Press release: 18 December 2020

Resist BP and gas industry lobbying to call gas ‘sustainable’: lawyers

Environmental lawyers are urging EU leaders to resist years of intensive lobbying efforts by BP and other large oil and gas companies that want fossil fuel gas labelled as ‘environmentally sustainable’ for investment purposes.

With just weeks before the EU is due to unveil the rules for its flagship initiative classifying green investments, legal experts from ClientEarth are urging European leaders to disregard gas industry demands and set the taxonomy for sustainable finance in line with science.

The European Commission is expected within weeks to finalise the critical taxonomy rules for climate change mitigation and adaptation. The rules will classify what business activities are deemed sustainable and will help re-orient finance flows toward genuinely green businesses and to avoid greenwashing.

In October, the International Association of Oil & Gas Producers (IOGP) wrote to EU leaders demanding they disregard the bloc’s own expert advice and classify fossil fuel gas power and heat as sustainable, alongside other business activities like actual renewable energy. The letter – signed by BP, Total, Repsol, Equinor and UNIPER among others – followed more an €70 million worth of gas industry lobbying, including more than 300 meetings with policymakers since 2018, on the European sustainable finance plans.

Lawyers questioned BP’s role in the letter, given CEO Bernard Looney’s pledge just in September that the company was changing its approach to lobbying and would only push for policies in line with its net zero ambitions.

ClientEarth climate lawyer Johnny White said: “The gas lobby appears to be doubling down on greenwashing in Brussels: lobbying to water down green investment standards, when it can use the same standards to camouflage continued access to capital for unsustainable fossil gas.

“The gas industry will avoid market scrutiny if it can label unabated fossil gas as ‘sustainable’ through the EU taxonomy. Gas is not green or ‘clean’, it’s a fossil fuel. The science is clear, we simply cannot afford investment that locks in gas infrastructure with no place in a net zero future.

“BP’s role in this lobbying calls into question its net zero promises just months after its CEO earned global plaudits for the company’s shiny new green image. Nor is it just BP – other companies behind the IOGP letter are publicising net zero commitments. A genuine net zero strategy should focus on real decarbonisation rather than moving the goal posts on what is deemed sustainable.”

ClientEarth lawyers said that for the EU’s taxonomy to succeed, it must be an accurate, science-based standard for the investment needed to reach a net zero future.

White added: “If gas investments are labelled green, the taxonomy risks funnelling money into disastrous projects that ‘lock in’ generating carbon into the future – right when we need to decarbonise urgently – instead of shifting investment flows toward genuinely sustainable sectors.”

Investors and banks will also look to the EU taxonomy as a single credible, science-based market standard to accurately manage ESG risks and opportunities. If gas investments are included, there is a risk the flagship EU standard will become meaningless as a reference point for investors.

“In the coming AGM season, we recommend that investors actively engage with companies on the lobbying that their money is funding, and how this lobbying aligns with companies’ net zero commitments,” White said.

ENDS

Notes to editors:

• The gas lobby’s letter calls for the EU rules to include “deploying natural gas to continue displacing, wherever possible, coal in power generation and heating”.
• The EU expert group’s recommendation for the taxonomy rules was for an “over-arching, technology-agnostic emissions threshold” with no exception for gas, under which “unabated fossil fuel combustion, namely coal and natural gas, will be ineligible under the Taxonomy”.
• The expert group recommends that, to qualify as contributing to climate change mitigation or adaptation, fossil gas energy and heat generation must meet low lifecycle emissions thresholds which are aligned with the EU Green Deal targets of net-zero emissions by 2050 and a 50% reduction against 1990 levels by 2030. The expert group advises that these thresholds should periodically reduce to zero by 2050.  There cannot be lock-in of assets inconsistent with these goals. Burning fossil gas may potentially meet the expert group’s recommended thresholds with ‘carbon capture’ technology, which is presently commercially unproven at scale, but not with unabated gas energy production.
• The EU taxonomy regulation under which the detailed rules will be published requires that any business activity hoping to market itself to investors and financers as ‘environmentally sustainable’ cannot, at the same time, do significant harm to efforts to mitigate climate change by producing significant greenhouse gas emissions.  ‘Transitional’ activities may qualify provided that there is no technologically and economically feasible low carbon alternative such as renewable energy, and that they do not lead to a lock-in of carbon-intensive assets such as new gas infrastructure, considering the economic lifetime of those assets.
• NGO Reclaim Finance has counted the gas lobby paying for over 300 meetings with policymakers on the taxonomy since the adoption of the European Sustainable Finance Action Plan in January 2018, incurring an annual spend of around EUR 70m.

About ClientEarth

ClientEarth is a charity that uses the power of the law to protect people and the planet. We are international lawyers finding practical solutions for the world’s biggest environmental challenges. We are fighting climate change, protecting oceans and wildlife, making forest governance stronger, greening energy, making business more responsible and pushing for government transparency. We believe the law is a tool for positive change. From our offices in London, Brussels, Warsaw, Berlin and Beijing, we work on laws throughout their lifetime, from the earliest stages to implementation. And when those laws are broken, we go to court to enforce them.