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Clean Power

EU’s Green Finance Plan Leaves Door Open to Gas Investments

Originally published on Transport & Environment.
By Eoin Bannon

The EU’s strategy to finance the green transition leaves a path for fossil gas investments to count as sustainable, green group Transport & Environment (T&E) has said. Gas-fired power plants had been kicked out of the first part of the taxonomy of green investments, but after pressure from pro-gas governments, the European Commission now says it will be considered in the second part of the law next year. T&E said allowing gas energy to be counted as green would destroy the credibility of the EU’s gold standard for sustainable finance.

Luca Bonaccorsi, director of sustainable finance at T&E, said:

“Sustainable finance in 2021 should be about driving investment away from fossil fuels like gas and nature-wrecking bioenergy. This strategy doesn’t shut out either. If the first part of the taxonomy, which greenwashes indiscriminate logging, is anything to go by we must remain vigilant.”

The plan has just a vague reference to addressing the flawed Environmental, Social, and Governance (ESG) ratings that currently steer investments and allow greenwashing of polluting industries. The Commission also unveiled a so-called ‘rulebook’ for green bonds, but it will come too late to help ensure the EU’s own recovery fund will be spent on sustainable projects. The EU itself will issue green bonds to finance 30% of the €800-billion NextGenerationEU fund but these will not need to be aligned to its taxonomy of what counts as environmentally-friendly investments.

Luca Bonaccorsi said:

“There’s no clear commitment to bring order to the wild west of ESG ratings. Greenwashing is rife, consumers are being misled and we need legislation urgently. Meanwhile, the new EU standard for Green Bonds would be great news if it was based on a rock-solid taxonomy and was used to green the spending in the EU recovery plan. Unfortunately, the taxonomy is under attack and the standard will not be ready in time to influence the recovery money.”

The Commission also published a delegated act on the environmental information that corporations and financial institutions will have to publish as part of the taxonomy. T&E said SMEs, which are the backbone of the EU economy, will lose out on green finance as they are excluded from the list of ‘green companies’ until 2025 at least. Also, the rules favour governments over the private sector by exempting government bonds from the requirements.

Photo by Loïc Manegarium from Pexels

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