Simon Jessop, Kate Abnett

BRUSSELS (Reuters), a coalition of investors with 50 trillion Euros ($56.81 Trillion) have warned the European Union against labeling investments as “sustainable”, claiming that Brussels’ proposal to do so would make it less global.

Last year, the European Commission prepared a plan for labelling some of Europe’s nuclear and gas investment as green under its “taxonomy”. This is a long-awaited document that will define what investments in Europe can be called climate-friendly.

On Wednesday, the Institutional Investors Group on Climate Change, which has 370 members, said that doing so would harm the EU’s efforts to lead international efforts for science-based, credible standards for green investment.

Stephanie Pfeifer (IIGCC Chief Executive) stated in an open letter that she and her team opposed the inclusion of gas into the Taxonomy.

“It is our view that the proposals… would seriously compromise Europe’s status as a global leader in sustainable finance, potentially triggering a ‘race to the bottom’ which could dilute the level of climate ambition within emerging jurisdictional taxonomies.”

When natural gas is burned in power plants it emits about half of the carbon dioxide emissions as coal. Some EU countries see this as a key way to reduce their dependence on coal. Gas infrastructure also has methane leaks, which can be a dangerous greenhouse gas.

The EU has been waging a heated debate about gas in the last months. This is despite record gas prices and tensions with Russia as its largest gas supplier.

The Commission was advised by experts not to classify gas plants as “green investments” unless they meet a limit of 100g CO2e/kWh. This limit was included in the original proposal of rules by Commission, which faced resistance from several countries such as Poland and Hungary.

Reuters has seen the latest draft of the proposal. It would include a 270g CO2e/kwh gas plant limit until 2030.

IIGCC claimed that it would allow energy companies the green taxonomy label to be used, even though they have not yet reached net zero emissions in 2050. Scientists believe this is the mark the world should reach to stop climate catastrophe.

According to the Taxonomy, “This hinders the ability of our members align their portfolios net zero and undermining its whole purpose,” it stated.

In the letter, it cited International Energy Agency calculations that natural gas demand has to fall 8% by 2030 if we are to achieve net zero global emissions by 2050.

($1 = 0.8802 euros)