EU Taxonomy Update: Fossil Gas and Nuclear
The EU Taxonomy aims to improve the flow of capital towards sustainable activities across the European Union by categorising which economic activities can be considered sustainable using science-based criteria.
On 2nd February 2022, the European Commission presented a proposed update of the EU Taxonomy to the European Council to include nuclear and gas energy activities in its list of sustainable economic activities. The draft legislation, or 'Complementary Climate Delegated Act', proposes that nuclear and fossil gas activities fall under the category of 'transitional activities', meaning those that will assist in the transition to lower-carbon alternatives. According to the European Commission, the inclusion of nuclear and fossil gas activities, "subject to clear limits and phase-out periods", aligns with EU climate and environmental objectives and would aid the long-term goal of carbon neutrality.
Which gas activities are included?
Electricity generation from gaseous fossil fuels
High-efficiency co-generation of heat/cool and power from gaseous fossil fuels
Production of heat/cool from gaseous fossil fuels in an efficient district heating and cooling system
Which nuclear activities are included?
Upgrades and modifications of existing nuclear plants for lifetime extension purposes
New nuclear plant projects with existing technologies for energy generation of electricity or heat ("Generation III+") [until 2045]
Research, development, and deployment of advanced technologies (termed "Generation IV") that minimise waste and improve safety standards
The European Commission's proposal to include nuclear and fossil gas was made considering scientific advice and current technological progress, hence there are strict requirements for these activities to be eligible:
Fossil gas activities:
Must meet specific emission thresholds
Should replace an existing coal facility which renewables cannot replace
Should achieve minimum requirements for emissions reductions
Should fully switch to renewable or low-carbon gases by 2035
Nuclear energy activities:
Must be compliant with all relevant regulatory requirements and best technology criterion
Should be monitored by the Commission
Must set target dates for operational disposal facilities to be in place
Must not cause significant or long-term harm to the environment from the disposal of waste
Must not export radioactive waste to developing countries
Must set dates for accelerating the transition to advanced technologies
The European Parliament will have four to six months to scrutinise the proposal, which, if passed, will come into force in 2023. The Council has the right to object to the Complementary Climate Delegated Act by a majority of at least 72% of its members representing 65% of the EU's population; the European Parliament can object by a majority of its members.
The inclusion of fossil gas and nuclear activities in the EU Taxonomy has proved highly controversial. Several governments and organisations, including Austria and Luxembourg, are already planning legal action against the inclusion of gas and nuclear activities in the taxonomy.
Climate groups, such as the WWF, are against the inclusion, arguing that the EU Commission's own expert group, the EU Platform, deems it to be inconsistent with the requirements of the EU Taxonomy Regulation. In their response to the draft Complimentary Delegated Act, the European Commission's group of green experts voiced concerns that the labelling of fossil gas activities as sustainable could detract investment away from renewables and could lead to greenwashing in the financial sector, despite large listed non-financial and financial companies being required to disclose the proportion of their natural gas and nuclear energy activities. The report also states that fossil gas activities fail ‘Do No Significant Harm’ objectives.
Another concern is that the inclusion of nuclear and fossil gas in the EU Taxonomy’s list of sustainable economic activities could reduce climate ambition and action globally. This is heightened because the EU's guidelines are expected to form the benchmark of EU member states' own green finance regulations. The Platform is developing an Extended Taxonomy approach with an amber zone for more transitional economic activities, such as nuclear and fossil gas, proposing one solution to the debate.
The inclusion of nuclear and fossil gas in the EU Taxonomy could be a necessary steppingstone towards decarbonisation. However, this must not come at the expense of more sustainable renewable technologies like solar, wind, geothermal, hydroelectric, tidal, and biomass.
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References:
https://ec.europa.eu/commission/presscorner/detail/en/ip_22_711
https://ec.europa.eu/commission/presscorner/detail/en/qanda_22_712