EU concludes Act with fossil gas and nuclear as ‘green’ investment

The European Commission published a set of sustainable finance rules which does damage to the EU and global environmental action. With the final Delegated Act, the Commission is officially classifying fossil gas and nuclear power as environmentally sustainable under the EU Taxonomy – the EU’s “green” investment guidebook.

This new determination sets a green benchmark that lags behind the existing green bond market, which excludes gas and nuclear, and risks directing billions of euros towards these environmentally harmful industries labeled as “green”. The European Commission’s scientific advisers on the Taxonomy disagreed with the Commission’s proposal, saying that it was “not in line with the Taxonomy Regulation,” and posed a “serious risk of undermining the sustainable Taxonomy framework.”

The Commission’s proposal is meant to flesh out the details of the otherwise robust EU Taxonomy regulation, whose Article 19 requires the Taxonomy criteria to be built on science, not give special treatment to certain technologies, and be easily verifiable. However, the new gas and nuclear criteria violate each of these requirements and so are inconsistent with the regulation.

Manuel Pulgar-Vidal, WWF Climate & Energy Global Lead said: “This final Delegated Act is not consistent with science, is not consistent with the recommendations of the experts across industries that have been working to shape this taxonomy, it undermines the EU’s global leadership, and risks undermining the global economic transition we so desperately need to avoid the worst effects of climate change. “The new principles, decisions, and actions of the climate and nature debate framed under the concepts of transformational change, Net Zero, and Nature Positive, are defining the new elements of what should be considered green and sustainable, and this decision is not following nor considering those elements. The global impact of this decision should not be underestimated, muddying the water for investors, and must be rejected to protect the credibility of the whole Taxonomy and protect progress toward the ultimate goal of a net-zero, nature-positive economy.”

Margaret Kuhlow, Lead of the Finance Practice, WWF International, said: “The EU sustainable finance taxonomy did not set out to describe all economic activity but to define what is “green”. It is disappointing to see the EU relinquish this leadership just as the industry is looking for green standards that can be applied globally. Other markets are moving ahead with stronger standards, sustainability-minded investors are increasing their scrutiny of such definitions, and recent global climate discussions ended with resounding calls for credibility, integrity, and accountability in climate commitments.”

Many investors and banks have already made it clear they do not support a greenwashed Taxonomy – a system that was explicitly designed to identify green economic activities in a clear and transparent manner for investors. The text is splitting the finance market – against the taxonomy aim to unify markets’ approaches – and will slow down the transition.