The European Union is split over which fuels deserve support from the bloc’s flagship green transition fund, after lawmakers on Monday (6 July) called for rules that could allow the money to be spent on some fossil gas projects.
The European Commission wants to launch a €40 billion Just Transition Fund using cash from the EU’s coronavirus recovery fund and its budget for 2021-27 to help carbon-intensive regions launch green industries and retrain workers currently in polluting sectors.
All EU member states agreed last week that the new fund should exclude nuclear and fossil fuels projects – including natural gas projects – a position also shared by the EU Commission.
But on Monday a committee of lawmakers leading talks on the issue in the European Parliament broke ranks. They said that while nuclear energy projects should not be eligible, some fossil gas projects could get just transition funding.
“For regions heavily reliant on the extraction and combustion of coal, lignite, oil shale or peat, MEPs propose a derogation for investments in activities related to natural gas,” the Parliament’s regional affairs committee said in a statement.
Lawmakers did vote in favour of requiring green finance rules to be applied to funding for gas projects, a move which would effectively exclude fossil fuels. But they also said the EU Commission could make exemptions to this rule and approve some gas projects that don’t meet the green criteria.
“The Commission may approve Territorial Just Transition Plans that include (natural gas) activities, if they qualify as environmentally sustainable” under the EU’s green finance taxonomy “and comply with six additional cumulative conditions,” the committee said.
Environmental groups were incensed after the vote. “Pro-gas MEPs prevent carbon-intensive regions from moving towards climate neutrality. Investing in fossil gas today will result in locking the EU into fossil fuel dependency for decades, whereas the EU has to become climate neutral by 2040,” said Markus Trilling from Climate Action Network (CAN) Europe.
Eurelectric, the European power industry association, also expressed disappointment. “We regret that the vote leaves a door open for investments in unsustainable fossil activities. We can no longer afford to channel EU funds into activities that delay the move towards climate neutrality,” said Henning Haeder, policy director of Eurelectric.
The full legislative assembly will vote in September on whether or not to approve the rules. Once the assembly has agreed its position, talks will start with the EU Commission and national governments in the EU Council on the final terms of the funding.
“The European Parliament still has a possibility to become relevant in the debate when it will vote in Plenary on this file after summer. If the Parliament wants to be respected as a consistent body, MEPs will have to exclude all fossil fuels from the fund to stay in line with the climate emergency declaration they adopted last year,” Trilling said.
Gas emits roughly 50% less CO2 than coal when burned in power plants, but it is not a “zero-carbon” fuel and is associated with leaks of methane, a potent greenhouse gas.
Environmental groups have called for access to the fund to be reserved for countries that commit to climate neutrality and coal phase out dates.