Natural Gas and Nuclear Energy Projects as ‘Green’ Investments

Natural Gas and Nuclear Energy Projects as ‘Green’ Investments

Subject – IR

Context – EU drafts plan to label gas and nuclear investments as green

Concept –

• The European Union has drawn up plans to label some natural gas and nuclear energy projects as “green” investments after a year-long battle between governments over which investments are truly climate-friendly.
• The European Commission is expected to propose rules in January deciding whether gas and nuclear projects will be included in the EU “sustainable finance taxonomy”.
• This is a list of economic activities and the environmental criteria they must meet to be labelled as green investments.
• By restricting the “green” label to truly climate-friendly projects, the system aims to make those investments more attractive to private capital, and stop “greenwashing”, where companies or investors overstate their eco-friendly credentials.
• A draft of the Commission’s proposal, would label nuclear power plant investments as green if the project has a plan, funds and a site to safely dispose of radioactive waste. To be deemed green, new nuclear plants must receive construction permits before 2045.
• Investments in natural gas power plants would also be deemed green if they produce emissions below 270g of CO2 equivalent per kilowatt hour (kWh), replace a more polluting fossil fuel plant, receive a construction permit by Dec. 31 2030 and plan to switch to low-carbon gases by the end of 2035.
• Gas and nuclear power generation would be labelled green on the grounds that they are “transitional” activities – defined as those that are not fully sustainable, but which have emissions below industry average and do not lock in polluting assets.
• Natural gas emits roughly half the CO2 emissions of coal when burned in power plants, but gas infrastructure is also associated with leaks of methane, a potent planet-warming gas.