EU Taxonomy and the Nuclear Energy and Gas-Fired Power Issue

Elise Attal, Head of EU Policy, PRI, and Jan Vandermosten, Senior Policy Analyst, PRI provide insights why the inclusion of gas-fired power and nuclear energy in the list of sustainable economic activities is the wrong approach. European member states are expected to vote on this on 7 December 2021. The position of PRI is that gas-fired power and nuclear energy are not aligned with the objectives of the EU Sustainable Taxonomy.The Taxonomy Regulation stipulates that Technical Screening Criteria (TSC) for the EU Sustainable Taxonomy should be based on the best available scientific evidence and – in the case of the climate change objective – whether the economic activities contribute to the long-term temperature goal of the Paris Agreement. Decision-makers are currently considering TSC for gas-fired power and nuclear energy as part of a complementary climate delegated act. They must not use this opportunity to let economic and political questions on energy security and cost thwart the scientific integrity of the EU Sustainable Taxonomy; this would tarnish investors’ interest to use it as an instrument for driving sustainable investments, and lead to market fragmentation and risk of greenwashing. The inclusion of gas-fired power would seriously compromise the EU Sustainable Taxonomy’s ability to act as an independently and scientifically designed tool for guiding investment into environmentally sustainable activities in line with the EU’s goal of reducing emissions by at least 55% by 2030. 1 The IEA net zero by 2050 pathway stresses that there is no remaining carbon budget for new gas investments at all and that existing gas-fired power plants will have to be phased out by 2035 in the OECD and 2040 globally.The climate delegated act (climate DA) was presented by the European Commission in April 2021, including TSC for over 100 economic activities in 13 sectors.2 However, no agreement could be reached on the inclusion of gas-fired power and nuclear energy. The European Commission laid out next steps for both these economic activities in points 273 and 284 of the climate DA preamble, and committed to address them in a ‘complementary’ delegated act.There is growing criticism from within the EU against the inclusion of gas-fired power and nuclear in the EU Sustainable Taxonomy: six member states are publicly opposing the inclusion of nuclear (Germany, Austria, Luxemburg, Portugal, Denmark) or both nuclear and gas-fired power (Spain). Undermining the credibility of the EU Sustainable Taxonomy by including gas-fired power and nuclear energy would also undermine the EU’s leading role on sustainable finance. Other countries such as China and Russia have already excluded gas-fired power production from their own taxonomies. Existing voluntary Green Bond standards5 and green labels6 also exclude both gas and nuclear."Decision-makers cannot let economic questions on energy security and cost thwart the scientific integrity of the EU Sustainable Taxonomy and still have an opportunity to save the credibility of the EU’s sustainable finance policy framework. It is now up to them to take responsibility", concluded by Elise Attal and Jan Vandermosten in an op-ed on Euraktiv.com.PRI Analysis - PRI Position PaperEuraktiv Article investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics. All opinions expressed are those of the author or contributing source.