Gas and nuclear power should be considered as sustainable investments in the EU green taxonomy, a confidential non-paper sent to the European Commission on October 29 and circulating in Brussels has claimed.
The WWF warned that the paper would allow the greenwashing of billions of euros of financing for these activities, despite the high emissions from fossil gas and the radioactive waste produced by nuclear power.
The taxonomy is an upcoming EU classification to give the financial sector clarity on which economic activities can be considered sustainable.
The criteria on gas outlined in the confidential non-paper are radically weaker even than a previous Commission proposal, which was withdrawn following a public outcry by scientists, financial institutions, and civil society.
To qualify as a “sustainable” investment, gas power plants or cogeneration facilities built before 2030 must not emit more than 100 grams of CO2 equivalent per kWh, according to the draft paper.
However, the non-paper also suggests allowing higher limits for gas plants commissioned up to 2030 to be classified as green. These green gas plants could start operations in 2035 or later.
These new higher limits would reach 340g grams per kWh for direct emissions and 700 kg per kW for annual emissions
This would allow gas to qualify as a transitional activity under the EU’s sustainable finance rules.
This would go against the International Energy Agency’s (IEA) recent call for no new fossil fuel projects, and that gas plants must be shut down by 2035 in industrialised countries.
The non-paper criteria on nuclear build on flawed technical recommendations by the Commission’s Joint Research Centre, which do not even require operational facilities for the long-term disposal of highly radioactive nuclear waste to be in place: having a ‘plan’ to develop such facilities is enough. The JRC report was criticised by several experts.
Europe’s pro-nuclear lobby spoke out in October, when energy ministers from Bulgaria, Croatia, Czechia, Finland, France, Hungary, Poland, Romania, Slovakia and Slovenia supported nuclear’s inclusion in the taxonomy.
“This proposal is a scientific disgrace that would deal a fatal blow to the taxonomy. It would severely damage the EU’s sustainable finance agenda and the EU Green Deal. It must be firmly rejected by the Commission and opposed by all member states. With all eyes on COP26, the EU must show rock-solid climate leadership,” said Henry Eviston, a spokesman on sustainable finance at WWF European Policy Office.
Despite speculation on the role of France or other member states, the exact source of the non-paper remains unclear.
The use of gas as a transitional, low-carbon fuel and nuclear power as a non-emitter was hinted at recently by European Commission President Ursula von der Leyen.
She said in October that the EC was planning to table proposals on gas and nuclear as part of the EU’s green taxonomy.
“We need more renewables. They are cheaper, carbon-free and home-grown,” von der Leyen wrote on Twitter after an EU summit meeting in October where leaders debated the bloc’s response to rising energy prices.
“We also need a stable source, nuclear, and during the transition, gas. This is why we will come forward with our taxonomy proposal,” she added.
The proposals follow the decision by the EU to delay any decision on including nuclear power and natural gas in the green taxonomy, which was organically due to be made in autumn.
EU Financial Services Commissioner Mairead McGuinness told The Financial Times that the EU needed more time before coming to a decision.
McGuinness has said that the proposal may be pushed back into the next year, particularly in light of various elections in several key member states.
As such, the role of nuclear and gas in any green taxonomy will be a major political issue, particularly given the momentum provided by the COP26 conference towards reducing fossil fuels’ role in the energy sector, and especially a move away from coal.
The EU’s green taxonomy is a crucial benchmark and reference point for defining what projects and investment are green or not, and will form the foundation for a green bond standard that will be used to issue €250bn as part of the EU’s post-pandemic recovery fund.