Jul 7, 2022 - Energy & Environment

Europe's battle over "green" natural gas

Illustration of a hand painting a gas tank green.

Illustration: Shoshana Gordon/Axios

European lawmakers' decision to bless some natural gas plants and nuclear power as climate-friendly energy sources signals the high priority countries are placing on securing energy supplies to replace Russian fossil fuels.

Catch up fast: The European Parliament on Wednesday voted to classify certain uses of natural gas and nuclear power as green, or climate-friendly energy sources, in its taxonomy of sustainable activities.

  • The moves, which are highly controversial, encourage the private sector to continue to invest in such energy sources.
  • Many lawmakers and environmental groups argue that labeling natural gas, which is a fossil fuel, as a sustainable form of energy is misleading at best.

Why it matters: Russia's unprovoked invasion of Ukraine has set off a scramble in Europe to secure natural gas supplies ahead of next winter and for many years to come, with planning underway to build more than a dozen new liquefied natural gas (LNG) terminals.

  • Countries are cutting deals with U.S., Middle Eastern and African suppliers to try to make up for the loss of Russian gas.
  • While natural gas, sometimes referred to as fossil gas, is a cleaner burning fuel compared to coal, it still emits planet-warming greenhouse gasses during drilling, transport, and when it's burned for energy.
  • A commentary published in the journal Nature Energy this week, in fact, argues that natural gas-related emissions have consistently been underestimated.

Context: Even with the Parliamentary vote, lawmakers maintained their rapid timetable for an energy transition away from fossil fuels and put some guardrails around natural gas projects as well.

  • Gas-fueled power plants will need to meet certain emissions criteria in order to be referred to as sustainable investments and need to switch to low-carbon gases by 2035.
  • The EU still aims to cut its greenhouse gas emissions by "at least 55%" by 2030, and be carbon neutral by 2050.

Zoom in: Since the first of the year, European natural gas prices have skyrocketed by about 700%, according to Kevin Book, managing director of ClearView Energy Partners.

  • To bring prices down, many European countries are seeking long-term deals for fuels, including LNG shipments from the U.S., Qatar and other nations.
  • However, such lengthy contracts run counter to Europe's goals of curtailing global warming by cutting greenhouse gas emissions as quickly and sharply as possible.
  • "What I think we're seeing is a divergence between rhetoric and realpolitik," Book told Axios. "Some of the governments that have espoused very green values are also signing 20-year contracts for LNG."
  • "High prices tend to usher out incumbent politicians faster than they usher in new technologies," he said.

The intrigue: A major concern for those seeking to meet the Paris climate targets and limit human-caused global warming is new fossil fuel infrastructure that can be used for decades, unless such installations could be converted to using or producing renewable energy.

  • Gernot Wagner, a climate economist at Columbia Business School, points out that so far, Europe has chosen to both pursue more fossil fuel infrastructure and to "double down on ambitious climate policies."
  • "Lock-in, of course, is a real problem," he said via email from Austria. It will take "smart policy, strong political leadership" and "foresight" to avoid this, Wagner said.
  • "All that said, worries around fossil infrastructure lock-in here are literally pitted against the Russian war of aggression in Europe. Sending a billion Euros a day to Russia in exchange for fossil fuels is simply untenable," Wagner said. "Locking in a handful of LNG terminals seems like a secondary worry."

What they're saying: Environmental activists are disappointed with Parliament’s move.

  • The EU's energy taxonomy is meant to provide reliable anti-greenwashing signals to the financial sector. However, Wednesday's vote did the opposite, according to Laurence Tubiana, an architect of the Paris Agreement and president of the European Climate Foundation.
  • "This decision cannot be justified based on our need for energy independence or the science of climate change," Tubiana stated via Twitter. "Politics and vested interests have won over science today," she said.
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