On the last day of the year, the European Commission secretly circulated a plan to classify the fossil fuel natural gas and nuclear power as ‘sustainable’ investments. It seems the Commission will not publicly consult on this plan - the second chapter of the EU ‘taxonomy’ - while it did so three times for the first chapter, which dealt with renewable energy.
The World Wildlife Fund (WWF) says in a first reaction that it is “highly concerned”. The European Commission’s plan on the subject was leaked to the media last weekend and is highly controversial: EU member states differ deeply in their opinions, while non-governmental organisations such as WWF have very strong objections to it in principle. Also several investors, like pension funds, reject Brussels’ course of action.
Very little time for handling plan
Henry Eviston, spokesman for sustainable finance at WWF’s European policy office, said: “Short of digging an actual hole, the European Commission couldn’t have tried harder to bury this proposal. When the question was whether renewables are green, the Commission gave citizens three chances to provide their opinion. For fossil gas and nuclear, we get a document written behind closed doors and published on New Year’s Eve. If the EU is confident in this proposal, it must hold a public consultation.”
On 1 January, the draft plan was submitted to the Commission’s officially designated Technical Advisory Group on Taxonomy - the EU’s sustainable finance platform. The WWF is also a member of this. However, to the irritation of the platform, it was given only eight working days, until 12 January, to make a formal response to this complex and controversial dossier. Consultations in Brussels normally take at least four weeks.
The inclusion of certain gas and nuclear activities in the European taxonomy is controversial. However, it has been the subject of dispute between groups of member states for some time. France is in favour of this extension of the taxonomy, other member states are strongly against it and are even threatening to take it to the European Court of Justice. The dispute could lead to serious delays for the already difficult taxonomy project.
At the beginning of December, Fondsnieuws reported that 13 experts in a joint letter to the European Commission warned that the Paris Climate Agreement targets of no more than a 1.5 degree rise in global temperatures will become unattainable if Brussels does not stand firm against the attack by ten EU member states, including Greece, Hungary and Poland, which believe that natural gas, as a ‘transition fuel’, should be included in the green taxonomy.
Goal: climate neutral in 2050
The EU taxonomy aims to ensure that private investment in activities achieves climate neutrality over the next 30 years. However, currently member states have very different views on their energy mix. Eastern European member states have based their mix heavily on high carbon emitting coal. The taxonomy aims to ensure that member states can work towards climate neutrality with their diverse energy activities.
The European Commission is now of the opinion that in view of scientific advice and technological progress, as well as the different transition problems in the member states, nuclear energy and natural gas can help in a realistic transition to a renewable energy-based future. In concrete terms, this means that energy sources such as natural gas can be included among renewable sources under clear conditions.
Background
The Commission wants to amend the delegated act on the publication of the taxonomy so that investors can determine whether and to what extent activities include gas or nuclear activities in order to make an informed choice.
The EU taxonomy aims to provide a common language that investors can use when investing in projects and economic activities that have a significant positive impact on the climate and the environment. The taxonomy also forces companies and investors to disclose relevant information.