EU parliament supports 'green' label for gas, nuclear investments

7 July 2022

The European Parliament has voted in favour of European Union (EU) rules labelling investments in gas and nuclear power as climate-friendly. Of the 639 lawmakers that voted, 278 supported a motion to block the EU gas and nuclear rules, while 328 opposed the motion, and 33 abstained. This fell short of the majority of 353 of the Parliament's total 705 lawmakers, which was required for the motion to be approved. The rules will apply from 2023, unless 20 of the EU's 27 member states in the European Council reject them.

The result means that the European Commission's (EC’s) proposals to include certain nuclear and gas activities within the list of investments that meet the taxonomy requirements, is now due to come into force from the start of 2023.

The EU has undertaken to be climate neutral by 2050 based on a system to "facilitate sustainable investment". The Taxonomy Regulation provides guidance on economic activities that can be considered environmentally sustainable and obliges European companies to report their level of taxonomy-aligned undertakings. Any activity excluded from the list could be excluded from sustainable finance products and would contravene long-term EU policy objectives.

EU members have been divided over whether nuclear power and natural gas should be deemed "sustainable". Nuclear was not included in the original Delegated Act but further assessment by the EU Joint Research Centre, reviewed by two expert bodies, concluded that the technology was sustainable. As a result, the EC included nuclear energy as a transitional activity in the taxonomy through a Complementary Delegated Act (CDA).

EU member states that support nuclear, such as France and the Czech Republic, see it as a low-carbon power source that is key to tackling climate change, and that does not cause more significant harm than other energy source. Opponents, such as Germany, see it as environmentally harmful, citing radioactive waste as a problem. Austria and Luxembourg had even threatened to sue the EU if the plan becomes law.

For inclusion in the taxonomy, six environmental objectives must be met without causing significant harm to the others. These are climate change mitigation; sustainable use and protection of water and marine resources; pollution prevention and control; protection of healthy ecosystems; and transition to a circular economy.

Nuclear and gas are now included in the "transitional" category as activities that "cannot yet be replaced by technologically and economically feasible low-carbon alternatives, but do contribute to climate change mitigation and with the potential to play a major role in the transition to a climate-neutral economy, in line with EU climate goals and commitments, and subject to strict conditions, without crowding out investment in renewables”.

The European Parliament’s decision has been welcomed by pro-nuclear organisations such as the World Nuclear Association and European nuclear trade association Nucleareurope, but has been roundly condemned by Green politicians and environmental organisations.

Lawmakers of the centrist Renew Europe group were largely in favor of the proposal, while the Greens and Social Democrats mostly opposed it. Greenpeace EU sustainable finance campaigner Ariadna Rodrigo said: "It's dirty politics and it's an outrageous outcome to label gas and nuclear as green and keep more money flowing to [Russian President Vladimir] Putin's war chest. We will fight this in the courts."

Polish member of the European Parliament (MEP) Bogdan Rzonca said less wealthy EU countries need private investments in gas and nuclear power to be able to move away from coal. French MEP Gilles Boyer said meeting energy demand with renewable energy in the long-term "would be ideal, but it's not possible right now”. Czech Prime Minister Petr Fiala said the vote was "excellent news" for Europe. "It paves the way towards energy self-sufficiency which is absolutely crucial for our future," he wrote on Twitter.

While Germany continues to object to nuclear in the taxonomy it accepts the inclusion of natural gas. Steffen Hebestreit, a spokesman for German Chancellor Olaf Scholz, said Germany "stands by its position and considers nuclear energy as unsustainable”, but added that the taxonomy is important for achieving climate protection targets, “because it is clear that natural gas is an important bridging technology”.

In her opening remarks to the plenary debate at the European Parliament, Mairead McGuinness, European Commissioner for Financial Stability, Financial Services and the Capital Markets Union, stressed that the Climate Delegated Act “prioritises investments in renewable energy and energy efficiency”, adding “given the urgency of moving away from Russian fossil fuels, we need to ramp up those investments with a renewed sense of urgency”.

She said gas is a fossil fuel – it is not green. “But some Member States moving from dirty fossil fuel may need gas in transition – and that is where we have placed gas in this Taxonomy.” She described nuclear power as divisive with both supporters and detractors. “But nuclear – low carbon - is part of our energy mix in transition too. And that is why it is in the transition category of the Taxonomy.”

She explained that the taxonomy is “a voluntary instrument to guide private investors towards investments that allow us reach our climate goals”. She emphasised: “It is not energy policy: Member States are and remain fully in charge of their energy mix. I want to stress that there is no obligation on any Member State to invest in either nuclear or gas. There is no obligation on any private investor to invest in nuclear or gas.” The Complementary Delegated Act provides “clarity around the criteria under which private investments in gas or nuclear, or both, comply with the taxonomy in the transition category”.

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