With the intention of stopping the greenwashing of technologies and activities under the European Green Deal, the European Commission tabled its first set of implementation rules under the EU’s sustainable finance taxonomy.
It is basically a list of positive criteria that categorizes certain investments and economic activities as “green”. That is to say, sustainable and on-target with the towering Green Deal ambitions. In principle, it is a very powerful tool to put an end to any green cover-up that investments and technologies may receive in order to hide their harmful, unsustainable truth. In the future, only investments falling under this taxonomy can officially be classified as “sustainable”. Plus, as those “green” technologies and economic activities can receive funds from the Just Transition Fond and the Recovery and Resilience Fond, one shouldn’t complain about the lack of financial incentives to make the switch to a more climate- and environmentally friendly strategy.
The criteria laid down in this taxonomy will be a central force in driving decisions about major investments in the future of the EU. The EU Taxonomy for Sustainable Investments promises to be a neat idea to make the Green Deal become reality. However, as it’s usually the case with big Commission announcements, a closer look at the details is more than necessary.
With the climate and climate change delegated act on the table and significant investments on the horizon, corresponding sectors will now go above and beyond to secure an entry on the taxonomy. Here, it is important to remind ourselves – and first and foremost the Commission – that the end does not justify all means. To make room for new, climate-friendly investments, companies may fall back on the use of greenfield sites even if brownfield sides are just nearby, cut down forests, sacrifice important wildlife habitats and increase water consumption dramatically.
A view over to Brandenburg’s new and prestigious “Giga-Project” illustrates the dilemma: As an American investor continues to build one of the biggest factories for electric cars and batteries close to a Natura 2000 Nature Reserve, more and more reports bubble up to the surface, warning about water scarcity in the state in north-eastern Germany. For an investment, which is not only “giga” in size, but also in water consumption, the project is problematic for the region’s groundwater levels and water supply. This makes it ever more surprising – not to say shocking – that till now, the whole projects rests on hasty preliminary permits from the authorities. And since there has never been a thorough environmental impact study, the proceedings in Brandenburg not only violate EU law, they paint a grim picture of what the effects of a non-balanced taxonomy may be.
The question before us is: are we now facing a wave of investments for economic activities that may, at first sight, be beneficial, but upon closer inspection harm water resources, biodiversity and the environment? This issue needs to be urgently addressed by the European Commission, as the climate crisis will never be resolved in complete disregard of the wider environmental picture.
Another point worth taking a closer look at is the Commission’s temporary indecisiveness on where to stand on gas and nuclear energy. After months of lobbying from industries and EU governments, the two energy sources are now reviewed separately and are announced to be part of an additional delegated act by the end of the year, in which natural gas would be considered a transitional technology to bridge the gap to full climate neutrality. While a climate-neutral Europe is, in all likeliness, not possible without a transition phase, labelling gas as a “green” technology is not a credible move.
The Commission keeps an equally low profile on where it stands on nuclear energy. With the high risks of the often ramshackle nuclear plants hanging over Europe and no solution in sight of where to depose of radioactive waste, nuclear energy should by no means be considered a sustainable technology under the Green Deal. The catastrophes of Chernobyl and Fukushima are sad reminders that the “do no significant harm” principle of the EU taxonomy cannot be applied here.
The EU sustainable finance taxonomy will set the pattern for the European Green Deal. It will be all the more important for the Commission to ensure that the taxonomy is in every regard holistic: We will not act in the interest of the Green Deal (and with that, future generations), if biodiversity destruction is tolerated for climate-neutral technologies or if investments are made in nuclear energy.
The transition that we urgently need in order to tackle Climate change can only be achieved when we look at the whole picture – and that is exactly what the EU Taxonomy should do.