You say green, I say greenwash

What exactly is a “green” investment? According to a European Commission proposal published this week, natural gas and nuclear power projects should count. Many Europeans disagree.

The EU’s “taxonomy for sustainable finance” is a first-of-its-kind attempt to prevent greenwashing in the financial sector by labelling certain activities as climate-friendly. The draft text proposes that nuclear projects would be marked green if they have “a plan, funds and a site to safely dispose of radioactive waste”. Gas power plants would also count so long as they produce emissions “below 270g of CO2 equivalent per kilowatt-hour” and receive a construction permit before 2031.

But not everyone is content with the new classifications:

• In Germany, the country’s newly-elected coalition has been riven by the decision to include gas: the Greens are arguing against, while their partners, the Free Democrats and Social Democrats, say that new gas plants equipped with carbon capture are integral to the transition. The coalition is, however, united behind plans to shut down Germany’s remaining three nuclear power stations by the end of 2022. That’s despite polls showing that half the German public are OK with keeping them going given the recent sharp rise in energy prices and risk of becoming dependent on Russian gas. Will it turn out to be a mistake?

• NGOs and activists have accused the EC of seeking to “bury” the proposal by publishing it so close to the New Years Eve deadline and providing just eight days for formal feedback. Greta Thunberg has previously called it “fake climate action”.

• The private sector is to a large extent already using an informal taxonomy of its own based on the available science: “Investors have already made their decision,” says Sean Kidney, CEO of the Climate Bonds Initiative, “I think the chances of them suddenly deciding to call gas ‘green’ are about zero.”

Others will view the EC’s proposal as a diplomatic victory:

• France and Poland have been lobbying hard for nuclear to be included. Both have climate plans that propose expanding nuclear power capacity to 2030 and beyond, mainly as a replacement for coal. 

There will be another year of consultation before the taxonomy becomes law, but the €250 billion question is whether the system, in final form, will be consistent with the EU’s target of reducing emissions by 55 per cent by 2030. 

“New gas-fired power stations able to operate for 40+ years well into the 2060s cannot be defined through any objective measure as ‘green’,” says Dr Ben Caldecott, Director of the Oxford Sustainable Finance Group. “We need to achieve net zero across the global economy by mid-century with significant reductions in emissions by 2030 to hold temperature increases to well below 2 degrees.” 

Likewise, commissioning nuclear plants to come online in the 2040s will not solve the pressing need to drastically cut emissions this decade. The burden for that task should fall overwhelmingly with renewables. Each EU member state will take a slightly different path to net zero, but first they’ll need to work out – collectively – what “green” really means.

1000 km charge
It was only a matter of time before an EV maker came out with a car that can go 1000 km on a single charge. The surprise is it’s a Mercedes, not a Tesla. The Times is taking seriously the idea that the prototype Mercedes Vision EQXX can go from Southampton to Inverness without troubling the grid, and Elon Musk should too. 1000 km is a third further than the Tesla Model S’s maximum range. “We will build the world’s most desirable electric cars,” says Ola Kallenius, the Mercedes-Benz chairman. We’ll see about that. A commercial version of the EQXX won’t be available for a couple of years and Tesla has a cult following. But Mercedes claims to have proprietary tech that stores more power per kilo of battery pack, and what Kallenius implies is true: even though most actual trips are under 30 km, until Europe’s charging infrastructure is fully built, range = desirability.

Green Chinese loans
Eighty-five billion yuan will probably turn out to be a drop in the ocean relative to the scale of the challenge, but it’s the thought that counts. China’s central bank has issued its first green loans, worth 85 billion yuan or $13.9 billion, for commercial banks to pass on to companies committed to shrinking their carbon footprints. The context is a sharp uptick in the price and use of coal in China to keep factories open as global demand for manufactures surges post-pandemic, and the central bank is also offering low-cost loans for “clean” coal, as opposed to the dirtiest kind. But some discounted rates for greener investment strategies are better than none at all.

Chester vs palm oil
The modestly-sized but commendably ambitious English city of Chester has become the first in the world to call itself a “sustainable palm oil city”. This entails urging its businesses to stop using palm oil from plantations grown on the remains of felled tropical rainforest in Indonesia and elsewhere in south-east Asia. The forests used to host wild populations of orangutangs, tigers and Sumatran rhinos. Oxford has followed Chester’s lead, as the Guardian reports. The shortness of the information cycle driving these initiatives is striking. Barely 20 years ago, a few miles east of Chester in Stockport, McVities said it was scrapping the use of unhealthy trans fats in its iconic Digestive biscuits. It had scoured the world for an alternative with the same “mouth feel” – and found one in palm oil.

Britain’s Amazon
The western side of the British Isles is one of very few places on the planet hospitable to “temperate rainforest”. These mostly deciduous woodlands are found in areas of high rainfall and humidity and are recognised by their abundance of carbon-trapping mosses and lichen. But while 20 per cent of the country has the right conditions for temperate rainforest, they cover just 1 per cent of the UK, as fast-growing plantations of Sitka spruce have gradually come to replace historic oak and birch. Campaigners have sought to reverse the trend by getting the government to explicitly back rainforest preservation efforts in its forthcoming £30m Big Nature Impact Fund. They’ve now succeeded.

Thanks for reading.

Barney Macintyre
@barneymac

Giles Whittell
@GWhittell

With thanks to our coalition members: a network of organisations similarly committed to achieving Net Zero