for the Commission to include gas as a sustainable investment is believed to have come mainly from France, with support from Italy. The Netherlands, Denmark, Austria, Portugal and Luxembourg are all against. The position of the new ‘traffic light’ coalition in Germany is unclear, as the Social Democrats and Greens opposed it, while the Free Democrats supported it.
The NGOs’ walkout in April was prompted by the Commission’s decision to classify destructive forestry practices and highly-emitting types of biomass as sustainable investments, but it has also advocated labelling heavily polluting cargo ships and gas-fuelled buses as sustainable. The delegated act is also expected to say that investments in nuclear energy and intensive farming can be labelled as green, thereby sparking conflict with the wider environmental movement.
Bonaccorsi added: “The taxonomy regulation is required by law to be science-based, yet the Commission has turned its back on the science. In these circumstances, it would be justified for the Commission vice-president Frans Timmermans to refer this matter to a public consultation. He’s allowed to do that as the commissioner in charge of better regulation, and this is a case where regulation has a lot of scope to be better.”
The consequences of the Taxonomy becoming the tool for greenwashing rather than the tool to fight greenwashing will be far reaching.
The regulation is the foundation of the disclosure requirements for corporations and for the financial industry. If greenwashing is accepted the same will happen to the rest of private finance. But beyond that, public finance, via green bonds and other funding mechanisms, will be affected too as it will use the Taxonomy as a rulebook. Many policy areas where the environmental movement has tried to clean up the economy, whether it’s in bioenergy, agriculture or energy, will suffer a knock-on effect.
Bonaccorsi concluded: “The greenwashing of the Taxonomy Regulation risks, in fact, setting the environmental ambition of Europe back by at least 10 years.”