The EU Taxonomy: Putin’s best friend?

At the beginning of March the EU Commission published a law that defined investments in gas plants as ‘green’.

The law (also known as the Complementary Delegated Act of the Taxonomy Regulation) is a scam that will intoxicate the green finance market, undermine EU’s sustainable finance strategy and, most importantly, hand money over to Putin and fossil fuels oligarchs.

This is not one of those simplifications you read in Sunday papers. The proposal by the European Commission allows ALL gas plants to be labeled as green and to be funded by green bonds and loans. On paper these new ‘green’ gas plants are there to replace dirty coal or oil, and if you do that the energy provider gets to increase the installed power by 15%, as a premium. The problem is that a gas plant is indeed greener than coal, but it is by no means ‘green’ nor compatible with the Paris Treaty or the Green New Deal. 

So, here’s how the trick works: if you have an existing coal or diesel 500MW plant, it can be converted to a gas plant, by installing an OGT (open cycle gas turbine, the most inefficient and cheap). OGT’s don’t meet the ‘official’ threshold for emissions of 270gr CO2e/kWh, but rather 500-600gr. 

But, and here’s the stroke of (evil) genius, the emissions will only be measured over a 20 year average. Ex post. After the corporations have siphoned green money from green markets and after they’ve burnt fossil gas for 20 years. Under the current proposal, you could run your gas burner at full capacity for 10 years and then shut it down and you’d still pass the test (20 years from now), after all it only takes 5-7 years to pay back the turbine. But the truth is that the average usage of gas plants today is much lower, so you can use your turbine over a much longer time. 

And there’s more. The law isn’t just, effectively, a massive incentive scheme for gas, but also a enormous incentive scheme for biogas. The fig leaf the Commission is hiding behind is the condition by which, in 2035, these new ‘green’ gas plants would have to switch to ‘low carbon gasses’ such as hydrogen or biomethane. Anyone who knows a thing or two about the issue knows that 1) the little green hydrogen we’ll have by 2035 will be badly needed in hard to decarbonise sectors such as aviation, shipping or steel manufacturing and 2) using renewables to produce green hydrogen to then burn it to produce energy is massively inefficient (it takes about 4kW of renewables to produce 1kW of green-gas-energy). And that leaves us with the obvious consequence that the only low carbon gas on the market will be biogas. 

In normal circumstances, the Commission would have had to assess the impact of this: how much arable land would we need to produce the crops to replace fossil gas with biogas? Well… the Commission forgot, or decided to ignore, this trivial verification. It would have shown that you’d need an area the size of France! So, despite the fact that Europe is trying to phase down biogas because of its negative impact on nature, the Commission has thought it would be a good idea to launch a mammoth pro-biogas scheme.   

Gas isn’t green and yet the Commission is about to label all investments in gas as ‘green’ regardless of what the science says. And you may even hear Mairead McGuinness, the Commissioner for Financial Services, state that she is following ‘alternative science’. A statement that bears a striking resemblance with Donald Trump’s ‘alternative facts’.

“But wait a minute,” I hear you asking. “Green bonds don’t fund gas and nuclear.” Which is why the EU is also creating a new Green Bond Standard, so Putin’s and Macron’s friends can fund gas and nuclear with ‘green bonds’. These new ‘EU green bonds’ will crash the existing green bonds party and intoxicate it. If you were afraid of greenwashing in finance then we have bad news for you: it’s now a reality, guaranteed by the EU.

As Putin shells Ukraine and kills countless Ukrainians, as the climate crisis accelerates, destroying species, habitats and causing poverty, the European Commission thinks the best idea is to ensure a new wave of investments goes into fossil fuels, such as gas. 

Long live Putin, hurray for climate chaos. 

Well done the European Commission and Mr. Macron, the mastermind of Europe’s disastrous law.

But this bad piece of legislation is not approved yet. The European Parliament can veto it. 

It isn’t easy, but it can be done in the next three months.