EU denies gas plants a green finance tag, offers possible hydrogen loophole

BRUSSELS/LONDON, Nov 22 (Reuters): The European Commission on Friday proposed that power plants fuelled by natural gas would not be not classed as a sustainable investment in Europe, although plants could possibly gain a green label by burning some hydrogen.

The landmark EU rules, due to be finalised this year, will force providers of financial products to disclose from the end of 2021 which investments meet climate criteria, and can therefore be marketed as "sustainable".

Gaining such a label is likely to help companies tap the growing share of investor cash looking to profit from the region's multi-trillion-euro shift to a net zero emissions economy by 2050.

In its proposal for the rules, the Commission said to be classed as a sustainable investment - one that makes a "substantial" contribution to mitigating climate change - gas power plants must have life-cycle emissions below 100 grams of CO2 equivalent per kilowatt hour (gCO2e/kWh).

That confirmed draft plans reported by Reuters and comes despite intense lobbying from the energy sector for a more generous threshold. The rules face a four-week consultation, before the Commission drafts the final version.

Sean Kidney, CEO of the Climate Bonds Initiative, who along with other experts advised the Commission on the rules, said the decision on gas was "a victory of science over the political economy." Europe's most efficient gas plants produce more than three times the proposed emissions limit, and would need to use carbon capture technology to comply.

However, some experts said gas plants could potentially earn a sustainable investment badge by burning a share of hydrogen.

That is because investments can also earn a green label by meeting criteria which contribute to "climate adaptation" - building resilience against the impacts of climate change.