European gas pipeline companies, known officially as transmission system operators (TSOs), report less than 1% of their emissions on average because of a climate accounting loophole that lets them obscure their environmental impact from investors.
New research from the Institute for Energy Economics and Financial Analysis (IEEFA) finds that a lack of guidance from standard-setter the Greenhouse Gas Protocol allows pipeline companies to not report emissions from the final use of gas they transport.
This “transported emissions” ambiguity means that investors may gain the false impression that these gas TSOs are low-carbon entities which are somehow separate from the fossil fuel value chain and its risks — when in fact they are its crucial “midstream” link.
This creates potential for greenwashing and unpriced risk at the financial institutions that serve these gas pipeline companies, as these indirect emissions effectively remain off the books.
“This fundamental flaw in climate accounting distorts the market by enabling gas pipeline companies to attract capital that might otherwise flow to greener investments,” said Arjun Flora, energy finance analyst at IEEFA and author of the report.
“The broader risk is that this loophole ultimately delays the electrification of gas-consuming sectors and the transition away from fossil fuels.” More information here.
