A New Year's Eve Attack on the "Green" in Sustainable Finance

I am writing to document a giant greenwash, which occured in my inbox on December 31st 2021 at 9:59pm Brussels time. I was not the only one receiving a draft EU delegated act (DA) at such an unusual time. I understand this also happened to all Members of the European Parliament, the Member States representatives and the 57 others members of the EU's Platform for Sustainable Finance, on which I serve. MEP Michael Bloss even argues that the EU Commission is formally not permitted to send draft delegated acts to the European Parliament between Dec 22nd and Jan 6th. He also posted the actual draft delegated act - the 2nd DA of the EU Taxonomy - on his website for full public scrutiny [see note 1 below], to which I will refer in the following.

So just how big is this Greewash?

As anyone can read on page 29 of the document, the proposal is for electricity generation from fossil gas to be declared "green by law" if it replaces a "facility that uses solid or liquid fossil fuels" with no more than a 15% capacity increase and its "annual GHG emissions ... do not exceed an average of 550kg CO2e/kW of the output energy of the facility’s capacity over 20 years". In other words, gas fired power plants can emit a "budget" 11 tons of CO2e per kilowatt (kW) of capacity over 20 years until they have to use carbon capture technologies or lose the "green by law" label. If a gas fired power-plant has 3 gigawatt (GW) capacity, that is 33,000,000 tons of CO2e.

If this sounds like a large number, consider that there are "166 coal-fired power plants operating in .. EU countries, with a total capacity of 112 GW" [2] If they all were replaced with gas-fired power stations, President Von der Leyen's proposal would declare 1,416,800,000 tons of CO2e [3] as "green by law".

This is 1.4 billion (!) tons (!) of fossil gas pollution.

That number is so big, it would exceed the annual CO2e emission of France, Poland, Czechia, Romania, Greece, Hungary, Bulgaria, Finland and Sweden added together [see image above] - all member states that lobbied heavily for the 2nd DA proposal and voted against the 1st DA, which was largely green from a scientific perspective [4].

If this giant greenwash makes it through the EU Parliament, can we still reach Net Zero 2050?

Probably not. With constructions permits for "green by law" gas fired power plants available until Dec 31st 2030, construction times of about 3 years [5], 20 year assessment periods and an average lifetime of gas power stations of 30 years [6], we will see a lot of the fossil gas pollution well beyond 2050. In my view, this would be way too much to "net" given the current state of CO2e removal technologies [7]. Furthermore, my computation above only considers gas replacing coal, while it could also replace oil or other solid or liquid fossil fuels.

Why is President Von der Leyen proposing such a giant greenwash?

Only she knows. After France and the remaining twelve pro gas and nuclear states had failed to stop the 1st DA [4], there was no procedural need to put a 2nd DA forward on gas and nuclear and certainly not one that could declare 1.4 billion tons of CO2e as “green by law”. Rightfully, German Vice-Chancellor Habeck was the first one to call this proposal both “unnecessary” and a “greenwash”. So what does Von der Leyen have to gain politically? The most plausible explanation is that she wishes to retain the chance of a second term and needs Macron’s support for this after her own party lost power in Germany [9]. Hence, she feels the need to do Macron the gas/nuclear favour to support his upcoming election campaign. This would be a purely political explanation of a decision she may well have to explain her seven children one day.

Can 1.4 billion tons of fossil gas CO2e emissions really be declared "green by law" ?

The short answer to above question is sadly: Yes, unless we all make our voices heard so very loud (!!!) that half the Members of the European Parliament will vote against this giant greenwash.

So what can we all do now?

Raise awareness. Share this post. Share the actual draft. Contact your MEP.

Only if we all as as citizens, consumers, investors, civil servants, scientists, civil society stand together in unity and demand this giant greenwash to stop, we retain our chance of actually reaching Net Zero by 2050!

Raise awareness. Share this post. Share the actual draft. Contact your MEP.

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Notes & References

[1] https://michaelbloss.eu/de/presse/themenhintergrund/kommissionschefin-zerstoert-glaubwuerdigkeit-der-gruenen-eu-taxonomie-mit-atom-gas

[2] https://ec.europa.eu/jrc/sites/default/files/factsheet_on_eu_trends_coal_peat_oil.pdf

[3] 112,000,000 kilowatt * 1.15 * 11 tons of CO2e = 1,416,800,000 tons of CO2e

[4] https://www.linkedin.com/posts/andreashoepner_eu-greentaxonomy-teg-activity-6875368409597661184-BviI

[5] https://www.iea.org/data-and-statistics/charts/average-power-generation-construction-time-capacity-weighted-2010-2018

[6] https://www.edfenergy.com/energy/nuclear-new-build-projects/hinkley-point-c/news-views/gas-blog

[7] The proposal is trying to counter this with requires power stations to adopt to "low carbon" gases by 2035 if they want to keep the "green by law" label but "low carbon" gases are not defined with an absolute CO2e emissions cap and, more crucially, gas-power stations need the "green" investment in the construction period not during operations. Hence, there is no certainty that all of them will decide to incur significant costs to retain the "green by law" label.

[8] https://www.dw.com/en/eu-proposes-labeling-gas-and-nuclear-energy-as-climate-friendly/a-60308833

[9] https://www.politico.eu/article/german-election-poses-risks-for-von-der-leyen/

Data Source of Figure 1

CO2e "green by law" bar: Own calculations as explained in text and note [3] based on [1].

Benchmark countries: Eurostat - Greenhouse gas emissions by source sector (online data code: ENV_AIR_GGE$DEFAULTVIEW ) | Source of data: European Environment Agency (EEA)