EU presents amendments to the Taxonomy Climate Delegated Act to accelerate decarbonization

But the choice of including nuclear and gas energy among the “green” ones was criticized by many

On Wednesday the EU Commission, published the final text of its taxonomy for sustainable finance.

The taxonomy is a classification system to guide private capital into environmentally sustainable activities. It ranks investments, declaring which can be considered sustainable and which not.

According to the Commission this act is necessary to accelerate the transition towards net-zero greenhouse gas emissions. Anyway, not everyone agreed with the amendments. In particular one aspect was sharply criticized: the classification of nuclear power and some forms of natural gas as green energy; or better, belonging to the “transitional” category of activities.

From the Commission standpoint, private investments in gas and nuclear sector can have a determinant role in the transition. Mairead McGuinness, Commissioner in charge of Financial Services, Financial Stability, and Capital Markets Union, clearly said that stepping up private investments in the transition is key to reach the climate goals.

The EU stated that gas and nuclear activities selected are in line with the climate and environmental objectives they set. In addition, they are confident that these two power sources will allow to accelerate the shift from more polluting activities, such as coal generation, towards a climate-neutral future, mostly based on renewable energy sources.

Climate change experts, as well as several EU governments did not entirely agree with the Commission.

The Member States that, more than any other, stood against these viewpoints were Austria and Luxembourg. They decided to join forces and declare that they will appeal to the European Court of Justice in case the amendment is approved.

Germany only declared to be against nuclear energy, defining it too risky and costly, but did not line up against gas.

Spain talked about the topic, too. The Minister of Ecological Transition said that gas and nuclear cannot receive the same treatment of energies that are “indisputably” green. It would be a bad sign for sustainable investments.

Despite the criticism from the last few days, the 31st of December draft was not radically changed, and the Commission officially presented the law on February 2nd.

The next steps of the legislative procedure will be in charge of the European Parliament and Council. These two bodies will have to scrutinize the document. The Council can apply its power to object, with at least 20 countries against this measure, representing more than the 65% of EU population (reinforced qualified majority). While the Parliament can object the act by a majority of MPs voting against.

It is important to remember that the Members of European Parliament are the only institutional figures to be directly elected from citizens, while the Member of Council is formed by Heads of State or Government of the Member States.

At the moment it does not seem that there is enough opposition to block the law. In addition to the aforementioned Austria, Luxembourg, Spain and Germany, only few other countries (like Denmark, Netherlands and Sweden) officially exposed themselves on the matter.

This choice of the EU appears to be in contrast with its principles, or at least, not as forward-thinking as some might have expected.

It is difficult to judge with certainty whether this is a true effort towards net-zero or just another half-way choice to please as much people as possible: having a green façade, while sticking to non-renewable resources.

Furthermore, the choice of pushing investments towards gas, could prove to be counterproductive, because of the particular situation we are living. First, the price of gas is rising. On top of that, the relationship among UE and its main exporter of gas, Russia is not idyllic, at the moment. This is not only because of the tensions at the Ukrainian border, but also with respect to the Nord Stream II, a pipeline that should connect Russia to Germany, to improve gas exports. This pipeline has not started working yet, because it has become a “geopolitical weapon” with which countries put pressure on each other, rather than an economic deal.

EU presents amendments to the Taxonomy Climate Delegated Act to accelerate decarbonization

But the choice of including nuclear and gas energy among the “green” ones was criticized by many

On Wednesday the EU Commission, published the final text of its taxonomy for sustainable finance.

The taxonomy is a classification system to guide private capital into environmentally sustainable activities. It ranks investments, declaring which can be considered sustainable and which not.

According to the Commission this act is necessary to accelerate the transition towards net-zero greenhouse gas emissions. Anyway, not everyone agreed with the amendments. In particular one aspect was sharply criticized: the classification of nuclear power and some forms of natural gas as green energy; or better, belonging to the “transitional” category of activities.

From the Commission standpoint, private investments in gas and nuclear sector can have a determinant role in the transition. Mairead McGuinness, Commissioner in charge of Financial Services, Financial Stability, and Capital Markets Union, clearly said that stepping up private investments in the transition is key to reach the climate goals.

The EU stated that gas and nuclear activities selected are in line with the climate and environmental objectives they set. In addition, they are confident that these two power sources will allow to accelerate the shift from more polluting activities, such as coal generation, towards a climate-neutral future, mostly based on renewable energy sources.

Climate change experts, as well as several EU governments did not entirely agree with the Commission.

The Member States that, more than any other, stood against these viewpoints were Austria and Luxembourg. They decided to join forces and declare that they will appeal to the European Court of Justice in case the amendment is approved.

Germany only declared to be against nuclear energy, defining it too risky and costly, but did not line up against gas.

Spain talked about the topic, too. The Minister of Ecological Transition said that gas and nuclear cannot receive the same treatment of energies that are “indisputably” green. It would be a bad sign for sustainable investments.

Despite the criticism from the last few days, the 31st of December draft was not radically changed, and the Commission officially presented the law on February 2nd.

The next steps of the legislative procedure will be in charge of the European Parliament and Council. These two bodies will have to scrutinize the document. The Council can apply its power to object, with at least 20 countries against this measure, representing more than the 65% of EU population (reinforced qualified majority). While the Parliament can object the act by a majority of MPs voting against.

It is important to remember that the Members of European Parliament are the only institutional figures to be directly elected from citizens, while the Member of Council is formed by Heads of State or Government of the Member States.

At the moment it does not seem that there is enough opposition to block the law. In addition to the aforementioned Austria, Luxembourg, Spain and Germany, only few other countries (like Denmark, Netherlands and Sweden) officially exposed themselves on the matter.

This choice of the EU appears to be in contrast with its principles, or at least, not as forward-thinking as some might have expected.

It is difficult to judge with certainty whether this is a true effort towards net-zero or just another half-way choice to please as much people as possible: having a green façade, while sticking to non-renewable resources.

Furthermore, the choice of pushing investments towards gas, could prove to be counterproductive, because of the particular situation we are living. First, the price of gas is rising. On top of that, the relationship among UE and its main exporter of gas, Russia is not idyllic, at the moment. This is not only because of the tensions at the Ukrainian border, but also with respect to the Nord Stream II, a pipeline that should connect Russia to Germany, to improve gas exports. This pipeline has not started working yet, because it has become a “geopolitical weapon” with which countries put pressure on each other, rather than an economic deal.

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