German gas industry questions EC taxonomy

German gas industry group Zukunft Gas (Future Gas, or ZG) has questioned the logic of the European Union's taxonomy, a set of rules defining access to funds that accord with the aims of the Green Deal. The block has set itself the target of reaching net zero carbon by 2050, meaning that energy projects that do not fit with this will have to be funded independently.

While the taxonomy initiative creates investment security for the energy industry, the "current draft from Brussels is short-sighted and misses the real goal," says ZG. It wants the threshhold for gas-fired power to be lowered and the timetable pushed back to enable enough despatchable power-generation capacity to be built.

“Every project in the energy industry depends on financing. Sustainable investment criteria will have a much greater impact on the energy transition than previous laws and ordinances," says ZG's Timm Kehler. "This makes the taxonomy ordinance an important step towards climate neutrality by 2050."

As coal and some nuclear power plants are retired, renewable energy will depend more on dispatchable gas-fired power stations, it says. Their low CO₂ emissions, high efficiency and flexibility make them "particularly suitable as a back-up for renewables." But for the purposes of the taxonomy, "greenhouse gas emissions from electricity generation running on gaseous or liquid fuels may not exceed a limit of 100 grams CO₂/kWh. Even the best-in-class gas-fired power plants are not below 340 g CO₂/kWh."

Gas-fired power plants built by 2025 would be exempt from this assessment limit, but they have an average lead time of around seven years. “Gas-fired power plants will be essential for the security of supply for a few more decades. If investments in the gas infrastructure are not classified as sustainable, we risk supply gaps and power outages in the 2030s," said Kehler.

ZG said some German politicians are waking up to the implications. It quoted one member of the European Parliament and CSU party member Markus Ferber saying the taxonomy should be seen "as an instrument to enable change, not to prevent or shut down the existing infrastructure. If we get this wrong, we will get into social imbalance in Germany."

Last year, Germany shortened the approval process for gas-fired power plants with the Investment Acceleration Law, to speed up the process of closing down coal-fired capacity.

ZG was until recently known as Zukunft Erdgas. It changed its name in recognition of the growing amount of non-natural gas that will be flowing through Europe's pipelines as biomethane, syngas and hydrogen demand expand. The EU is still consulting on the final form of the taxonomy.