EU Goes Ahead to Include Gas, Nuclear Energy Under 'Green' Investment
A Brief Summary
The European Commission has decided to move forward the decision to include investments in gas and nuclear-based energy in the list of green investments under a new EU taxonomy classification system. The commission has also published and presented a Taxonomy Complementary Climate Delegated Act, which proposes criteria and disclosure rules for their inclusion.
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The EU Taxonomy was created by the EU Technical Expert Group on Sustainable Finance as part of the EU Action Plan on Sustainable Finance (EU TEG). The taxonomy is a classification system that allows for the categorization of economic activities that contribute significantly to at least one of six defined environmental objectives, beginning with climate change mitigation and adaptation, with no significant negative impact on the other objectives.
Following the approval of the EU Taxonomy Climate Delegated Act (CDA), the EU Taxonomy regulation went into effect at the beginning of this year, starting with the first two objectives, climate change mitigation and climate change adaptation, though the assessment of gas and nuclear energy as eligible areas for green investment is still ongoing.
The European Commission said earlier this year that discussions on including gas and nuclear energy as green investment areas under the EU Taxonomy categorization system had begun. While gas and nuclear energy are frequently considered as transition energy sources that will be necessary to assist the move from fossil-based power to a greener energy system, several member states, like Germany and Austria, have expressed strong opposition to their planned inclusion.
The EU Platform on Sustainable Finance, an expert group tasked with advising the European Commission on the development of sustainable finance policies, recently warned that including nuclear and gas would risk undermining the sustainable Taxonomy framework by including criteria for activities that are not aligned with Europe's environmental goals.
The Commission stated in today's presentation that it has taken into account the input it has received on the proposal, which has resulted in changes to the criteria and disclosure and verification required regulations for nuclear and gas in the Taxonomy. New nuclear power plant projects, for example, will not be acknowledged until 2045, and gas-related activities will be expected to have lifecycle emissions of less than 100gCO2e/kWh.
The recommendations will now be referred to the European Parliament and Council, where they will be legally adopted unless 72 per cent of member states representing at least 65 per cent of the EU population, or a majority of European Parliament members, oppose within four months.
