Gas is in the black, not green

Would excluding natural gas from the green taxonomy prevent the financing of transition fuels?

Natural gas is the transition fuel of choice. Should it be included in the EU Green Taxonomy as a result, since it needs new capital? In a new research note, we show that excluding gas generation from the taxonomy would not increase its cost of capital and thus not create any risk of underinvestment in the `transition fuel’ of choice. Conversely, including gas in the Green Taxonomy creates a genuine price distortion and a perverse incentive to limit future investments in renewable energy technologies.

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