EU moving ahead with labelling natural gas power plants as green investments

…Opportunity beckons for Nigeria, gas-awash nation to reap big

…Experts say country must develop standard gas infrastructure

Ben Eguzozie, in Port Harcourt

Although the European Commission proposed it in earlier March this year, plans to classify some natural gas-fuelled power plants that generate power plus heating or cooling as green investments, the commission appears set to move ahead with things.

More so, if the caveat of meeting strict conditions on emissions, and the plants are operating by 2025, have the potential to use low-carbon fuels in future, and emit no more than 270 grams of CO2 equivalent per kWh of energy.

The decision is set to be agreed upon later this year as the climate change-related section of the taxonomy takes effect next year.

If this consideration is carried through, and many experts believe it would, great opportunity opens for Nigeria, a gas-awash nation, to reap big from the value chain. But this must go with preparing its gas infrastructure. Currently, the country has done pretty little in developing a profit-driven gas infrastructure. Its biggest effort so far, is the $7 billion Train 7 liquefaction plant under construction by Saipem, Chiyoda and Daewoo (SCD) joint venture. Milan headquartered Saipem is the core investor, contributing $2.7 billion.

Train 7 would take Nigeria’s current 22 million metric tons per annum (mt/y) LNG to 30 mt/y by 2024.

Experts at the Institute of Chartered Economists of Nigeria (ICEN) believe that this volume constitutes an insignificant part of an estimated ongoing global 456 mt/y LNG liquefaction projects. Though a significant proportion of this has been called back due to Covid-19 pandemic.

Meanwhile, central and eastern countries advocate for rules that promote gas investments as they seek to phase out coal-powered generation. On the other hand, some western and Nordic states believe that labelling a fossil fuel as green is not credible.

An initial proposal went off to deny the gas power plants a green label faced a backlash from a group of 10 EU member states.

The European Commission said the European Union’s rules to classify green investments would likely be altered to allow natural gas. The Commission had earlier published its “sustainable finance taxonomy”, a list of economic activities classified under green investments as the EU looks to promote private investments that will help meet climate targets.

Germany, the EU’s biggest economy is set to increase its carbon emissions target following court ruling.

The commission delayed deciding on classifying natural gas power plants as green. The EU financial services commissioner Mairead McGuinness noted to lawmakers in the European Parliament that the executive will have to reassess how to accommodate gas, especially as it could help to reduce emissions in certain instances.

“Maybe in the situation we have today, we need to find some accommodation, so that if there is no other better option that a member state can use, that gas plays a particular role,” she stated.

The commission will also review nuclear power as it expects expert reports to help it decide by the end of the year.

The EU’s aim is to direct more capital into environmentally friendly projects to help it deliver on its plan to rapidly slash the greenhouse gas (GHG) emissions causing climate change.

But the classification has become stuck in disputes between EU countries over how to treat investments in natural gas, forcing the Commission to redraft its original proposal from November.

Natural gas, a fossil fuel, produces roughly half the carbon dioxide (CO2) emissions of coal when burned in a power plant; and countries such as Poland and Germany plan to use gas to wean themselves off the more polluting fuel.

There are increasing concerns that leaks of potent planet-warming methane from gas infrastructure could eliminate the gains of switching to gas from coal. What this translates to is that gas is not emissions-free.