EU leaves some room for gas projects in green spending guidelines

BRUSSELS (Reuters) - The EU’s mammoth post-pandemic recovery fund, which is intended to exclude projects that worsen climate change or harm the environment, could in some circumstances be used for investment in a fossil fuel - gas - the European Commission said on Friday.

FILE PHOTO: Smoke and steam billow from Belchatow Power Station, Europe's largest coal-fired power plant, operated by PGE Group, at night near Belchatow, Poland December 5, 2018. REUTERS/Kacper Pempel/File Photo

On offer to the bloc’s 27 member countries are 672.5 billion euros ($813 billion) in European Union grants and loans.

Brussels wants to harness the cash to help deliver its goal of becoming climate-neutral by 2050. As well as requiring each country to allocate at least 37% of its share directly to climate projects, it insists that all recovery spending must “do no significant harm” to climate and environmental goals.

EU states including Germany and Poland plan to use natural gas, which contributes to global warming, as a “bridge” to wean themselves off far dirtier coal - despite growing concerns that associated leaks of methane from gas infrastructure could cancel out any benefits.

The Commission on Friday published guidelines to help countries assess whether their spending plans do no major harm to efforts to:

- curb climate change

- adapt to the impact of climate change

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- protect marine resources

- reduce pollution

- safeguard nature

- and promote a “circular economy”, with less waste and more recycling.

It said investments in power or heat generation from fossil fuels and related infrastructure should generally not be eligible for recovery funds.

However, “limited exceptions” can be made for natural gas projects “on a case by case basis”, it said, pointing to countries where the use of gas could curb emissions quickly by replacing coal and oil.

Any spending on gas must also not lock in CO2 emissions for years, for instance through infrastructure that cannot be “decarbonised” in future by switching to green gases.

Countries must also demonstrate that gas investments “do no significant harm” to the other environmental issues.

National governments have until the end of April to submit their spending plans to the Commission for approval.

($1 = 0.8269 euros)

Reporting by Kate Abnett, additional reporting by Matthew Green; Editing by Kevin Liffey