EUETS data shows that in 2020 CO2 emissions from gas power plants overtook those from lignite power plants for the first time, having already overtaken hard coal power in 2019. Power sector emissions fell by 17% compared to 2019 mainly due to hard coal and lignite’s continued decline, resulting in gas making up a record 34% of the sector’s total emissions. Despite a huge 236 Million tonnes (Mt) of emissions from gas power in one year, many European countries are lobbying for gas plants to be eligible for green financing.
What is the EUETS?
The EU’s Emissions Trading System (EUETS) is a cap and trade carbon market, where companies buy or receive emissions allowances to cover their polluting activities. It covers all EU countries as well as the UK, Norway, Iceland and Liechtenstein.The resulting records provide a picture of Europe’s emissions each year, although not all emissions are included.
The EUETS power sector records include combined heat and power plants along with power only. Biomass and some waste generation is not included. We added fuel categories to power sector emissions and split them by hard coal, lignite, gas, and other fuel emissions.
Gas plants are now the largest source of power sector emissions
As we reported earlier this year, in 2020 renewables overtook fossil fuels to generate the largest share of Europe’s power. As a result power sector emissions have fallen by 139 Million tonnes (Mt), or -17%, to 692Mt. The majority of the fall in fossil generation came from coal, with hard coal and lignite falling 25% and 23% on 2019 respectively. In comparison gas fell only 6%, resulting in gas emissions overtaking lignite emissions to become the number one source of power sector CO2.
However, the power sector is still responsible for half of all emissions in the EUETS, down only 1 percentage point on 2019. The hard coal phase out has begun in earnest, and lignite is beginning to follow the same path, but gas is still seen as a “clean” alternative. This means that instead of switching from coal to clean power, in some cases gas is used to replace coal.
As a result, while hard coal and lignite power emissions together have fallen 58% (-496Mt) since 2013, gas power emissions have increased 23% (45Mt). 34% of all power sector emissions are now generated by gas power plants, an increase of 18 percentage points since 2013.
Gas is the top power sector emitter in 11 countries
In 10 countries (UK, France, Spain, Belgium, Austria, Netherlands, Italy, Malta, Latvia, Ireland), gas has been the largest source of emissions for several years. This year Portugal joins them. Five of those countries (Italy, UK, Spain, Netherlands and France) are among the top 10 most polluting power sectors in the EUETS. These places will now need to undertake a second phase out from gas to decarbonise.
A new risk to Europe’s energy transition lies in more countries pursuing a similar path. Countries such as Poland, Czechia and Bulgaria currently rely on coal power and are hoping to meet their emissions reduction targets by switching from coal to gas.
That gas power emitted 236Mt of emissions in 2020 demonstrates that this sector is already a large contributor to greenhouse gas emissions. Further growth will only exacerbate the problem. Instead of switching into gas, which will also have to be phased out in the 2030s to meet climate targets, coal heavy power systems should skip straight to carbon-free electricity.
Gas should not get green finance
Unfortunately, Poland and eight more key coal-reliant countries are lobbying for loopholes to be added to the EU’s sustainable finance taxonomy, which would allow money for green infrastructure to be diverted to gas projects. According to Global Energy Monitor’s European gas tracker, 70% of current proposed new gas capacity in the EU is planned in countries that currently generate significantly more from coal than gas. The rest is in Italy and France.
As well as building new gas capacity, utilities can convert old coal plants to burn gas instead of coal, which in some circumstances would also be eligible for green finance under the proposed taxonomy. PGE, Poland’s largest utility, is planning to convert all of its coal-fired combined heat and power (CHP) assets to gas power.
In 2020 PGE was one of just four utilities (RWE, LEAG, CEZ, PGE) that contributed over half (52%) of power emissions from coal (lignite and hard coal combined). RWE, the largest coal utility with 49Mt of lignite and 10Mt of hard coal emissions in 2020, is also the top gas utility with 15Mt, an increase of 5% on 2013. If other large utilities follow PGE in switching from coal to gas, they will lock in further fossil emissions, whereas if they switch to wind and solar those emissions will fall to zero.
Including gas power in the EU’s sustainable finance taxonomy will only incentivise these companies to build more gas plants or switch coal plants to gas, at a time when investment in clean energy infrastructure is most needed. As the largest source of power sector emissions in the EUETS, gas power cannot be considered a sustainable investment. A science based taxonomy will be an important tool in making finance work for Europe’s electricity transition — it cannot include gas power.
– Power sector is taken to include combined heat and power installations alongside power only installations.
– The primary fuel was found for all installations with greater than 1Mt of emissions in 2020. The main categories were gas, hard coal and lignite. Peat, non municipal waste, oil and blast furnace gases were all mapped to other. In addition the primary fuel for many very small installations could not be researched. These are also mapped to other, but are most likely small oil and gas plants, or oil and gas cofired in biomass plants.