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MEPs voted to allow gas to receive Just Transition funding

Yesterday, Members of the European Parliament (MEPs) in the Regional Development Committee called for a derogation for investments in natural gas projects for regions heavily reliant on coal, thus contradicting both the European Commission’s original proposal and the consensus reached by Member States last week opposing the inclusion of gas in the Just Transition Fund.

In the wake of the pandemic, the EU decided to provide substantial additional funding for the Just Transition Fund, made up of 30 billion euros from the Next Generation EU recovery fund and 10 billion euros from the bloc’s budget for 2021-27, bringing the total to 40 billion euros.

Just a week ago, Member States agreed that the Just Transition shall not support investment related to the production, processing, distribution, storage or combustion of fossil fuels, nor the decommissioning or the construction of nuclear power stations.

However, lawmakers of the European Parliament’s Regional Development Committee seem to disagree and while they agreed to ban nuclear from green transition fund, they intend to leave a loophole for gas projects.

Based on the proposal, the European Commission may approve Territorial Just Transition Plans that include natural gas-related activities, “if they qualify as environmentally sustainable in accordance with the Taxonomy Regulation and comply with six additional cumulative conditions.”

In principle, the do not harm condition embedded in the sustainable finance taxonomy – a tool setting out performance thresholds for economic activities to help green transition – would exclude the financing of fossil projects and nuclear as they undermine the EU’s long-term emission cutting goals.

The position adopted by the Regional Development Committee to include gas in the Just Transition Fund faced strong opposition from the part of environmental organisations.

“Investing in fossil gas today will result in locking the EU into fossil fuel dependency for decades,” warned Markus Trilling, finance and subsidies policy coordinator at Climate Action Network (CAN) Europe.

“This is also an economic dead-end that misses out on the great job creation potential that renewable energy and energy savings measures offer,” continued Mr Trilling, adding that the vote is a triple loss for people, the economy and the climate.

However, the proposal could give hope to some Easter-European Member who last month urged the EU to include natural gas projects in future funding, underlining its bridging role to a sustainable future.

In a joint letter, eight Central Eastern Europen countries – Bulgaria, the Czech Republic, Greece, Hungary, Lithuania, Poland, Romania and Slovakia – argued that natural gas is a substantial back-up and balancing source for development of renewable energy and therefore the achievement of the EU’s climate targets – and called upon the EU to allow tailored solutions for the achievement of climate-neutrality by 2050.

As a next step, the European Parliament plenary is expected to vote on the draft report and give the mandate for inter-institutional negotiations during its September sitting.

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