The European Commission proposed on December 31 that natural gas and nuclear energy be included in the so-called EU taxonomy as sustainable energy sources.
According to the European Commission, the EU Taxonomy guides and mobilises private investment in activities that are needed to achieve climate neutrality in the next 30 years.
“Taking account of scientific advice and current technological progress, as well as varying transition challenges across the Member States, the Commission considers there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominantly renewable-based future,” the Commission said in a press release on January 1. “Within the Taxonomy framework, this would mean classifying these energy sources under clear and tight conditions, for example, the gas must come from renewable sources or have low emissions by 2035, in particular as they contribute to the transition to climate neutrality,” the Commission added.
Nuclear and gas could be necessary for a smooth energy transition. But the Commission’s proposal to declare via the taxonomy gas and nuclear projects as sustainable energy sources has sparked controversy. This means natural gas and nuclear will be labeled green for investment purposes.
In Germany, for example, which has pledged to eliminate all nuclear power by 2022, the government is divided regarding this question: the Greens do not want to finance nuclear and gas projects, and the Liberals refuse nuclear as sustainable but are more open for gas projects as are the socialists. So, the government agreed on gas projects if they are Hydrogen ready.
“Sustainable is the wrong label for nuclear, German MEP in the group of the Greens / EFA Manuela Ripa told NE Global on January 4. “If sustainability is used for nuclear application this undermines the very idea of the taxonomy. However, we need to think in transition terms,” Ripa said. “Therefore, investments into gas infrastructure should only be part of the taxonomy if they are hydrogen ready combined with a clear and early defined sunset clause which ends the transition period of fossil gas,” the German MEP added.
Meanwhile, the nuclear lobby and some EU Member States led by France, which has just assumed the rotating EU Presidency, have used the EU Taxonomy as a gateway for a comeback of nuclear energy.
The Commission’s proposal to include natural gas as sustainable transitional energy towards a renewable future is good news for the Kremlin, Justin Urquhart Stewart, co-founder of Regionally in London, told NE GLOBAL on January 5. Russia, which wants to pump 55 billion cubic meters of gas via the controversial Nord Stream 2 pipeline to Germany, is one of the leading exporters of gas to Europe. “What they want is actually a position where a significant proportion of Europe is dependent upon Russian gas and without it, they will find themselves economically humbled. And if we start seeing a downturn in the economy and then you start seeing a constriction on gas supplies that’s a perfect way of actually trying to persuade Europe that actually part of Ukraine should go to Russia after all,” Urquhart-Stewart argued.
“(The Germans) they are hardly likely now to stop Nord Stream 2. They have gone so far down the route of it and given the fact they have closed down all nuclear alternatives, they don’t have any viable alternatives so now (Russian President Vladimir) Putin must be absolutely delighted. He has Europe exactly where he wants them in a position where they are going to be dependent on Russian gas so much,” Urquhart-Stewart said.
According to the EU Commission, the existing energy mix in Europe today varies from one Member State to another. Some parts of Europe are still heavily based on high carbon-emitting coal. “The Taxonomy provides for energy activities that enable Member States to move towards climate neutrality from such different positions,” the Commission said.
In addition, to ensure transparency, the Commission said it will amend the Taxonomy Disclosure Delegated Act so that investors can identify if activities include gas or nuclear activities, and to what extent, so they can make an informed choice. “The activities covered in this complimentary Delegated Act would accelerate the phase-out of more harmful sources, such as coal, and in moving us towards a more low-carbon greener energy mix. As for the other activities under the Taxonomy Regulation, the criteria for the gas and nuclear activities will be updated as technology evolves,” the press release read.
The Platform on Sustainable Finance and the Member States Expert Group on Sustainable Finance must be consulted on all Delegated Acts under the Taxonomy Regulation, given their expert role foreseen by the Taxonomy Regulation, the Commission said, adding that they will have until January 12 to provide their contributions.
The Commission said it will analyse their contributions and formally adopt the complementary Delegated Act in January 2022. It will be then sent to the co-legislators for their scrutiny.
Similar to the first Climate Delegated Act, the European Parliament and the Council, who have delegated the power to the Commission to adopt this Delegated Act, will have four months to scrutinise the document, and, should they find it necessary, to object to it, the Commission said. In line with the Taxonomy Regulation, both institutions may request for additional two months of scrutiny time. The Council will have the right to object to it by reverse reinforced qualified majority, which means that at least 72% of Member States, i.e. at least 20 of the Member States, representing at least 65% of the EU population are needed to object to the Delegated Act, and the European Parliament by simple majority, i.e. at least 353 MEPs, in Plenary.
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