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EBA welcomes Commission's sustainable finance package despite shortcomings

The European Commission (EC) adopted on April 21, 2021, an "ambitious and comprehensive" package of measures including the EU Taxonomy Climate Deregulated Act. The European Biogas Association (EBA) welcomes the adoption and the decision to label the production of biogas from anaerobic digestion (AD) as a low-carbon activity recognizes its valuable contribution to climate-neutrality, even though the chosen criteria are not fully aligned with the Renewable Energy Directive (RED).

Gas fuelled light- and medium-sized commercial vehicles from Volkswagen, IVECO, and Scania.

Biogas production enables greenhouse gas (GHG) emissions savings in agriculture and waste management, as acknowledged by the EU Methane Strategy released in October 2020. The regulation also supports the role of biogas and biomethane in providing renewable heat and power and recognizes the need to integrate “low-carbon gases”, including biomethane, in existing natural gas grids.

This the EBA says, sends a positive signal to investors and operators across the whole energy value chain for further deployment of biogas and biomethane in the coming years.

However, the EBA notes that the criteria in the Commission’s adopted EU Taxonomy will put the use of biomethane in the transport sector at stake. The manufacture and operation of some vehicles using biomethane are included in the regulation, for instance, bi-mode trains and coastal vessels or, in very specific cases, freight road vehicles.

Yet in most cases, the new EU Taxonomy Regulation confirms the tailpipe approach to measure carbon dioxide (CO2) emissions and therefore fails to recognize the climate benefits of biomethane, either compressed (bioCNG) or liquified (bioLNG). On the basis of lifecycle analysis (LCA), bioCNG and bioLNG can reduce emissions by more than 100 percent.

However, while the EU Taxonomy Regulation supports the use of freight road vehicles of more than 7.5 tonnes where “low-emission vehicles” (LEVs) are not technologically and economically feasible, in the CO2 Standard Regulation for heavy-duty vehicles (HDVs), the definition of “low-emission vehicles” excludes all natural gas vehicles (NGVs).

EBA points out that these vehicles could use locally produced biomethane, contributing to a circular economy and creating new business and job opportunities for farmers, agro-industries, waste treatment operators, and the local population.

Therefore, this decision is inconsistent with the Taxonomy Regulation (articles 9 and 10), as well as with the overall objectives of the EU Green Deal – achieving climate-neutrality and moving towards an efficient circular economy.

Available technologies and market needs point to biomethane as the best available solution right now to decarbonize multiple transport modes and segments. Earmarking green investments only for zero-emission vehicles, according to a tailpipe approach, will strongly penalize the scale-up of sustainable solutions, such as biomethane, in the road and maritime transport, as well as in non-electrified segments of the rail network. This will also jeopardize the development of low-emission fleets in low-density areas, where electric and hydrogen vehicles are not the most appropriate.

Furthermore, the EU Taxonomy puts too strict restrictions on the use of renewable gas in building heating systems and fails to identify highly efficient gas appliances and hybrid heat pumps as sustainable assets. Yet investments in gas and hybrid heating appliances can be beneficial for the energy system and energy consumers.

On the one hand, by bringing flexibility and security of supply. On the other hand, by being fit for different building types and climate zones while remaining affordable for all.

The EBA calls for higher transparency in the elaboration of the next batch of the EU Taxonomy by the European Commission and the Platform of Sustainable Finance, expected to be adopted by the end of the year. This new batch will be also critical for the biogas and biomethane sector, as it will focus on four other environmental objectives, including the transition towards a circular economy.

The scientific references used in the assessment, and explanations of the rationale for the criteria and thresholds of each activity should be accessible for consultation.

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