The European Commission stands accused of greenwashing after a New Year’s Eve announcement that it will designate nuclear and natural gas plants as “green” facilities to help them attract financing as climate change solutions, despite tough conditions on their operations and environmental impacts.
“The draft text, which has been under discussion for months and is still provisional, was sent to member states on 31 December, shortly before midnight,” Agence France-Presse reports. “It sets out the criteria for classifying investments in nuclear or gas-fired power plants for electricity generation as ‘sustainable’, with the aim of directing ‘green finance’ towards activities that contribute to reducing greenhouse gases.”
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The classification in the continent’s new green taxonomy “allows for a reduction in financing costs, which is crucial for the projects concerned and for the states willing to support them,” the news agency adds.
News reports indicate that France, which produces more than 70% of its electricity from nuclear, and countries like Poland and the Czech Republic, which see it as a replacement for high-carbon coal-burning, successfully countered Germany’s opposition to including nuclear in the taxonomy. Germany had pushed to include gas, although Clean Energy Wire says the country’s new governing coalition is divided on the idea of declaring fossil gas sustainable.
Despite its quiet release in the midst of the December holiday, “the final decision had been long in the making and is essential to securing investments in these energies,” the Brussels Times writes. “For the Commission, nuclear and natural gas are key transition energies that will allow member states to move away from even more polluting energy sources (such as coal power stations) whilst ensuring that Europe’s energy needs are met.”
That latter point “is especially pertinent in light of renewable energy sources that either have not been developed enough to cover a country’s energy needs, or operate below capacity (for instance, in times of low wind) and therefore need to be supplemented by alternative energy sources.”
But countries like Austria and Luxembourg opposed the decision, with Austria threatening court action, the Times says. The World Wide Fund for Nature (WWF) criticized the EC’s failure to consult the public on the decision, while Greenpeace wrote it off as “greenwashing”.
The German Renewable Energy Federation (BEE) said neither natural gas nor nuclear could come close to meeting sustainability criteria, Clean Energy Wire adds. President Simone Peter declared that “natural gas must only be used to a limited extent so as not to burn taxpayers’ money as a ‘stranded investment’ in infrastructure and power plants in the foreseeable future.”
Climate think tank E3G agreed that public consultation was needed to “keep the integrity and relevance of the taxonomy,” with sustainable finance advisor Johannes Schroeten urging a strong diplomatic push from member states “advocating for a truly green taxonomy.”
Clean Energy Wire has details on how the decision took shape and what’s next.
The draft includes tough criteria for gas or nuclear plants aiming to qualify for green financing. It defines gas plants as a “transitional energy source” and restricts access to plants that emit less than 100 grams of carbon dioxide per kilowatt-hour of electricity, “a threshold that experts say is unattainable with current technologies,” AFP writes. Plants that receive construction permits before the end of 2030 will be allowed a threshold of 270 grams per kilowatt-hour “on condition that they replace existing infrastructures that are much more polluting and meet a series of criteria.”
Proposed nuclear plants must receive building permits by 2045 for new construction, or 2040 to extend the operating life of existing plants.
But Felicia Jackson of the Center for Sustainable Finance, University of London points to high stakes and a missed opportunity in a taxonomy that will determine which activities are excluded from climate finance dollars, funding under the European Green Deal, and possibly from private funds that emphasize Environmental, Social and Governance (ESG) criteria. “Labels have a purpose as they provide an easy way to gauge suitability for different types of investment—so muddying the waters of what that means is counterproductive,” she writes.
“A sustainable taxonomy should not only give investors confidence that their investment fits sustainability criteria under the [EU’s] Sustainable Finance Disclosure Regulation (SFDR), but also provide a shared market shorthand enabling the rapid scale-up and deployment of green finance. By providing a tool driving the realignment of capital, the taxonomy could be an enabler of the US$3 to $5 trillion that has been estimated as necessary to meeting global climate goals,” she adds.
But “despite input from experts and NGOs, the inclusion of gas and nuclear power just proposed by the Commission suggests that, once again, politics is trumping science.”