The EU has passed the first set of green investment standards; the most problematic areas are yet to be addressed.
A Brief Summary
The EU has passed the first part of its rulebook on climate-friendly investments. The rules will define which activities can be labeled green in sectors including transport and buildings. The most politically sensitive part of the EU taxonomy is still to come, on whether to label gas and nuclear energy investments as green.
Read Full Article Below
The European Union has approved the first section of its regulation on climate-friendly investments, which will define which operations in sectors such as transportation and construction can be labeled as green beginning next year.
After passing a review process that ended on Wednesday night, the first element of the EU's sustainable finance taxonomy will take effect on January 1, 2022.
The guidelines establish environmental requirements for investments in renewable energy, shipping, and automobile production, with zero-emission vehicles being the only type that will be eligible to be labeled green starting in 2026.
The EU hopes to push money towards low-carbon projects and prevent corporations and investors from making unfounded environmental claims by limiting the green investment badge to only those activities deemed truly climate-friendly.
In a tweet on Thursday, EU financial services director Mairead McGuinness said, "This will assist channel sustainable capital towards projects and enterprises to help us achieve our climate commitments."
Approximately a dozen nations, including France, Poland, Finland, and Hungary, had protested to the guidelines but lacked the necessary majority to veto them, according to EU officials.
The EU taxonomy's most politically contentious section is yet to come. This month, the EU will decide whether or not to identify gas and nuclear energy projects as green. The decision has caused divisions within the EU and has been postponed for a year due to heavy political pressure. Frans Timmermans, the EU's climate policy leader, said the standards would have to reflect the fact that gas and nuclear power are required for the EU's transition to net zero emissions by 2050.
"I believe we must find a way to acknowledge that these two energy sources are important in the energy transition. This does not imply that they are green "On Wednesday evening, he told a Politico event. Nuclear supporters, such as France, point to the energy source's minimal CO2 emissions, while opponents point to the dangers of radioactive waste.
Gas is also polarising, with countries split between those who believe that gas investments are necessary to assist their transition away from more polluting coal and those who believe that labeling a fossil fuel as green is untrustworthy.
Labeling gas as green, according to Luca Bonaccorsi, director of sustainable finance at NGO Transport & Environment, risks "undermining the credibility of the EU's sustainable financing goal as a whole."
