Energy secretary set to ‘classify natural gas as sustainable investment’

The government is planning to reclassify natural gas as “environmentally sustainable”, as part of the government’s ‘green taxonomy’ index being drawn up to guide investors, according to reports.

The Telegraph has reported that Kwasi Kwarteng, the secretary of state for business, energy, and industrial strategy (BEIS), is keen that natural gas be recognised as a ‘green’ transition fuel, as part of a classification process taking place within Whitehall.  

In November 2020, chancellor Rishi Sunak announced that the government would seek to establish a ‘green taxonomy’, which would identify which sectors contribute most to the UK’s climate goals, in a bid to aide investment decisions. 

Speaking about the green index last year, John Glen, economic secretary to the Treasury, said that the government wanted investors and businesses to play their part in greening the economy and transitioning to net zero, “so it’s crucial we have a clear common definition of what green means”. 

“A UK green taxonomy will provide better data on the environmental impact of firms, supporting investors, businesses and consumers to make green financial decisions and accelerating the transition to net zero,” he said.

A Whitehall source is reported as telling the Telegraph this week that Kwarteng “considers natural gas a transition fuel”, and “accepts the reality of the situation which is that we will need gas for decades to come and we need more developments in the North Sea”.

The source continued: “A lot of investors with environmental, social and governance (ESG) targets are divesting from fossil fuels - we don’t want that to be done at the detriment of natural gas.”

While burning natural gas is a huge source of carbon dioxide emissions, some in the energy industry argue that because it emits fewer emissions than coal and oil, it is right to consider it a green transition fuel.

The government also argues that producing natural gas in the UK is key to developing the country’s energy security, and has said it intends to establish a ‘Gas and Oil New Project Regulatory Accelerators’ task force, to provide support to new fossil fuel developments.  

Continued investment in natural gas and oil, as announced in last month’s Energy Security Strategy, has prompted ire from commentators and campaigners, but the BEIS secretary has shown no signs of backing down.

Last week, in response to activists disrupting a business lunch to protest against the government’s current approach to energy security, Kwarteng took to Twitter to say: “Shout and scream all you like, but I’m not going to put Britain’s energy security at risk by shutting off domestic oil and gas production. 

“We will need oil and gas for decades to come. Either we source more of what we need from the North Sea, or import more from abroad.”