European Parliament proposes tighter fossil fuel limits in sustainable investments
The European Parliament intends to seek tighter restrictions for oil and gas companies that may be classified as “green” investments under updated EU sustainable finance rules. Politico Europe reports, citing a document obtained by the publication.
Conditions for the transition category
Parliament’s position differs from the approach of EU member states, which want to ease restrictions for companies working with fossil fuels. The differences concern the updated Sustainable Finance Disclosure Regulation (SFDR), which is intended to combat greenwashing and support sustainable investment decision-making.
The new SFDR “transition” category is intended for companies shifting more polluting business models to cleaner ones. Members of the European Parliament propose including fossil fuel companies in it only if, over three years, they invest more in green activities than in new fossil fuel projects.
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Differences with member states
According to the publication, such an approach would likely exclude the French oil and gas company TotalEnergies from the transition category. The company directs 35% of its capital expenditure to new oil and gas projects, while about a quarter goes to low-carbon energy.
The European Commission’s initial proposal envisaged a complete exclusion of the fossil fuel industry, meaning it was stricter than the European Parliament’s position. In June, member states agreed on a less stringent approach: oil and gas companies could enter the transition category if they spent one-fifth of their capital expenditure on green activities defined by the EU taxonomy.
The European Parliament’s Committee on Economic Affairs is due to vote on Parliament’s position on September 10, and it will be considered at a plenary session the following week. If approved, lawmakers and member states will be able to begin negotiations on a compromise.
