October 2023

The role of fossil fuels intaxonomies: Canada case
study
Whitepaper

Contents
Executive summary ........................................................................................................... 3
Introduction...................................................................................................................... 4
Fossil fuels in world taxonomies ........................................................................................ 6
EU Taxonomy............................................................................................................................ 9
Climate Bonds Taxonomy ........................................................................................................ 12
China Green Bond Endorsed Project Catalogue ........................................................................ 12
ASEAN Taxonomy ................................................................................................................... 13
Russian Taxonomy .................................................................................................................. 14
Kazakhstan Taxonomy ............................................................................................................ 14
Thailand Taxonomy ................................................................................................................. 14
South Korean Taxonomy ......................................................................................................... 15
Singapore-Asia Taxonomy ....................................................................................................... 15
Summary ....................................................................................................................................................... 16

Fossil fuels in national policies ........................................................................................ 17
United States .......................................................................................................................... 17
China ...................................................................................................................................... 20
Germany................................................................................................................................. 23
Summary ....................................................................................................................................................... 26

The future of fossil gas .................................................................................................... 27
Summary ....................................................................................................................................................... 29

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative2

Executive summary
It has been over a year since Climate Bonds Initiative (Climate Bonds), with funding from CSA Group, completed
a landscape report and the Government of Canada’s Sustainable Finance Action Council (SFAC) published its
Taxonomy Roadmap Report: Mobilizing Finance for Sustainable Growth by Defining Green and Transition
Investments. This paper is intended to inform the debate on the inclusion of fossil fuel-related activities in a
future Canadian taxonomy, and whether they should be classified as green, transitional, or not permitted.
Purely green taxonomies, which constitute the majority globally, do not include activities related to extraction,utilization and transportation of fossil fuels. Mixed taxonomies that include both green and transitional
components generally include fossil gas power generation, but with significant limits on both the level ofemissions and the time when the activity is considered compatible with the taxonomy. Only one of thetaxonomies, however, allows for new fossil gas-fired generation capacity beyond 2030–2035 (Thailand states2040). Criteria and thresholds for such activities are expected to tighten as 2050 approaches.
Science-based transitional taxonomies (with a specific transition label for compliant activities) are still few: thefirst one was the Thailand Taxonomy, adopted in May 2023. The Singapore-Asia Taxonomy will share a similar
format when adopted. Both of these taxonomies use a traffic light classification to differentiate an activity’scontribution to transition: green, amber (transit) and red. Transitional activities, therefore, must follow apredetermined path leading to gradual improvement of their emissions profile in line with the Paris Agreement
goals. Transitional taxonomies do not include activities related to new extraction or coal-based and oil-based
generation. Although they do allow a more flexible approach when it comes to generation from fossil gas, thishas very strict limitations and a clear gas phase-out date.
The inclusion of electricity generation from fossil gas in the EU Taxonomy was the result of lobbying, notscientific research. Nevertheless, the criteria for recognizing gas generation are currently so difficult to comply
with that launching such a project, compatible with the provisions of the taxonomy, is meaningless from atechnological and economic point of view. Existing alternatives in renewable energy are much cheaper andmore efficient in almost all parts of the EU.
Canada’s key trading partners, the United States (US), China and Germany, consider a dramatic reduction inhydrocarbon consumption either as one of the main direct goals of their policies, or as a natural result of
achieving other goals (for example, decarbonization). Although none of the countries considers anyhydrocarbons green, all three countries use fossil gas as a temporary support for the growing renewable energy
industry and as a substitute for other, dirtier energy sources. However, adopted plans, programs and incentives
are designed to lead to a decline in consumption of all major hydrocarbons in the medium term.
None of the three countries considers limiting climate change as the main imperative of their policy but instead,all three try to fulfill their commitments in the field of decarbonization. This is achieved through the creation of
new opportunities and providing subsidies and financing incentive programs rather than through bans on thedevelopment of new hydrocarbon capacity. Even so, the European example of creating restrictive legislation(such as the emissions trading system and carbon border tax) will inevitably lead other countries to adopt similar
measures and so transform the market. Comparable legislation adopted by the US as part of the Inflation
Reduction Act (IRA) is aimed at curbing methane emissions, which could also prompt additional requirementsfrom exporters to the US and level the playing field.
Recent scientific studies indicate significant fugitive emissions accompanying the extraction, transportation anduse of fossil gas. Fugitive emissions of just 3% across the whole supply chain make fossil gas just as impactfulon the climate as coal. Acknowledging this problem, the US and the EU are already implementing policies aimed
at reducing fugitive leaks. Additionally, international taxonomies recognize the importance of this issue throughthe requirement to evaluate emissions from the use of fossil gas on a lifecycle basis rather than on a scopes 1
and 2 basis.

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative3

Introduction
It is no longer a question of whether countries need a strategy to decarbonize their economies, but how to do it
faster, more efficiently and with the least damage to their economies. A taxonomy is a classification system thathelps market participants distinguish projects that are aligned with the goal of achieving net zero by 2050 andallows governments to integrate ambitious climate policies into first-order public priorities. According to Climate
Bonds, as of 2023, more than 40 countries and regions have a taxonomy or are in the process of developing one.
The most recently published taxonomies for Thailand, Mexico and ASEAN demonstrate that there are different,
but converging, pathways to this goal.
In May 2021, the Sustainable Finance Action Council (SFAC) was mandated to provide advice andrecommendations to Canada’s Deputy Prime Minister and Minister of Finance, and the Minister of Environment
and Climate Change on developing a green and transition investment taxonomy. In September 2022, SFAC
released the Taxonomy Roadmap Report: Mobilizing Finance for Sustainable Growth by Defining Green andTransition Investments.1 The report provided a recommendation on whether a green and transition financetaxonomy would be an appropriate tool for the Canadian context. It also provided guidance on the optimal
taxonomy design for Canada, including the key elements for success, the governance model, and the framework
for the taxonomy.2
This document provides guidance on how to structure the future taxonomy to make it consistent with global bestpractices, and define its principles and objectives. The authors estimate that the country needs CAD115bn peryear to implement the decarbonization policy, and a taxonomy is a proven means of attracting private capital tothis task, including foreign direct investment. This also requires definitions in the future Canadian Taxonomy to becompatible with internationally recognized definitions and criteria for classifying various activities as green,transitional and sustainable.
While the debate over the future content of the Canadian Taxonomy continues in the press, the main stumbling
block remains the inclusion of fossil fuels, particularly fossil gas where Canada is the world’s fifth-largest
producer. The controversy centers on whether fossil gas should contribute to a decarbonization pathway as aninterim or a transitional fuel, or be phased out completely.
Canada’s Taxonomy Roadmap Report suggested the creation of a green and transition taxonomy with two
different labels for green and transition activities and financial instruments.3 It would cover:•••Green activities. Projects expected to grow substantially during the transition include those with low- or
zero-scope 1 and 2 emissions; low or zero downstream scope 3 emissions; and those that produce
goods or services that are expected to see significant demand growth in the global low-carbon
transition (green hydrogen production, zero-emissions vehicle manufacturing, electricity transmission
infrastructure, etc.,).
Transition activities include:
o Activities that have high scope 1 and 2 emissions but low scope 3 emissions and have notechnically viable net-zero alternative after 2050 (examples would be a steel production facility
that installs an electric arc furnace or constructing a new blue hydrogen facility with a highemissions capture rate). These activities are expected to remain stable or grow in thetransition.
o Activities with high scope 3 downstream emissions that have viable alternatives after 2050,
such as those associated with energy generation from oil and gas. Eligible activities in thiscategory must have a well-defined lifespan that is approximately proportionate to the
expected decline in global demand in representative 1.5 °C pathways. They must also lead tosignificant emissions reductions from existing assets, for example, installing world-leading
methane capture on existing natural gas production (with a short to moderate lifespan); or
installing carbon capture, utilization, and storage (CCUS) on an existing oil sands facility (with ashort to moderate lifespan). These activities are expected to play a role but must be phasedout completely and be replaced by green activities.
Ineligible activities that:o are related to solid fossil fuels;

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative

4

o
o
o
o

create carbon lock-in and path dependency;
are at a high risk of becoming stranded in net-zero pathways due to high scope 3 emissions
and declining global demand;
have scope 1 and emissions that are inconsistent with net-zero pathways;
are unable to scale in transition.

The debate around transition proves the most complicated part of a future Canadian taxonomy, which needs tobalance the presence of a vast oil and gas sector with the science-based and credible policies required to attract
investors to finance the Canadian transition. This report informs the discussion from the perspective of Canada's
three key economic partners, based on climate science, providing an overview of the status of fossil fuels in
global taxonomies with an emphasis on the transition component of fossil gas.

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative

5

Fossil fuels in world taxonomies
Taxonomies have gained the status of an effective tool for the implementation of government policy because
they provide a system for classifying activities into different categories related to their place in the transition to
net zero by 2050. For this reason, most of Canada’s main trading partners (with the important exception of theUS) have, to varying degrees, engaged in the development of one. Crucially, a taxonomy is simultaneously bothrear- and forward-facing by indicating where new investments must be attracted to change existing sectors andactivities, in accordance with climate objectives. Acting as an investment beacon, the taxonomy helps to avoid
locking in outdated technologies that are incompatible with climate goals; especially important in the energy
sector which is responsible for three-quarters of global greenhouse gas emissions.
The inclusion of fossil fuel activities in the taxonomy is controversial, given that fossil fuels still power about 80%of the world's energy requirements despite recent successes in the development of renewable energy sources.
None of the taxonomies listed below allows the creation of new oil and coal generation capacities, but some dosee fossil gas as a transitional fuel. This allows their use for a short period of time to support renewable energy
sources and facilitate the transition away from coal and petroleum products. Nevertheless, in all cases, there is atime limit on the period for which fossil gas can be used, in line with the country’s decarbonization pathway,
after which its use is no longer compatible with climate policy.
A review of the taxonomies of 12 countries or trading blocs with different economic structures was conducted forthe purpose of this research. China, the EU, Mexico, and South Korea are among the top ten Canadian trading
partners.4 Others such as Russia and Kazakhstan have a strong reliance on hydrocarbons. Table 1 below reviews
three main sources of fossil energy (coal, oil and gas) and four categories of activities:
1.
2.
3.
4.

Extraction of fossil fuels.
Processing or transportation of fossil fuels, including construction of natural gas or oil pipelines.
Creation of new capacities involved in the generation of electricity, heating and cooling from fossil fuels.
Retrofitting of existing facilities, including fossil fuels infrastructure and power plants, to reduce
emissions.

A glossary of taxonomy terms used in Table 1 is provided below.
Green taxonomy

A classification framework that focuses only on activities that are clearlycompatible with the net-zero goal (e.g., solar power generation, use of electricvehicles). Usually, such taxonomies include only climate change mitigation andclimate change adaptation activities. In Table 1, if the taxonomy lists otherenvironmental objectives but includes only mitigation and adaptation
activities, it is still considered green.

Sustainable taxonomy

A taxonomy that addresses a wider range of activities than green taxonomies.
Typically, these are activities related to achieving sustainable development,
environmental and social well-being goals.

Transitional activities

Activities for which there are no technological solutions for rapid
decarbonization, but which can either be decarbonized gradually or are
recognized as necessary for a certain limited period. It is important to notethat activities in this category should have either a credible and science-based
decarbonization pathway by 2050 or a clear timeframe after which they should
be fully phased-out of the economy. For further explanation see the Climate
Bonds white paper, Financing Credible Transitions.5

Transitional taxonomy

A taxonomy that clearly separates the category of transitional activities (e.g.,through a traffic light system) from the category of green activities, whichallows them to be given a separate label.

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative

6

Green/sustainable taxonomy
with transitional activities

A taxonomy that includes transitional activities but does not separate theminto a distinct category or give them a specific label.

Taxonomy eligibility

Whether the activity is present in a taxonomy at all.

Taxonomy compliance

Whether the activity complies with the principles and intentions of ataxonomy.

Table 1. Fossil fuels in world taxonomies

Table color coding
Ineligible and noncompliant

Eligible with additional
criteria (impossible or very
hard to meet)

Oil
EU Taxonomy(a sustainablefinance taxonomy
with transition
activities, but asingle compliancelabel)

Climate Bonds
Taxonomy(a green taxonomy
with transition
activities, but asingle compliancelabel)

Chinese Green
Bonds Project
Catalogue 2021
(a white list ofeligible activities
and technologies
with a single label)

Colombian Green
Taxonomy

Eligible with additional
criteria (easy to meet)

Eligible and compliant withminimal or no criteria

Gas

Coal

Extraction✘

Extraction✘

Extraction✘

Processing/transportation✘

Processing/transportation✘

Processing/transportation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✓

Electricity/heating/cooling generation✘

Retrofitting✘

Retrofitting✘

Retrofitting✘

Extraction✘

Extraction✘

Extraction✘

Processing/transportation✘

Processing/transportation✘

Processing/transportation✘

Electricity/heating/cooling generation✓

Electricity/heating/cooling generation✓

Electricity/heating/cooling generation✓

Retrofitting✘

Retrofitting✘

Retrofitting✘

Extraction✘

Extraction✘

Extraction✘

Processing/transportation✘

Processing/transportation✓

Processing/transportation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✓

Electricity/heating/cooling generation✘

Retrofitting✘

Retrofitting✘

Retrofitting✘

Extraction✘

Extraction✘

Extraction✘

Processing/transportation✘

Processing/transportation✘

Processing/transportation✘

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative7

(a green taxonomy
with a single label)Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✘

Retrofitting✘

Retrofitting✘

Retrofitting✘

Extraction✘

Extraction✘

Extraction✘

Processing/transportation✘

Processing/transportation✘

Processing/transportation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✓

Electricity/heating/cooling generation✘

Retrofitting✘

Retrofitting✓

Retrofitting✘

ASEAN Taxonomy

Extraction✘

Extraction✘

Extraction✘(a tick or crossapplies to all threetiers);

Processing/transportation✘

Processing/transportation✘

Processing/transportation✘

Electricity/heating/cooling generation✓(Tier-

Russian
Taxonomy(a green taxonomy
with a single label
plus a catalogue ofenergy efficiency
measures)(three-tier green
and transition
taxonomy with asingle label)Electricity/heating/cooling generation✓

Electricity/heating/cooling generation

✓

2
Amber
)

Retrofitting✘

Retrofitting✘

Retrofitting✘

Extraction✘

Extraction✘

Extraction✘

Processing✘

Processing✘

Processing✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✘

Retrofitting✘

Retrofitting✘

Retrofitting✘

Kazakhstan
Taxonomy (aExtraction✘

Extraction✘

Extraction✘

sustainabletaxonomy withenergy efficiency
activities and asingle label)

Processing/transportation✘

Processing/transportation✘

Processing/transportation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✘

Retrofitting✓

Retrofitting✓

Retrofitting✓

Extraction✘

Extraction✘

Extraction✘

Processing/transportation✘

Processing/transportation✘

Processing/transportation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✘

South African
Taxonomy(a green taxonomy
with transition
activities and asingle label)

Thailand
Taxonomy(a green andtransition
taxonomy with two
separate labels)

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative8

MexicanTaxonomy(a green taxonomy
with a single label)South Korean
Taxonomy(a sustainablefinance taxonomy
with transition
activities but asingle compliancelabel)

Singapore-Asia
Taxonomy (draft)(a green andtransition
taxonomy with two
separate labels)

Retrofitting✘

Retrofitting✓

Retrofitting✘

Extraction✘

Extraction✘

Extraction✘

Processing/transportation✘

Processing/transportation✘

Processing/transportation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✘

Retrofitting✘

Retrofitting✘

Retrofitting✘

Extraction✘

Extraction✘

Extraction✘

Processing/transportation✘

Processing/transportation✘

Processing/transportation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✓

Electricity/heating/cooling generation✘

Retrofitting✘

Retrofitting✘

Retrofitting✘

Extraction✘

Extraction✘

Extraction✘

Processing/transportation✘

Processing/transportation✘

Processing/transportation✘

Electricity/heating/cooling generation✘

Electricity/heating/cooling generation✓

Electricity/heating/cooling generation✘

Retrofitting✘

Retrofitting✓

Retrofitting✘

EU Taxonomy
The EU taxonomy is officially labelled the sustainable finance taxonomy but despite its six environmental
objectives, the focus is on climate change mitigation and adaptation. The taxonomy includes several activities
labelled as transitional (e.g., aluminium, cement, and steel production with specific emissions limits per unit ofproduction) but does not differentiate these activities in any way. They do not receive a separate label and aresimply designated as compliant with the objectives of the document. Therefore, the expectation is that the perunit emission thresholds for such activities will be revised downwards as 2050 approaches.
Published in June 2020, the first version of the EU Taxonomy did not include fossil gas-related activities. However,a year after it entered into force, a Complementary Climate Delegated Act that included two fossil gas-related
activities (4.29. Electricity generation from fossil gaseous fuels and 4.30. High-efficiency co-generation ofheat/cool and power from fossil gaseous fuels) was adopted.6 The activities were included under a transitional
category of the Taxonomy Regulation to ‘allow us to accelerate the shift from more polluting activities, such ascoal generation, towards a climate-neutral future, mostly based on renewable energy sources.’7
The inclusion of fossil gas-related activities in the taxonomy was the result of an intense lobbying campaign byrepresentatives of the oil and gas industry and was at odds with the scientific approach taken in the rest of thetaxonomy .8 A significant number of international investors opposed the move, emphasizing that the inclusion ofgas would undermine the credibility of the taxonomy as well as the EU's own commitment to climate neutrality
by 2050.9
However, the criteria for the two abovementioned activities are so specific and limiting in nature, that it is unlikelythat any green financial products will align with the requirements.

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative9

EU new gas facilities criteria (electricity generation from fossil gaseous fuels)

1.
••

To be aligned, construction or operation of gas-powered facilities must comply with the following
criteria:
EITHER the life cycle GHG emissions from the generation of electricity using fossil gaseous fuels arelower than 100 g CO2e/kWh (carbon capture, utilization, and storage (CCUS) may apply)
OR facilities for which the construction permit is granted by 31 December 2030 comply with all of
the following:o direct GHG emissions of the activity are lower than 270g CO 2e/kWh of the output energy,
OR annual direct GHG emissions of the activity do not exceed an average of 550gCO2e/kWhof the facility’s capacity over 20 years (CCUS may apply);o the power to be replaced cannot be generated from renewable energy sources, based on acomparative assessment with the most cost-effective and technically feasible renewable
alternative for the same capacity identified, the result of which is published and is subject toa stakeholder consultation;o the activity replaces an existing high-emitting electricity generation activity that uses solid
or liquid fossil fuels (oil or gas);o the newly installed production capacity does not exceed the capacity of the replaced facility
by more than 15%;o the facility is designed and constructed to use renewable and/or low-carbon gaseous fuels
and the switch to full use of renewable and/or low-carbon gaseous fuels takes place by 31
December 2035, with a commitment and verifiable plan approved by the management
body of the undertaking;o the replacement leads to a reduction in emissions of at least 55% GHG over the lifetime of
the newly installed production capacity;o where the activity takes place on the territory of a Member State in which coal is used forenergy generation, that Member State has committed to phase-out the use of energy
generation from coal and has reported this in its integrated national energy and climate
plan.

2. The activity meets either of the following criteria:••

At construction, measurement equipment for monitoring of physical emissions, such as those frommethane leakage, is installed or a leak detection and repair programme is introduced;
At operation, physical measurements of emissions are reported and leaks eliminated.

3. Where the activity blends fossil gaseous fuels with gaseous or liquid biofuels, the agricultural biomass used
to produce the biofuels complies with the specific criteria from the EU Taxonomy.

The threshold of 100 gCO2/kWh lifecycle emissions as well as the threshold of 270 gCO2e/kWh of direct (scope 1)
emissions are currently unachievable by gas-powered plants unless fitted with additional CCS/CCUS installations.
Current best-in-class combined-cycle gas turbines (CCGT) have direct emissions of approximately 320-350g
CO2/KWh (see Figure 1 below), to achieve lower emissions than currently possible through further efficiency gains
that could only be achieved though H2 blending or with CCS. Real world emissions can be much higher.

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative10

Figure 1. Direct CO2e emission of different types of fuel in relation to their primary energy content

Source: Volker Quaschning

Detailed 2022 data on emissions intensity of different types of fossil fuels, calculated by the German Federal
Agency for Environmental Protection, clearly shows that direct CO2 emissions from natural gas in relation to theprimary energy content of around 358g CO2e/kWh.10 Average efficiency of modern fossil gas power plants (basedon German data) varies between 39% (turbine) and 59% (CCGT).11 Consequently, real emissions intensity of thesetypes of installations fluctuates between 512 and 340 gCO 2/kWh of direct emissions respectively.12 The United
Nations Economic Convention for Europe gives similar numbers: 434 gCO2e/kWh on average of direct emissions
for unabated gas power plants (CCGT) and 128 gCO2e/kWh for natural gas plants (CCGT) with CCS. 13
It is important to note that the first entry within the EU Taxonomy fossil gas criteria limits emissions not only to
100g CO2e/kWh but also on a lifecycle (LCA) basis, which requires taking account of the emissions during fossil gas
extraction, transportation, storage, and utilization. The fugitive methane emissions that always accompany
upstream and midstream gas operations (covered in detail under the US chapter) make it exceptionally difficult
for any project to achieve this level. Figure 1 above demonstrates emissions with standard leakage factors applied.
This makes it challenging for any company to comply with the EU Taxonomy gas generation criteria without
deploying the most up to date CCS installations. Although CCS and CCUS technologies can move emissions profilesof power plants closer to the targeted numbers, the price of electricity for consumers becomes economicallyquestionable. Research conducted by the Institute for Energy Economics and Financial Analysis estimates thelevelized cost of energy for gas with CCS power plants to be significantly higher than that of ordinary gas power
plants and almost two times above current alternatives such as renewable energy plus storage.14

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative11

Figure 2. Levelized cost of energy per energy source

Source: Institute for Energy Economics and Financial Analysis

Finally, the alternative average annual direct emissions threshold of 550kg CO2e/kW of capacity over 20 years
initially appears feasible but it still creates investment risk. Compliance with the threshold requires a justified
projection of future emissions that together add up to 550gCO2e/kWh on average over the 20-year horizon, which
may not be demonstrable. Even if it were (many financial professionals question its feasibility) the owner of theactivity is also required to prove compliance with the eight other additional requirements.15 As a consequence,these obligations make the project so expensive and cumbersome (no existing gas-powered plant meeting therequirements was identified at the time of writing) that the taxonomy can hardly be called gas friendly.

Climate Bonds Taxonomy
Since the Climate Bonds Initiative (Climate Bonds) published its first green taxonomy in 2013, it has become oneof the most cited international taxonomies. Each set of criteria and thresholds is a product of a 15-stage process
involving hundreds of technical experts from all over the world.16
The Climate Bonds Taxonomy is, in most circumstances, technologically agnostic, meaning that alignment ofactivities is subject to compliance with specific criteria and their related thresholds. While there are some
exceptions, generally it does not label any technology directly as being harmful, but rather relies on limiting its
application by designating specific science-based thresholds.
The Climate Bonds Taxonomy effectively excludes any use of fossil fuels. Coal and oil extraction are ineligible asactivities, while generation using coal and oil power is eligible, but only with 100% of capture of emitted CO 2 with
CCS. This rate is currently unachievable: existing CCS installations have an effective capture rate of 50-68%, withsome installations achieving 90%, but never 100%.17,18 Gas generation criteria have not been developed andincluded in the taxonomy yet, so at this point gas generation is ineligible.

China Green Bond Endorsed Project Catalogue
The China Green Bond Endorsed Project Catalogue (referred to as the China Taxonomy hereafter) differs frommost existing taxonomies in that it is a list of aligned technologies rather than a list of eligible activities with criteria
and thresholds.19 It was developed with manufacturing rather than financial operations in mind and is used mostly
by industrial companies. The taxonomy was first published in 2015 with major updates in 2021 which led to

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative

12

tightening of the criteria for fossil fuels. Clean coal, and standalone liquefied and ordinary natural gas generation
were completely excluded from eligible types of projects. Now, standalone generation of energy from any fossil
fuels is completely excluded from the taxonomy. However, some fossil fuels-related articles remain, albeit minorin scope.
The taxonomy considers the following fossil fuels-related activities as eligible:
•
•
•
•
•
•

Manufacturing of gas turbines (3.2.1.6),
Use of hydrogen-natural gas mixture as fuel (3.2.2.8),
Use of gas generation as part of multi-energy complementary projects (3.2.3.1 i.e., projects combining
several sources of energy to achieve maximum efficiency and avoid waste,
Construction and operation of natural gas transmission, storage, and peak load regulation facilities(3.2.3.3),
Construction of gas-powered distributed energy resource installations (3.2.3.4, small-scale i.e., less than
10 MW- installations necessary in remote areas),
Replacement of coal-powered municipal generation with gas-powered generation in urban centralized
heating facilities (5.1.1.1).

In other words, the Chinese taxonomy permits the building of infrastructure that serves and supports fossil gas
generation, building small gas generators in hard-to-reach areas, combining renewable energy sources with gas,and replacing coal generation with gas. This corresponds with China's general decarbonization policy, where gas
is treated as a temporary replacement for oil and coal because it is considered a cleaner fuel. This is covered in
more detail in the China chapter below.

ASEAN Taxonomy
The ASEAN Taxonomy is still in its development phase but the last update published at the beginning of March2023 contained the first set of criteria and thresholds for compliance checks. 20 It is a complicated multi-layered
document that defines three tiers of criteria with different stringency. Tier 1 is classified green and intended foruse by the most developed countries. Therefore, it is generally compatible with other international taxonomies
and climate science, stipulating 100 gCO2/kWh as an internationally aligned threshold for energy generation.
Tiers 2 and 3 are classified as amber but have significantly weaker thresholds than tier 1 and are intended foruse by less developed countries. This lack of rigour means they cannot align with 1.5 0C pathways and are
directional in nature. The ASEAN Taxonomy has also been criticized for allowing electricity generation from fossil
gas with an emissions threshold of up to 510 gCO2/kWh (see Figure 3 below). However, the taxonomy does
explicitly differentiate tier 1 from tiers 2 and 3, acknowledging that generation with emissions above the 100g
gCO2/kWh threshold is not compatible with the Paris Agreement. It also allows generation of electricity fromhybrid fossil and renewable fuels as well as generation of heating and cooling with the same total threshold as
would be achievable with electricity generation from fossil gas.
Although the ASEAN Taxonomy can be viewed as having an element of transition for all activities, it is not
implemented in the same way as most other transitional taxonomies. Each ASEAN country chooses a baseline tierthat corresponds to its level of economic and technological development. Although tiers 2 and 3 have significantly
less stringent thresholds (i.e., up to 510 gCO2e/kWh for electricity generation, which corresponds to the level ofobsolete low-efficiency gas capacities), the expectation is that countries will migrate to higher tiers, as theireconomies develop, to be compatible with international standards.
This means that the taxonomy does not meet the strict criteria for transitional activities because it does not
require a gradual movement towards decarbonization by a predefined date (Paris Agreement or NDC-based).
Given that the choice of tier and ambition to transition are political decisions, the country may remain locked ata lower tier until 2050. Although paragraph 4.2.6 states that tiers 2 and 3 will discontinued in the future, it does
not provide a timeframe or binding phase-out to align with the goals of the Paris Agreement.

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Figure 3. ASEAN Taxonomy Energy Criteria abstract

Source: Asean.org

Russian Taxonomy
The Russian Green Taxonomy is generally compatible with scientific principles and follows the example of the EU
in most of its thresholds .22 However, in the case of gas generation, the activity must be compliant with thethreshold of 100g CO2e/kWH of direct (scope 1) rather than LCA (scopes 1, 2 and 3) emissions. Given theubiquity of methane leakages in Russia, this caveat seriously undermines the profile of installations that can becertified as green.23
Russia has also developed a Transitional Taxonomy document, which consists mainly of energy efficiency
measures rather than alignment with a 1.50C pathway. Therefore, it includes operations with all types of fossil
fuel and generally requires a very modest improvement of installations for compliance. Analysis of thisdocument is not included in the present paper because it does not qualify as a taxonomy, which aligns to net
zero by 2050 or related time-bound goals).

Kazakhstan Taxonomy
No new energy generation from fossil fuels is eligible under the Kazakhstan Taxonomy. However, a loophole exists:
articles 2.1.2., 2.1.3, and 2.1.4 allow introduction of energy efficiency measures on all existing power and heating
plants with a threshold of 20% efficiency improvement required. The overwhelming majority of power and heatplants in the country are working on fossil fuels, and these articles allow the owners of the projects to align withthe taxonomy by improving their efficiency.

Thailand Taxonomy
The Thailand Taxonomy was the first in the world where the principle of a science-based transition was fully
applied.24 The criteria in the taxonomy use the traffic light classification system: green indicates activities that are
currently fully compatible with net zero by 2050; amber indicates transit activities that should either gradually

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reach to net zero by 2050, or be phased out at some point in the future before 2050 (in the latter case, theemission intensity per unit of output should also be constantly reduced on the path to the phase-out date).
Red corresponds to activities that are under no circumstances compatible with the goals of the taxonomy: newand existing generation from oil and coal with any level of emissions, and new gas generation. Within the green
category, conversion of gas capacities to hydrogen is permissible, and within the amber category, conversion ofgas plants to reduce their emissions is in accordance with a pre-calculated trajectory leading to 0gCO2e/kWh by
2050 (see Figure 4 below). The construction of gas distribution infrastructure is also prohibited but within theframework of the green category, its conversion into infrastructure for the transportation of hydrogen is allowed.
The taxonomy establishes a deadline of 2040 as the cut-off for any gas generation activity to be eligible.

Figure 4. Thailand Taxonomy energy sector thresholds, gCO2e/kWh2022-2025

2026-2030

2031-2035

2036-2040

2041-2045

2046-2050

Green
Activities

100

100

100

100

Amber
Activities

381

225

191

148

N\A

N\A

Red
Activities

>381g

>225g

>191g

>148g

>50g

>50g

50

Source: Thailand Taxonomy Board

South Korean Taxonomy
Energy production based on liquefied natural gas and mixed gas (i.e., the gas that is a mixture of two or more gas
types including hydrogen, ammonia, and by-products of gas and liquefied natural gas) as well as liquefied natural
gas-based hydrogen (blue hydrogen) production are eligible in the South Korean Taxonomy under the transition
sector.25 The sunset date, after which fossil gas generation can no longer be considered eligible, is currently
defined as 2030. However, as in the EU Taxonomy, no separate label is provided for the transitional activity.

Singapore-Asia Taxonomy
As of August 2023, the Singapore-Asia Taxonomy is still in draft form but as it is almost complete, the criteria for
power generation are unlikely to change. Like the Thailand Taxonomy, the Singaporean one is built upon a traffic
light system with green, amber, and red activities. It does not allow for the construction of new purely fossil gaspowered generation facilities but provides a wide range of amber options for retrofitting of existing facilities:
•
•
•
•
•

Retrofit of existing power plants to allow ≥50vol% hydrogen or its derivatives,
Retrofit of existing plants with CCS that is designed at the outset to allow the facility to meet the green
criteria by 2035 at the latest,
Retrofit of existing transmission and distribution networks that allow ≥50vol% low-carbon gases,
Retrofit of existing storage systems that allow ≥50vol% low-carbon gases,
Other investments directly supporting or facilitating H2 uptake in the plant are eligible if the measuresresult in ≥50vol% hydrogen or its derivatives (e.g. purchase, operation, and maintenance measures).

In addition, the taxonomy permits the construction of new fossil gas power plants with the following limitations:•

New power plants (e.g. CCGTs or fuel cells) that can allow ≥50vol% hydrogen or its derivatives (e.g.
ammonia), or,

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•
•
•

New power plants that capture at least 50% of emissions and are designed to meet green criteria by 2035
at the latest, or,
New transmission and distribution networks that allow ≥50vol% low carbon gases, or,New storage systems that allow ≥50vol% low carbon gases.

Additionally, both retrofitting and construction of new power plants must meet the following criteria:•

The power cannot be generated from renewable energy sources, based on a comparative assessmentwith the most cost-effective and technically feasible renewable alternative for the same capacity
identified; the result of which is published and subject to a stakeholder consultation.

Summary
The main global taxonomies are unambiguous about the incompatibility of meeting the goals of the Paris
Agreement with the development and use of hydrocarbons, especially the construction of new fossil fuel plants.
The only issue on which there is disagreement is the use of fossil gas, which in some cases is seen as anintermediate/transitional fuel that can be used to replace other fuels with worse emissions characteristics.
Purely green taxonomies, which constitute the majority globally, generally do not include hydrocarbon-related
activities. Mixed taxonomies that include both green and transitional components generally include fossil gas
power generation, but with significant limits on the level of emissions and a cut-off date for when the activity is
no longer considered compatible with the taxonomy. All of the taxonomies, however, ban new fossil gas-fired
generation capacity beyond 2030-2035 (2040 for Thailand). None of the science-based taxonomies, whether
green or transitional, include new fossil fuels exploration projects.

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Fossil fuels in national policies
Even though national and international taxonomies are generally built on scientific principles and correspond to
the goals of the Paris Agreement, they are only one component of a national decarbonization policy. These
policies consider not only international treaties, but also domestic politics and economics, the views of various
interest groups, and issues of energy security and social stability. This accounts for why none of the taxonomies
described in the previous chapter have abandoned the use of hydrocarbons, including the construction of new
power-generation capacity.
To date, Canada's largest trading partners, the US, EU, and China, have not banned the construction of new
fossil fuel facilities directly, but opted to stimulate the development of new technologies and replacement of
outdated technologies with green ones. Nevertheless, all three regions have different grounds for selecting theirdecarbonization policies. EU countries prioritize reducing emissions and meeting climate commitments while the
US is upgrading its infrastructure as a new driver for economic growth. China is prioritizing its own energy
security and taking the lead in new market niches. Even so, hydrocarbons will play a diminished role in the future
economy of all three regions.

United States
The US is Canada's main trading partner (77% of trade) with hydrocarbons and their derivatives as Canada’s
major export class (35.6% in 2022).26,27 Therefore, US long-term carbon and climate change policies are of key
importance to Canada's economy. Although Washington does not have a plan to introduce carbon tax
mechanisms comparable to those in the EU, the Biden administration has dramatically stepped-up climate policy
and also adopted several ambitious goals that will inevitably affect the country's trade.

Does the US consider fossil fuels as green or sustainable?

The US Environmental Protection Agency clearly states that ‘green power is defined as electricity produced
from solar, wind, geothermal, biogas, eligible biomass, and low-impact small hydroelectric sources.’28 All
three fossil fuels (oil, gas, and coal) are defined as ‘conventional power’ and are clearly excluded from boththe list of green and the list of renewable sources of energy.

The Ministry of Energy recognizes natural gas as ‘relatively clean burning fossil fuel' but at the same time,clearly excludes it from the list of climate-friendly fuels underlining two facts:••

Natural gas is mainly methane—a strong greenhouse gas,
Natural gas exploration, drilling, and production affects the environment.29

However, this view is not universally held among US politicians and officials, although the attempts torecognize fossil fuels as green are rarely met with support. At the beginning of 2023, Ohio legislators adopted
a bill with a last-minute addition, labelling natural gas a green energy.30 The fact that Governor Mike DeWine
signed the bill into law despite its dubious nature and the circumstances of its creation (the fossil gas
provision was added into a bill originally focused on poultry sales, late at night on the second-to-lastlawmaking day of the year) led to public outrage and several lawsuits .31,32 According to the local media, thelaw was financed by a gas industry-sponsored non-profit and was not based on any scientific analysis.33 To
date, no other state has decided to follow in the steps of Ohio

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Some of the administration’s first actions after taking office in January 2021 were to bring the country back into
the Paris Agreement and establish a Climate Task Force of 25 ministerial-level members, which was tasked withthe following objectives:••••

Reducing US greenhouse gas emissions 50-52% below 2005 levels in 2030,
Reaching 100% carbon pollution-free electricity by 2035,
Achieving a net-zero emissions economy by 2050,
Delivering 40% of the benefits from federal investments in climate and clean energy to disadvantaged
communities.34

In September 2021, the US joined the Global Methane Pledge and adopted the US Methane Emissions Reduction
Action Plan that outlines the measures necessary to achieve a 30% reduction in 2020 overall methane emissions
levels by 2030.35 These measures do not limit the production and use of hydrocarbons but rather, include a listof measures to reduce fugitive emissions and increase efficiency of operations (such as reducing wastefulventing and flaring of gas during drilling operations, elimination of leaks or ruptures of oil and gas pipelines, andplugging abandoned oil and gas wells).
The most significant climate-related policy of the current administration has been the adoption of the Inflation
Reduction Act (IRA) in August 2022.36 Despite the omission of the reference to climate, the act contains thelargest climate-related economic stimulus package in American history with more than USD500bn to be spent onenergy and climate-change related projects.37 The act involves a multitude of incentives to drastically transformthe energy profile of the US economy by 2030, including:••••

USD250bn to upgrade, repurpose, or replace energy infrastructure;
USD216bn worth of tax credits to catalyze private investment in clean energy, transport, andmanufacturing;
USD43bn in tax credits to lower emissions by making electric vehicles, energy-efficient appliances,rooftop solar panels, geothermal heating, and home batteries more affordable;
The creation of the National Green Bank that will work as a development body and will partner with theprivate sector to help secure funding for green projects.

The IRA included a complex set of measures related to the control of methane (the main component of fossilgas) emission, including:••More than USD1bn to provide financial and technical assistance for preparing and submitting reports
on greenhouse gases, monitor methane emissions, reduce methane and other greenhouse gas
emissions from oil and gas systems, improve and deploy emissions reduction equipment, support
innovation, permanently close and plug wells, and mitigate health impacts in low-income areas;
USD350m in formula grant funding for eligible states to help oil and gas well-owners (as well as
operators of applicable facilities), and voluntarily and permanently reduce methane emissions fromlow-producing conventional wells on non-federal land.38

The IRA establishes a waste emissions charge for methane from applicable facilities that report more than
25,000 metric tons of CO2 equivalent per year to the Greenhouse Gas Reporting Program (GHGRP) petroleum
and natural gas systems source category, and that exceed statutorily specified waste emissions thresholds (seethe last chapter for further details). Analysis from Bloomberg NEF indicates the implementation of climate
targets will eventually require the US to apply CCUS to all its gas generation..39 However, this type of generation
will only be economically sustainable if the government continues to subsidize CCUS technology, making it
artificially cheaper than renewables. Currently, the IRA plans CCUS tax credits to be phased out by 2028, without
which the new gas plants paired with CCUS will have questionable profitability.
According to scenario analysis conducted by the US Energy Information Administration in March 2023, evenpartial realization of the IRA (full data is yet to be incorporated) will lead to a drastic reduction in the share ofhydrocarbons in the electricity generation sources mix by 2030 (in two of the three scenarios including thereference one).40

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Figure 5. US net electricity generation by fuelSource: Annual Energy Outlook 2023

While the IRA is mainly concerned with decarbonization of the energy generation sector, the largest share of US
emissions (28%) comes from the transportation sector.41 In January 2023, the US administration published the
US National Blueprint for Transportation Decarbonization. The document was jointly developed by thedepartments of energy, transportation, housing and urban development, and the Environmental Protection
Agency as a guide for future policymaking and research, development, demonstration, and deployment in the
public and private sectors. The document clearly stipulates that to achieve the goal of net zero by 2050 thecountry must ‘transition to clean options by deploying zero-emission vehicles and fuels for cars, commercial
trucks, transit, boats, airplanes, and more’.42
Blueprint developers emphasize that most new vehicle sales will need to be zero-emissions by the mid-2030s,
and the legacy stock of fossil-based vehicles must be simultaneously transitioned to electric vehicles to achieve
2050 goals. The document mentions the Executive Order on Catalysing Clean Energy Industries and Jobs
Through Federal Sustainability which directs the federal government to ‘use its scale and procurement power toachieve ambitious goals, including 100% zero-emission vehicle acquisitions by 2035 and 100% zero-emission
light-duty vehicle acquisitions by 2027’.43 Overall, current policies aimed at decarbonizing the most climatematerial parts of the transportation sector are as follows:
Table 2. Key US decarbonization policies related to transportation sector

Transportation mode

Share of current
emissions withintransportation sector

Light-duty vehicles

49%

GHG Emissions Reduction Goals•••
Medium and heavy-duty
trucks and buses

21%

Maritime

3%

•
•
•

Achieve 50% of new vehicle sales being zeroemission by 2030 supporting a pathway for full
adoption, and ensure that new internal combustion
engine vehicles are as efficient as possible.44
Deploy 500,000 EV chargers by 2030.45
Ensure 100% federal fleet procurement be zeroemission by 2027.46
Aim to have 30% of new vehicle sales be zeroemission by 2030 and 100% by 2040.47
Ensure 100% federal fleet procurement is zeroemission by 2035.48
Continue to support the Zero-Emission Shipping
Mission (ZESM) goals to ensure that 5% of the
global deep-sea fleet are capable of using zeroemission fuels by 2030, at least 200 of these ships
primarily use these fuels across the main deep sea
shipping route, and 10 large trade ports covering at

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•

•

Aviation

11%

•
•
•

least three continents can supply zero-emission
fuels by 2030.49
Support the US domestic maritime sector by
performing more RD&D into sustainable fuels andtechnologies and incentivize US commercial vessel
operators to move towards lower GHG emissions.
Work with countries in the International Maritime
Organization to adopt a goal of achieving zero
emissions from international shipping by 2050.50
Reduce aviation emissions by 20% by 2030 whencompared to a business-as-usual scenario.
Achieve net-zero GHG emissions from the US
aviation sector by 2050.
Catalyze the production of at least three billion
gallons of SAF per year by 2030 and ~35 billion
gallons by 2050, to supply the entire sector.51

Source: The US National Blueprint for Transportation Decarbonization

Although the full effect of these policies on the consumption of hydrocarbons by the US has not yet been
calculated, it will be significant. Rhodium Group analysts estimate that the IRA will lead to a substantial reduction
in US domestic production imports of hydrocarbons by 2030: domestic fossil gas production will decrease by 15%, net imports of crude oil will decrease by 1-6%, and net pipeline imports of natural gas will decrease by 911%.52
After 2030, the decline in consumption of hydrocarbons should accelerate due to the introduction of newenergy sources, the falling cost per kilowatt hour due to economies of scale, and the replacement of a significant
proportion of cars with electric vehicles. The speed of this change will be subject to the political situation in theUS, but the trajectory of current trends is clear as is the amount of money budgeted to underpin them. 53

China
China's hydrocarbon policy remains largely dependent on the economic, rather than environmental, plans of its
government. Nevertheless, China remains the world's undisputed leader in the production of technologies thatlead to a shift away from coal, oil and gas. The country not only actively exports these products around theworld, but also introduces them on its territory.
Does China recognize any of the fossil fuels as green?
China does not currently recognize coal and oil and their derivatives as clean fuels. Clean coal was a part of
the Chinese Taxonomy until 2021, but was removed in the update, marking a major change in the role offossil fuels in the energy transition.
The situation is more complicated with respect to fossil gas. On the one hand, direct electricity generation
using natural gas is not eligible in the Chinese Taxonomy, and the government's low-carbon transformationand decarbonization plans (see Figure 5. below) clearly state a commitment to reducing consumption of allhydrocarbons, including fossil gas.
However, fossil gas is often mentioned as a clean or low-carbon fuel when it comes to the implementation ofthese plans. For example, in March 2023, the National Development and Reform Commission listed fossil gas
on a list of clean fuels on par with hydro, nuclear, wind, and solar.54
The white paper on China's green and low-carbon transformation, published by the State Council of thePeople's Republic of China in January 2023, identifies one of the government's tasks as ‘promoting cleaner
end-use energy; encouraging the substitution of coal with natural gas, electricity, and renewable energy; andactively promoting cleaner heating during the winter in northern regions.’55
In most cases, natural gas is mentioned as a clean fuel where it substitutes dirtier fossil fuels like coal or oil,but no official document recognizes it as being green per se.

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The XIV Five Year Plan, adopted in March 2021, includes very concrete targets for reducing energy intensity andcarbon intensity.56 It also includes the following energy targets for the share of non-fossil fuels in the power andelectricity sectors:•••

By 2025, China will establish the initial foundation for a green, low-carbon and circular economy andsignificantly improve the energy efficiency of key industries. Energy consumption per unit of GDP will
decrease by 13.5% from the 2020 level; carbon dioxide (CO2) emissions per unit of GDP will decrease by
18% from the 2020 level; and the proportion of non-fossil energy consumption will reach 20%.
By 2030, China will make significant progress in economic and social development throughcomprehensive green transformation, and energy efficiency in major energy-consuming industries willreach international advanced levels. Energy consumption per unit of GDP will decrease significantly;
CO2 emissions per unit of GDP will be reduced by more than 65% from 2005 levels; the proportion of
non-fossil energy consumption will reach about 25%; and the total installed capacity of wind power andsolar power will reach more than 1,200 gigawatts.
By 2060, China will have fully established a green, low-carbon and circular economy and a clean, lowcarbon, safe and efficient energy system. Energy efficiency will be at an internationally advanced level,
and the proportion of non-fossil energy consumption will be more than 80%.

In November 2021, following the plan’s release, China's national climate goals were updated.57 They were
submitted to the UNFCCC secretariat in June 2022, and state the following objectives:
•
•
•
•
•

To have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060.
To lower CO2 emissions per unit of GDP by over 65% from the 2005 level.
To increase the share of non-fossil fuels in primary energy consumption to around 25%.
To increase the forest stock volume by 6 billion cubic meters from the 2005 level.
To bring the total installed capacity of wind and solar power to over 1.2 billion kilowatts by 2030.

To achieve these goals, China plans to implement more than 50 different policies contained within multiple
plans and strategies but two documents are particularly relevant:••Working Guidance for Carbon Dioxide Peaking and Carbon Neutrality in Full and Faithful
Implementation of the New Development Philosophy,58
Action Plan for Carbon Dioxide Peaking Before 2030.59

While many climate activists believe these targets are not ambitious enough, for the most populous and themost polluting country in the world, these targets represent an enormous challenge. However, the Oxford
Institute for Energy Studies concluded two years after the majority of these plans were adopted that they arebeing thoroughly implemented and all targets remain within reach.60
Coal dominates China’s fossil fuels mix, with fossil gas and oil combined comprising less than half of allhydrocarbons used in the country. China currently consumes 54% of the coal produced globally, which
comprised 56% of its energy mix in 2022, and is the biggest single contributor to its emissions. 61,62 The country's
new coal capacity creation had been in decline for the most of the 2010s, but Covid (and the associated closureof cities and interruption of supply chains), the effects of climate change (heatwaves, which simultaneously led
to excessive use of air conditioning and interruptions to hydropower facilities) and Russia's invasion of Ukraine
forced China to ramp up construction of coal-fired capacity for the first time in a decade, citing the importanceof energy security..63
However, China is generally considered an outlier in this respect and the majority of research puts peak Chinese
coal consumption at 2026 or 2027.64,65 Its Five-Year Plan for Energy (2021-2025) stipulates that between 2026
and 2030, coal consumption will begin to decline and it will gradually be phased out as the country's main sourceof energy, moving to a supporting role for other sources.66 A solid basis is being created for the fulfilment ofthese plans: on June 12 2023, China reported for the first time in its history that the installed capacity (by size) ofrenewables overtook the capacity of fossil fuels (50.9% vs 49.1%). 67 This trend is expected to continue in the
future, given that in February 2022, China’s National Energy Administration issued a decree instructing local
provincial governments not to build any further coal-fired capacity if the goal was solely to generate electricity.
New capacity can only be built to support grid stability or the integration of renewable energy.68

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Figure 6. China projected cumulative installed energy capacity development

Source: S&P Global Commodity Insights

Oil came a distant second in 2022, with 18% of the country’s energy mix, mostly consumed by the transportation
sector (energy only accounts for 1%). Although the oil sector does not receive as much attention as coal in
Chinese policy documents, it is heavily impacted by the booming development of the Chinese electric vehicles
market. The International Energy Agency (IEA) and consultancy Rystad Energy have brought forward forecasts ofChina's peak gasoline demand by about a year to 2024, while Chinese state companies PetroChina and Sinopec
forecast 2025.69 In the first half of 2023, 28% of all cars sold in China were electric compared to just 9% in thefirst half of 2021.70 By 2035, China intends that half of all cars sold will be fuelled by electricity, hydrogen or a
mix of electricity and fuel.71
Fossil gas currently occupies 9% of the country’s energy mix with 46% used in industrial processes while energy
generation consumes only 16%.72 Natural gas is seen as a bridging fuel and a much cleaner source of energy
than the more commonplace coal. In 2017, China launched a program to convert its existing coal capacities togas which led to significant improvements in air quality.73 However, despite the fact that China is the world's
fourth largest gas producer, its gas imports already account for half of consumption and continue to grow. The
economic consequences of this were felt when China had to purchase gas on the spot market last year following
a sharp jump in gas prices, caused principally by the war in Ukraine. The impact on China’s energy supply led toseveral dormant coal-fired facilities being brought back to life.74 This may make provoke a review of existing
renewable energy capacity, including facilities supported by coal.
However, in all energy mix scenarios conducted by the Tsinghua University’s Institute of Climate Change andSustainable Development, the share of fossil-based generation goes down by 2030 within the next two decades,
while the share of renewables goes up in all scenarios (see Figure 7 below).
China's hydrocarbon policy combines three intentions: to strengthen energy independence, to maintaineconomic growth, and to meet decarbonization targets. Although hydrocarbon divestment in general is not themain goal of the country's climate policy, the combination of actual policies inevitably leads to this outcome. As
renewable energy technologies improve and the adoption of electric vehicles increases, hydrocarbon use will
fall. This process will be driven by the volatility of fossil energy prices, which are subject to geopolitical risks.

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Figure 7. Forecasts of China’s energy mix

Source: Tsinghua University cited by Oxford Institute for Energy Studies

Germany
Germany is Canada's largest trading partner among the EU countries, which although subject to EU policies, hasalso adopted its own ambitious programs aimed at reducing emissions, including from hydrocarbon use.
Does Germany recognize fossil fuels as green?
According to all policy documents, Germany does not consider hydrocarbons, including oil, coal and fossil gas,
to be green, clean and environmentally friendly. The country has adopted clear guidelines for decarbonizationand intends to phase out fossil fuels by 2045. Nevertheless, natural gas is seen as a necessary interim fuel in aperiod of transition away from oil, nuclear power, and coal towards renewable sources.
Commenting on the inclusion of some gas generation options in the EU taxonomy at the beginning of 2022, agovernment spokesperson stated ‘for the German Government, natural gas is an important bridging
technology on the way to greenhouse gas neutrality against the background of the phase-out of nuclear
energy and coal-fired power generation.’75 As Europe’s largest industrial powerhouse, Germany has always
had to take the opinion of industrial associations into account. In February 2020, the country’s largest energyrelated companies issued a joint statement titled Protecting the climate and securing competitiveness
together, which called on the Federal Government to protect the fossil gas industry and infrastructure. It
states ‘The energy mix of the future consists of renewable electricity and gas, which will become increasingly
green over time.’76
In November 2022, the German Ministry of Economic Affairs and Climate Action published a paper called
Climate Action in Figures, which recognizes natural gas as a greenhouse gas with a negative effect on theworld’s climate.77 However, it reiterates that natural gas still currently serves as a bridge technology fortransitioning the energy system to renewable energy sources. Fossil gas, according to the paper, is far more
flexible in operation and, therefore, well suited as a transitional technology to compensate for the naturalfluctuations when generating power from renewable energy sources. However, it is emphasized that this gas
must be phased out and is not a part of zero-carbon future.

Traditionally, the German energy mix has been dominated by fossil fuels, but over the past decade, the country
has made substantial progress to change under the policy commonly known as Energiewende.78 As a result, by

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2022, renewables occupied roughly the same share of the country’s energy sector as fossil fuels (44% against46%) growing exponentially every year since 2002 when they were non-existent.
Figure 8. German energy generation sources mix, 2022

Source: Clean Energy WireAt the heart of Germany's climate policy lies the 2019 Climate Change Act, under which the country has pledged
to reach climate neutrality by 2045.79 As part of its adopted Nationally Determined Contribution (NDC), thecountry has also committed to a 65% reduction in emissions below 1990 levels by 2030. The Climate Change Act
details how much emission reduction must occur in each sector by 2030. In November 2022, Germany updated
its Long-Term Strategy for Climate Action and submitted it to the UNFCCC. Reduction in the use of hydrocarbons
is defined as one of the primary methods of achieving this goal.80
Figure 9. German emission reduction plans 1990-2030

Source: Climate Action in Figures

The strategy sets a deadline of 2030 by which at least 80% of Germany’s gross electricity consumption will be
generated by renewable sources, and coal-fired power generation phased out. Once the phase-out of coal-fired
power is complete, Germany will aim for a power supply that is greenhouse gas neutral. Here, the use of fossil
gas to generate power will be gradually cut back and partly replaced by green hydrogen. Similar policies were

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adopted for the transportation sector. Germany is actively promoting construction of electric charging stations
through the Charging Infrastructure Master Plan and incentivizes state and private bodies to procure electriccars through Electric Mobility Funding Guidelines.81,82
Fossil fuels are not only a climate problem, but also a political one, given that Russia was the largest supplier ofhydrocarbons to Germany before 2022. Climate Action in Figures stipulates that ‘the shift away from fossil
energy sources and increases in energy efficiency should be implemented and accelerated in all sectors – fromindustrial production to mobility and agriculture’.83 As a result of cutting supplies from Russia, Germany had toincrease the import of liquefied natural gas (LNG) and expand LNG infrastructure. However, in July 2023, theFederal Government updated an act to accelerate the use of LNG, which required all new LNG terminals to begreen-ready, meaning that the terminals must be easily convertible from LNG to hydrogen.84
As Germany has very few reserves of fossil fuels of its own, the switch to renewables is as much about
decreasing costs and providing energy security as climate. Over the last decade, Germany has reduced coal andoil imports substantially, in favour more renewable energy.
Figure 10. Import dependency by primary energy source in Germany, 2011-2021

Source: Clean Energy Wire

As the result of all these policies, Germany is expected to completely phase out coal by 2030. Gas will remain
until 2045, but new gas power plants will have to be convertible to hydrogen. 85 New wind and solar capacities
will be introduced every year and hydrogen production will also increase, displacing gas to a certain extent.
Despite the significant generation and receptive capacity, demand must go down to zero by 2045.
The German hydrocarbon strategy implies an accelerated phase-out of hydrocarbon imports and use over thehorizon of the next 20-25 years. Fossil gas will still be used as a transition fuel, but all new capacity will be
adapted for switching to hydrogen. As the cost of renewable energy falls and transportation technologies
improve, this process will accelerate, although imported LNG capacity will continue to grow for some time.

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Figure 11. Germany's capacity and demand for fossil gas, 2020-2050

Source: New Climate Institute

Summary
All three countries have adopted ambitious goals and policies to move away from fossil fuels and towards clean
energy sources. As the industrial giants of their respective regions, the US, China, and Germany are not able tophase out hydrocarbons overnight, but all three countries have made great efforts to create incentives to reducehydrocarbon consumption and eventually replace them with renewables. Among the elements of this systemare economic incentives for clean technology development, government programs to support infrastructure
upgrades, loans and subsidies for businesses, and government regulations and standards that close the door to
outdated and dirty technologies.
Despite the significant differences in the political structure of the three countries, there are some common
features that make the phase-out of hydrocarbons a difficult but unavoidable measure, not only for climatic, butalso for economic and social reasons.
•••

Dependence on hydrocarbons is a direct socio-political risk, as China and EU countries experienced in
Q1 2022, when gas prices surged as a result of the invasion of Ukraine. This contrasts with renewableenergy sources, which are not tied to supply and are able to exist autonomously, providing for thecommunities in which they are located.
Decarbonized technologies (including sustainable energy, industry, agriculture, and transport) promise
economic leadership for those who establish themselves as leaders in their technological development.
The IRA has already generated conflict between the EU and US, fuelled by the EU’s concerns over adrain of skilled labour and technology overseas.86 However, China provides a striking example of how acountry, which had no chance of gaining a foothold in the highly competitive market for traditional cars,
has become the undisputed world leader in sales of electric vehicles.87
The imminent introduction of the EU carbon border tax leaves countries that want to trade with thebloc (and remain competitive) no choice but to reduce the consumption of hydrocarbons in theirindustrial and energy systems.88 In doing so, these countries will move closer to implementing similarsystems to protect their own domestic market and prevent local companies from moving to otherjurisdictions with reduced environmental legislation.

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The future of fossil gas
The harmful effects on climate of oil and coal extraction and utilization are well known, yet there is no concrete
discussion on their future phase out, while fossil gas is perceived as a safer and cleaner fuel. However, in recent
years, the expansion of its production has been increasingly associated with growing atmosphericconcentrations of methane, which is emitted in huge quantities during the extraction and utilization of fossil
fuels. On a 20-year horizon, methane has 80 times the greenhouse effect of CO2 and is now responsible fornearly a quarter of all global warming.89 Two thirds of methane comes from human activity, mostly from fossil
fuel industries.
Research led by Stanford University scientists in 2020 clearly demonstrated that there has been an
unprecedented rise in global levels of methane emission over the past decade.90 It described the growth inmethane concentrations as ‘dangerously fast’.91 One of the causes identified was the increased extraction,transportation, and utilization of fossil gas, perceived as a transitional and less dirty fuel compared to otherhydrocarbons. However, natural gas-related operations often result in massive leakages of methane (fugitive
emissions) with the average US leakage rate between 1.4% and 3.7%.92 A recent report found that average
Canadian fugitive emissions stand close to 2.7%, which is twice as much as was previously thought.93
As a result of the fugitive emissions recently detected by satellites, the majority of green taxonomies requireemissions from energy to be assessed on a lifecycle basis, which is a material change from just scope 1 or scope 2
assessments.94 While a modern CCGT gas power plant has an average emissions intensity of 360-380 gCO2e/kWh,just adding an additional 3% of fugitive emissions makes fossil gas generation almost comparable in its greenhousepotential to coal.95 Research conducted by a consortium of US scientists found that on a 100-year timeframe, theeffects of life-cycle GHGs from fossil gas with about a 5% leakage rate are on a par with low-methane content coalmines, and 7.6% leakage is on a par with average coal mine methane leakage.96 The report also found thatconsidering the maximum life-cycle emissions from gas from all studies surveyed, gas with a 0.2% leakage rate is
on par with coal at all analyzed levels of coal mine methane leakage.
Table 3. Leakage factor importance in calculating fossil gas generation LCA emissions

Source: Volker Quaschning website

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative27

Figure 12. Average lifecycle CO2 equivalent emissions by energy type, gCO2/kWh

Source: UNECE*Vertical black lines indicate ranges of emission intensity. Blue horizontal lines indicate the average for each
emission type. NGCC: same as CCGT.
The consequences of fugitive methane emissions may potentially erase years of energetic and ambitious climate
policy. In 2020, a study conducted by the Environmental Defense Fund found that 3.7% of natural gas producedin the US Permian Basin leaked into the atmosphere, which alone was enough to erase the greenhouse gas
benefits of the coal-to-gas switching program that on paper allowed the US to substantially cut its emissions.97
Flaring, or burning of fossil gas emitted by oil and gas wells has long been thought of as a powerful tool tocombat emissions of leaking oil and gas wells. Combustion of methane has previously been thought to destroy
up to 98% of this gas (producing CO2 instead) and reduce the potential harm from uncontrolled methane
emissions. In September 2022, a group of US and European scientists published a study demonstrating thatthese beliefs are not compatible with reality.98 Airborne sampling around three US basins responsible for morethan 80% of flaring found that flares effectively destroyed only 91.1% of methane. This represented a fivefold
increase in methane emissions above previous assumptions and could constitute between four and 10% of total
US oil and gas methane emissions.
Awareness of the methane problem in general, and its relationship to the oil and gas industry in particular, wasreflected in the 2021 UNEP Global Methane Assessment.99 In November 2021, at COP26 in Glasgow more than
100 countries (including Canada) signed a Methane Pledge, promising to cut methane emission by 30% by 2030
compared to 2020 levels.100,101 Since then, many countries have adopted policies to cut the emission of methaneor make it more expensive for the oil and gas industry to produce it.
As a part of the IRA adopted in 2022 and discussed in the previous chapter, the US will charge from USD900 (in2024) to USD1500 (after 2026) per tonne of methane emitted, which equates to USD36 and USD60 per metricton of carbon dioxide equivalent, respectively.102 Simultaneously, IRA includes a disbursement of USD850mn
through the Environment Protection Agency to fund improving and deploying industrial equipment and

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processes that reduce methane emission. An additional USD700mn is destined for the upgrade of the emissions
profile of marginal conventional wells.
In May 2023, the EU parliament voted to reduce methane emissions through enhanced leak detection and repair
requirements.103 Now, companies will have to conduct regular equipment checks every two months, and from2026 this requirement will be extended to all exporters to the EU. This measure is designed to improve themethane situation beyond the bloc’s borders. In practice, the mechanism will serve as a methane addition to thecarbon border adjustment mechanism (CBAM) which will also come into effect in 2026. 104

Summary
As taxonomies are based on international climate science, the recent studies in the sphere of hydrocarbons
cannot be ignored. The alarming growth of excess methane emissions is starting to be addressed by the policies
of Canada's trading partners. To date, the measures taken have been relatively modest, but as 2030 approaches,countries will have to become increasingly strict, on both domestic producers and importers, to ensure
emissions reduction targets are met. Most existing taxonomies already require fugitive methane emissions to betaken into account by assessing the lifecycle emissions of fossil fuel utilization instead of limiting it to scope 1
and scope 2, which is expected to become standard.

The role of fossil fuels in taxonomies: Canada case study - Climate Bonds Initiative29

Endnotes
1

https://www.canada.ca/content/dam/fin/publications/sfac-camfd/2022/09/2022-09-eng.pdf
Ibid.
Ibid.
4
https://www.worldstopexports.com/canadas-top-import-partners/#google_vignette
5
https://www.climatebonds.net/files/reports/cbi_fincredtransitions_final.pdf
6
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2022.188.01.0001.01.ENG
7https://ec.europa.eu/commission/presscorner/detail/en/ip_22_711
8
https://reclaimfinance.org/site/en/2021/07/22/out-with-science-in-with-lobbyists-gas-nuclear-and-the-eu-taxonomy/
9
https://www.euractiv.com/section/energy-environment/news/investors-worth-e50-trillion-call-on-eu-to-exclude-gas-from-green-finance-taxonomy/
10
https://www.volker-quaschning.de/datserv/CO2-spez/index_e.php
11
Combined cycle gas turbine, a more modern and effective version of fossil gas power generation device
12
Ibid.
13
https://unece.org/sites/default/files/2022-04/LCA_3_FINAL%20March%202022.pdf
14
https://ieefa.org/resources/ccs-power-yet-stack-against-alternatives
15
https://clarity.ai/research-and-insights/eu-taxonomy-how-to-report-on-fossil-gas-related-activities/
16
https://www.climatebonds.net/files/files/Taxonomy/CBI_Taxonomy_Tables-08A%20%281%29.pdf
17https://www.newscientist.com/article/2336018-most-major-carbon-capture-and-storage-projects-havent-mettargets/?_ptid=%7Bkpdx%7DAAAAwPwz7sbzhAoKcmJhNGYxWmNwZRIQbGxpYWp0dHI2bjJxdmZmcRoMRVhMRlE5SEFCMVVTIiUxODIwMmpvMDg4LTAwMDAzMmdlcWx2M
TQ4ZmgzcDdkOGFmNzYwKhtzaG93VGVtcGxhdGU1S0E1TjJLWEY2RkgxMzIwAToMT1RZNkM3MjZBN1EyQg1PVFZDVkEwU1BUSTROUhJ2LYUA8Bd3MWoyOWZpc3RaDDg3LjEx
Ni4xNjUuM2IDZHdjaMOZiacGcAp4BA
18
https://climate.mit.edu/ask-mit/how-efficient-carbon-capture-and-storage19
http://www.pbc.gov.cn/goutongjiaoliu/113456/113469/4342400/2021091617180089879.pdf
20
https://asean.org/wp-content/uploads/2023/03/ASEAN-Taxonomy-Version-2.pdf
22
http://publication.pravo.gov.ru/Document/View/0001202109240043
23
https://www.theguardian.com/environment/2023/mar/06/revealed-1000-super-emitting-methane-leaks-risk-triggering-climate-tipping-points
24
https://www.bot.or.th/en/financial-innovation/sustainable-finance/green/Thailand-Taxonomy.html
25
https://www.shinkim.com/eng/media/newsletter/1690
26
https://www.worldstopexports.com/canadas-top-import-partners/
27
https://tradingeconomics.com/canada/exports/united-states
28
https://www.epa.gov/green-power-markets/what-green-power
29
https://www.eia.gov/energyexplained/natural-gas/natural-gas-and-the-environment.php
30
https://www.farmanddairy.com/news/newly-signed-ohio-law-defines-natural-gas-as-green-energy/752307.html
31
https://www.cleveland.com/open/2023/01/with-stroke-of-his-pen-gov-mike-dewine-defines-natural-gas-as-green-energy.html
32
https://ohiocapitaljournal.com/2023/07/21/declaring-natural-gas-green-energy-in-chicken-bill-violated-ohio-constitution-groups-argue/
33
https://www.cleveland.com/open/2023/01/lobbying-dark-money-were-behind-ohio-law-rebranding-natural-gas-as-green-energy-records-show.html
34
https://www.whitehouse.gov/climate/35
https://www.whitehouse.gov/wp-content/uploads/2021/11/US-Methane-Emissions-Reduction-Action-Plan-1.pdf
36
https://www.whitehouse.gov/wp-content/uploads/2022/12/Inflation-Reduction-Act-Guidebook.pdf
37
https://www.mckinsey.com/industries/public-sector/our-insights/the-inflation-reduction-act-heres-whats-in-it38
https://www.epa.gov/inflation-reduction-act/methane-emissions-reductionprogram#:~:text=The%20Inflation%20Reduction%20Act%20provides,the%20Methane%20Emissions%20Reduction%20Program.
39
https://about.bnef.com/blog/report-shows-that-inflation-reduction-act-alone-wont-set-united-states-on-track-for-net-zero/
40
https://www.eia.gov/outlooks/aeo/pdf/AEO2023_Release_Presentation.pdf
41
https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks
42
https://www.energy.gov/sites/default/files/2023-01/the-us-national-blueprint-for-transportation-decarbonization.pdf
43
https://www.fedcenter.gov/programs/eo14057/
44https://www.energy.gov/sites/default/files/2023-01/the-us-national-blueprint-for-transportation-decarbonization.pdf
45
https://www.whitehouse.gov/briefing-room/statements-releases/2021/12/13/fact-sheet-the-biden-harris-electric-vehicle-charging-action-plan/46
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/12/08/executive-order-on-catalyzing-clean-energy-industries-and-jobs-through-federalsustainability/
47
https://globaldrivetozero.org/2022/11/16/cop27-usa-growing-number-nations-sign-global-mou/48
https://www.whitehouse.gov/briefing-room/presidential-actions/2021/12/08/executive-order-on-catalyzing-clean-energy-industries-and-jobs-through-federalsustainability/49
http://mission-innovation.net/wp-content/uploads/2022/09/Zero-Emission-Shipping-Mission-Action-Plan.pdf
50
https://www.state.gov/remarks-at-how-ocean-solutions-contribute-to-net-zero/
51
https://www.faa.gov/sites/faa.gov/files/2021-11/Aviation_Climate_Action_Plan.pdf
52
https://rhg.com/research/climate-clean-energy-inflation-reduction-act/53
https://www.cfr.org/backgrounder/how-us-oil-and-gas-industry-works
54
https://www.ndrc.gov.cn/fggz/hjyzy/jnhnx/202303/t20230302_1350587_ext.html
55
https://www.gov.cn/xinwen/2023-01/19/content_5737931.htm
56
https://www.gov.cn/xinwen/2021-03/13/content_5592681.htm
57
https://unfccc.int/sites/default/files/NDC/202206/China%E2%80%99s%20Achievements%2C%20New%20Goals%20and%20New%20Measures%20for%20Nationally%20Determined%20Contributions.pdf
58
https://en.ndrc.gov.cn/policies/202110/t20211024_1300725.html
59https://en.ndrc.gov.cn/policies/202110/t20211027_1301020.html
60https://a9w7k6q9.stackpathcdn.com/wpcms/wp-content/uploads/2023/04/Chinas-climate-and-energy-policy-after-the-Two-Sessions.pdf
61
https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2022-full-report.pdf
62
Ibid.
63
https://www.eiu.com/n/china-road-to-net-zero-reshape-the-country-and-the-world/
64
Ibid.
65
https://www.frontiersin.org/articles/10.3389/fenvs.2022.974763/full66
https://www.ndrc.gov.cn/xxgk/zcfb/ghwb/202203/t20220322_1320016.html?code=&state=12367
https://www.reuters.com/business/energy/chinas-installed-non-fossil-fuel-electricity-capacity-exceeds-50-total-2023-06-12/68https://mp.weixin.qq.com/s/cxEhkFI7fLh0Vd_1SJNDeg
69
https://www.reuters.com/business/energy/chinas-gasoline-demand-peak-nears-ev-boom-hastens-transition-2023-07-28/
70
Ibid.
71
https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/china-aims-for-evs-to-account-for-50-of-all-car-sales-by-2035-60954964
72
https://a9w7k6q9.stackpathcdn.com/wpcms/wp-content/uploads/2023/04/Chinas-climate-and-energy-policy-after-the-Two-Sessions.pdf
73
https://link.springer.com/article/10.1007/s11356-022-23739-6#:~:text=Considering%20the%20massive%20cost%20of,the%20effect%20of%20this%20policy.
74
https://www.bloomberg.com/news/articles/2023-06-15/china-natural-gas-traders-pause-spot-purchases-as-prices-surge
75
https://www.reuters.com/markets/europe/germany-welcomes-eu-green-energy-plan-gas-still-opposes-nuclear-2022-01-02/76
https://wintershalldea.com/sites/default/files/media/files/Positionspapier_Gaskoalition_Erdgas%20in%20der%20Industrie_en_0.pdf
77
https://www.bmwk.de/Redaktion/EN/Publikationen/Klimaschutz/climate-action-in-figures.pdf?__blob=publicationFile&v=1
2
3

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78

https://web.archive.org/web/20161006040920/http://www.bmwi.de/English/Redaktion/Pdf/energyconcept%2Cproperty%3Dpdf%2Cbereich%3Dbmwi%2Csprache%3Den%2Crwb%3Dtrue.pdf
79
https://www.bmuv.de/fileadmin/Daten_BMU/Download_PDF/Gesetze/ksg_final_en_bf.pdf
80
https://unfccc.int/sites/default/files/resource/Anlage%202_Update%20to%20the%20longterm%20strategy%20for%20climate%20action%20of%20the%20Federal%20Republic%20of%20Germany_02Nov2022_0.pdf
81
https://nationale-leitstelle.de/wp-content/uploads/2023/01/Masterplan-Ladeinfrastruktur-II-der-Bundesregierung_Englisch_DIN_A4_barrierefrei.pdf
82
https://www.now-gmbh.de/en/news/pressreleases/electric-mobility-funding-guideline-call-for-funding-support-for-electric-commercial-vehicles-for-skilled-tradesbusinesses-and-smes/
83
https://www.bmwk.de/Redaktion/EN/Publikationen/Klimaschutz/climate-action-in-figures.pdf?__blob=publicationFile&v=1
84
https://www.bmwk.de/Redaktion/EN/Pressemitteilungen/2023/07/20230707-bundesrat-adopts-draft-legislation-amend-ing-the-lng-acceleration-act.html
85
https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/electric-power/112421-german-coalition-agrees-2030-coal-exit-aims-for-80-share-ofrenewables
86
https://www.bloomberg.com/news/articles/2022-09-10/eu-is-assessing-if-us-inflation-act-in-breach-of-wto-rules
87
https://www.bloomberg.com/news/articles/2023-07-17/how-china-beat-everyone-to-be-world-leader-in-electric-vehicles
88
https://www.npr.org/2023/05/17/1171238285/how-a-european-law-might-get-companies-around-the-world-to-cut-climate-pollution
89
https://earth.stanford.edu/news/methane-and-climate-change90
https://earth.stanford.edu/news/global-methane-emissions-soar-record-high91
https://www.nature.com/articles/d41586-022-00312-2
92
https://www.scientificamerican.com/article/methane-leaks-erase-some-of-the-climate-benefits-of-natural-gas/
93
https://taf.ca/custom/uploads/2022/05/TAF_Fugitive-methane-guidelines_2022-2.pdf
94https://seas.harvard.edu/news/2023/02/methanes-role-climate-change#:~:text=And%20because%20of%20its%20chemical,only%20about%2010%E2%80%9320%20years.
95
https://www.volker-quaschning.de/datserv/CO2-spez/index_e.php
96
https://iopscience.iop.org/article/10.1088/1748-9326/ace3db/pdf
97
https://www.scientificamerican.com/article/methane-leaks-erase-some-of-the-climate-benefits-of-natural-gas/
98
https://www.science.org/doi/abs/10.1126/science.abq0385
99
https://www.unep.org/resources/report/global-methane-assessment-benefits-and-costs-mitigating-methane-emissions
100
https://www.bbc.com/news/world-59137828
101
https://www.globalmethanepledge.org/
102
https://crsreports.congress.gov/product/pdf/R/R47206
103
https://www.politico.eu/article/eu-lawmakers-back-tougher-rules-on-methane-emissions/104
https://www.energypolicy.columbia.edu/publications/prospects-for-eu-extraterritorial-reduction-of-methane-emissions-from-its-natural-gas-supply/

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Authors: Mikhail Korostikov and Bridget Boule© Climate Bonds Initiative, October 2023

Prepared by the Climate Bonds Initiative

www.climatebonds.net

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