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EU set to deny natural gas 'transition' fuel status

Wednesday, 11 November 2020

According to a source from European news network EURACTIV, natural gas has been denied 'transition' fuel status in draft EU green finance rules. This has serious implications for the energy market.

Under such rules, power plants fuelled by natural gas will not be classed as “sustainable” or “transition” investments in Europe unless they meet emission limits which are so low that none are currently able to comply, according to draft EU rules seen by EURACTIV.

The suggested upper limit was 100 g CO2e per kilowatt hour of electricity produced; currently the most efficient combined cycle plants are emitting at a rate more than three times this. While long-term energy plans relying on natural gas are not viewed as sustainable, the denial of the 'transition' tag is seen as controversial.

This has larger consequences for a country like Poland, who have sought natural gas plants to replace their ageing coal fleet, with CO2 emissions from gas electricity generation being approximately half that of coal generation. 

Furthermore district heating, which was undergoing a similar transition from coal to gas-based generation in Poland, will also be affected by the threshold. Heat generation is more efficient than power generation, with emissions as low as 200 g/kWh being achievable but this is still twice as large as what has been proposed.

James Watson, secretary-general of the trade association, Eurogas, said: "We full expect natural gas to be classed as a 'transition' activity. But the 100 g threshold will unfortunately not allow this".

On the other hand, environmentalist hailed these new rules, Dave Jones of Ember (a climate think-tank) nothing "It's perhaps disappointing even that the taxonomy didn't set zero as the threshold."

Earlier this year, the EU’s climate chief, Frans Timmermans, said “natural gas will probably be necessary to shift from coal to sustainable energy” and key lawmakers in the European Parliament have also supported gas when it displaces coal.

The rules to present opportunities for green gases, including biomethane and hydrogen. In particular, hydrogen was set a threshold of 94g CO2e/MJ for being considered 'green', which is achievable in conjunction with carbon capture.