the Commission failed by the platform of experts on sustainable finance

The European Commission’s proposal to include fossil and nuclear gas in the financing of the ecological transition has raised reservations from the experts it called on itself on 31 December.

Consulted in a certain improvisation, on the last day of the year 2021, by the European Commission, the experts of the platform on sustainable finance, an official institution which brings together investors and NGOs, gave an unambiguous opinion: neither fossil gas nor nuclear are not compatible with the criteria of the European taxonomy.

In a document issued on January 21, the deadline set by the Commission, the platform regrets not having had “more time to deliberate” on the draft delegated act submitted to it. Despite this very short deadline given the complexity of the issues to be addressed, the experts were able to produce a 44-page note in which they detail the reasons why nuclear power and fossil gas are not, in their view, eligible for the nomenclature of criteria set for a green taxonomy of finance.

Nuclear is not a transitional energy

Regarding the Commission’s proposal to include fossil gases in the investments labeled by the taxonomy, the response of the experts is unambiguous: ” Any new facility producing power from gaseous fossil fuels would start operating with emissions above the “Do Not Cause Significant Harm” level. (i.e. more than 270 g CO2e / kWh, editor’s note) and would not be required to achieve the Substantial Contribution level at any stage over twenty years. »

Clearly, gas-fired power plants, built before 2030, and emitting 270 g CO2e / kWh (CO2 equivalent per kilowatt-hour) are eligible for the threshold “Do no significant harm” (does not harm significantly), but they are not considered consistent with the green category of investments. To be eligible for green labeled financing, they must not exceed 100 g of CO2e/kWh, i.e. the first threshold set by the regulation on taxonomy, adopted last December.

Including new nuclear power plants in sustainable finance would not guarantee a substantial contribution to the 2050 climate neutrality goals

The experts of the platform on sustainable finance

As for nuclear power, the financing of the extension of existing power plants would not be in line with the criterion “Do no significant harm (DNSH), the second crucial threshold of the Taxonomy Regulation. Nuclear ” could harm the sustainable use and protection of water and marine resources, the transition to a circular economy, the prevention and control of pollution, or the protection and restoration of biodiversity and ecosystems », i.e. four criteria out of six (the other two target climate neutrality and adaptation). In the case of new nuclear power plants, their inclusion in sustainable finance would not guarantee a substantial contribution to the 2050 climate neutrality goals and would require substantial changes to achieve this “, say the experts. Nuclear power cannot therefore be considered as a transitional energy.

Risk of signal interference

The platform also underlines the risk of confusion of the signals sent to the financial markets by this new regulation, if it is adopted. The provisions relating to the transparency of investments (disclosure) would be blurred in the event of adoption of this delegated regulation, because investors would no longer differentiate between the green labels of the taxonomy and these new thresholds. ” The measurement and verification requirements are insufficient to monitor the performance of the criteria in the draft supplementary delegated act, and therefore also to assess the alignment of the taxonomy », Slices the platform.

Clear, ” the draft supplementary delegated act takes a significantly different approach to the implementation of the taxonomy regulation, focusing on energy technologies that are part of an energy system in transition, but do not in themselves reach the levels contributions required by the Paris Agreement or do not meet DNSH performance requirements sum up the experts.

The Commission finds itself at odds between the experts it has itself summoned and the pressure from pro-nuclear Member States (France) and pro-fossil gas (the countries of Central Europe). While experts decide on purely technical criteria, political pressure from some Member States to include nuclear in the taxonomy could dilute these objective requirements. Developments are to be expected in the coming weeks, with the final delegated act to be proposed by the Commission in early February, then submitted to the Member States and the European Parliament.

Article published on January 24, 2022

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