Several financial institutions claim that gas is a transition energy (compared to coal) on the grounds that the European taxonomy would classify it as such. However, this only applies to gas-fired power plants, under certain conditions, and against the opinion of the European Commission’s sustainable finance experts, scientists, and many sustainable finance institutions. Gas is a fossil fuel that emits high levels of GHG throughout its life cycle. Although the final combustion of gas is less emissive than that of coal or oil, its extraction and transportation cause significant methane leaks, which over 20 years has a warming potential 86 times greater than that of CO2. So, in some cases, gas is even more GHG-emitting than coal.
To stay below 1.5°C, the IPCC scenarios, like the IEA’s NZE scenario, calls for a rapid drop in fossil gas production and consumption (-22% by 2030 for the NZE). Gas is not a transition energy in any geographical area of the world.
To be robust, a financial institution’s policy must necessarily address both oil and gas, and its evaluation in the Oil and Gas Policy Tracker will be severely penalized otherwise.
