Natural gas will be classified as a “green” investment to boost the North Sea
Natural gas is to be classed as a ‘green’ investment by Kwasi Kwarteng as the government scrambles to increase production from the North Sea in a move that risks stoking tensions with climate campaigners.
Mr Kwarteng, the business secretary, is keen to have fossil fuel drilling listed as “environmentally sustainable” in a new classification of activities being developed by his department and the Treasury to guide investors.
It comes amid concerns that banks and pension funds are abandoning natural gas projects due to implications for climate change.
The production and combustion of natural gas for power generation and heating is a large source of carbon dioxide emissions.
Yet gas is touted by many experts as a “transition fuel” towards low-carbon economies because it emits less than the coal and oil it can replace.
The European Union classified some natural gas projects as green investments last year on this basis, despite strong opposition from critics concerned about climate targets.
A Whitehall source said: “Kwasi sees natural gas as a transitional fuel, and he accepts the reality of the situation which is that we will need gas for decades to come and we need more offshore developments. North.
“Many investors with ESG [environmental, social and governance] targets get rid of fossil fuels – we don’t want that to come at the expense of natural gas.
Rishi Sunak, the chancellor, announced in November 2020 that the government would establish a “green taxonomy”, to determine which sectors contribute to the UK’s climate goals so that investors who want to invest in going green can spend accordingly.
Britain has mostly moved away from coal-fired power stations, with gas providing almost 40% of annual electricity compared to less than 2% from coal, and almost a quarter coming from wind turbines.