Which investments and economic activities are green and environmentally sustainable? And which do really contribute to reaching climate targets? In order to clearly resolve these issues and to avoid greenwashing – e.g. making false or misleading claims about the environmental benefits of a product or service – the EU adopted the Taxonomy Regulation in June 2020. It provides an overview of sustainable products and investments for private investors and businesses by determining, which technologies are deemed to be environmentally friendly, and which are not. The Commission determined the pending classification of nuclear energy and fossil gas on New Year’s Eve 2021. According to the draft of this legal act, these shall be classified as green energy sources under certain conditions and thus be able to be used as transitional technology towards a 100 % sustainable energy generation.

Classification criteria

Classifying investments in new nuclear power plants as green shall only be possible if the plants conform to the latest technical standards and if it can be guaranteed that they do not cause any significant harm to the environment. This includes the safe disposal of nuclear waste. Another condition is that new nuclear power plants need to get a construction permit by 2045. Investments in new gas power plants shall also be able to be classified as green on a transitional basis. In this case, the level of greenhouse gas emissions is relevant: for plants approved after 31 December 2030, life-cycle emissions of no more than 100 grams of CO2 per kilowatt hour will be permitted.This threshold to achieve classification as green is quite strict, as even the most efficient gas power plants currently significantly exceed this value. According to E-Control, this value for Austrian gas power plants is just over 300.

EU countries divided

The decision to classify gas and in particular nuclear energy as climate friendly is a controversial issue among member states. The majority supports this classification, as in their eyes nuclear energy is not only affordable and stable, but also CO2 neutral and therefore important for achieving the EU climate targets. This applies foremost to France, which covers 70% of its energy demand with nuclear energy and is therefore regarded as a major profiteer of such a regulation. For reasons of nuclear energy dependence, the Eastern and Southeastern European countries and Finland are also among the endorsing countries. In contrast, Austria, Germany, Luxemburg, Denmark, Spain and Portugal are clearly opposed to the admission of nuclear energy. Based on a legal opinion, Austria and Luxemburg even raised the possibility of suing the EU Commission, in case the act remains unchanged.

Next steps

Currently experts of the “Platform on Sustainable Finance” and the “Expert Group of the Member States on Sustainable Finance” are being heard. Subsequently, the Commission will formally adopt the delegated act before the end of January 2022 and officially present it to the European Council and Parliament. They then have a maximum of six months to analyse the bill and veto it if necessary. Due to the fact that it requires at least 20 Member States representing at least 65% of the EU population to veto, a rejection by the Council is not expected. Things are more exciting in the European Parliament, where a simple majority of MEPs is sufficient for a veto, which MEP Günther Sidl believes is possible.

Environmental organisations outraged

In the meantime, environmental organisations have been severely criticising the Commission’s initiative and complain that the European public has not been given the opportunity to participate by means of a consultation process. Classifying fossil gas as sustainable technology is not compatible with the EU’s climate targets for 2030, because according to IEA, any further investment in fossil gas distances us from the goal of limiting global warming to 1.5°C. The classification of nuclear energy is also regarded as a clear breach of the Taxonomy Regulation’s principle, as it thwarts other environmental objectives, such as those of the circular economy, biodiversity and pollution reduction in terms of the uranium mining and nuclear waste management required for this purpose.

Further information:

EU Commission: EU Taxonomy, Commission begins expert consultation

AK EUROPA: “Fit for 55” Package III: Energy Efficiency Directive

AK EUROPA: “Fit for 55” Package IV: Renewable Energy Directive