Delay to decide EU’s gas taxonomy squeezes LNG investment

LONDON (ICIS)–The European Commission’s delayed decision on whether to include natural gas in its green taxonomy is already slowing LNG investment plans, showing just how effective removing the label would be in stalling natural gas investments.

After it emerged at the end of last year that the Commission was planning on labelling gas green, a final plan from the Commission was delayed from December to early 2022.

It is now expected to be published later this month.

A binding season for the German Hanseatic Energy Hub, which would include an LNG terminal, has already postponed several times and is being held later this year instead of over the winter as was scheduled.

Potential customers, which include gas and energy multinationals, told the terminal’s planners that taxonomy was key to their own investment agenda in Germany and in the rest of Europe.

Small-scale LNG suppliers also say it will dent forecast expansion plans, with a growing network of bunkering and truck-loading facilities reliant on Trans-European Transport Network funding.

Cutting public investment in pure fossil fuels, even if encouraging pure LNG market growth as well, has already forced investing companies to allocate more to renewables and realign long-term strategies.

The draft taxonomy criteria for natural gas facilities for energy are intended to prescribe a progressive shift from natural gas-powered facilities to low carbon gases by 2035, which could help hydrogen market growth.

It means infrastructure like gas transmission and distribution networks will continue to receive state support, but should not increase gas transmission by volume, a feat opposers say is impossible.