On April 21st, 2021, the EU Commission published the delegated acts (1) of the EU sustainable taxonomy for climate mitigation and adaptation. While the technical work on the EU taxonomy started in 2018, the energy-related content of the delegated acts has been reshaped by tremendous pressure from Member states and industry lobbies. The end result: the EU Taxonomy opens the door to polluting activities and allows the greenwashing it was supposed to prevent. Now, it is up to the European Parliament and European Council to reject this proposal that could sink the whole EU Sustainable Finance Strategy.
More politics, less science
The Commission insists that its work is based “on robust, science-based, technical criteria” but adds that “at the same time, these criteria must be usable by market participants and acceptable to the co-legislators”. Meaning: the Taxonomy was initially defined as a science-based list but economic and political pressures pushed the Commission to water down the science.
The work on the EU Taxonomy began in July 2018, with the creation of the Technical Expert Group (TEG) that was charged to define technical criteria. In March 2020, the TEG released its final report that – though it was far from perfect and already missed the mark on bioenergy – set out some strong requirements, notably by excluding fossil gas and nuclear from the regulation.
While the TEG’s final report should have been used as a minimum standard by the Commission, it became the starting point of intense behind-door bargaining. Energy companies, their interest groups and Member states all pushed to see their favorite energy source branded as sustainable. Despite the taxonomy being only a transparency tool, lobbyist from highly polluting sectors painted it as the gravedigger of European industries.
The EU Commission did not resist this pressure for long. It delayed the publication of the delegated acts several times and made a series of dangerous concessions revealed in various leaks. The result of this opaque process is a text that fails to establish truly science-based sustainable criteria and even turns to greenwashing with extremely low bioenergy requirements and both fossil gas and nuclear in the waiting room.
Green light for unsustainable forest burning
Instead of tightening the initial recommendations of the TEG to ensure that bioenergy and forestry criteria would contribute to reforestation and sustainable biomass use, the Commission continuously weakened them. Concretely, all forest biomass – wood sourced directly from forests – may be burned as feedstocks and almost any activity that is aligned with the flawed Renewable Energy Directive (RED) will be counted as sustainable (including dedicated cropland).
This contradicts all authoritative scientific research, the Commission’s own impact assessment on bioenergy and a call from major scientists to stop considering bioenergy as a sustainable replacement for fossil fuel. As they stand in the Commission’s delegated acts, the criteria for bioenergy will contribute to deforestation in Europe to accommodate the wishes of the forest and energy industry and Scandinavian countries.
Fossil gas already in?
Amid contradictory pressure from Member States and strong corporate lobbying, the published delegated acts do not settle the gas and nuclear debate. While the Commission recently contemplated including some gas plants (2), it finally decided to postpone. The fate of gas, nuclear and so-called “transition activities” will be decided later in a complementary delegated act.
The inclusion of gas to the Taxonomy as long been a priority for strong industry lobbies with companies – like BP – wielding considerable influence in Brussel. The gas lobby can count on 759 employees and spends between €68.8 million and €82.9 million each year to weigh in EU legislation. Despite gas being at odds with EU climate objectives and a major source of greenhouse gas emissions, companies succeeded in passing it off as a “transition fuel” in the eyes of major EU politicians, like the President of the EU Parliament Environment Commission Pascal Canfin and many MEPs.
The EU Commission largely seems to have incorporated this dangerous argument. Its latest Q&A explains that its future delegated act “will cover natural gas and related technologies as transitional activity in as far as they fall within the limits of the EU Taxonomy Regulation” and that it will also “consider specific legislation covering the gas activities that contribute to reduce greenhouse gas emissions but cannot be covered within the EU Taxonomy as they do not meet the screening criteria”.
One could even say that fossil gas is already included in the EU Taxonomy due to insufficiently strict criteria on hydrogen manufacture and the blending of “low carbon gases”. The thresholds for hydrogen manufacture have been reviewed to accommodate energy companies’ demands, making it easier for hydrogen to be manufactured using natural gas with carbon capture and storage (CCS) or grid energy coming from non-renewable sources. Similarly, the criteria adopted for transmission and distribution networks allow for the inclusion of any infrastructure that “enables the increase of the blend of hydrogen or other low carbon gasses in the gas system” without establishing any threshold for this blending, therefore facilitating the financing of infrastructures that will predominantly transport fossil gas.
Fossil gas lobbying efforts largely benefit from the support of several EU member states that bet on it to replace their current coal power fleets – notably Slovakia, Czechia, Bulgaria, Romania, Poland, Malta, Greece and Hungary –. Opponents to the inclusion of gas – including Austria, Denmark and Spain – struggled as the inclusion of gas could have been used by eastern countries as a bargaining ship to let nuclear in, thus driving strong nuclear advocates – like France or Norway – to support gas inclusion too.
Nuclear advocates pushing harder than ever
Bowing to pressure from pro-nuclear Member states, the Commission commissioned its Joint Research Centre (JRC) to draft yet another technical report in 2020. This report is currently being reviewed by two sets of experts, the – notably pro-nuclear – Group of Experts on radiation protection and waste management under Article 31 of the Euratom Treaty and the Scientific Committee on Health, Environmental and Emerging Risks on environmental impacts (Sheer), and will inform the Commission’s decision and content of the delegated act to come.
Despite scientific evidence and the very meaning of the “do not significantly harm” principle pointing to the contrary (3), the JRC found no reason to exclude nuclear. This conclusion should not be surprising: the JRC has structural links with the Euratom Treaty, relations with the nuclear industry and pro-nuclear views were previously expressed publicly by its members (4). It notably led France to call on the delegated acts to be postponed until nuclear was included.
In that context, the Commission’s statement that nuclear will be integrated in the complementary delegated acts was misinterpreted by nuclear advocates as an early win (5).
Last chance to save the EU Taxonomy
In an opinion piece published hours before the Commission’s announcements, the Financial Times’ editorial board warned that to reach the Paris Agreement goals “new investment in fossil fuels such as gas will be all but impossible” and that if the EU “ends up with a system that allows the greenwashing it is supposed to prevent, the consequences will be felt well beyond the bloc itself”.
The Commission’s decision to go ahead with deeply flawed bioenergy and forestry criteria and to open the door to fossil gas and nuclear came as the last blow to an EU Sustainable Taxonomy that was already in poor shape. If adopted, the delegated acts would turn this key part of the EU sustainable finance strategy into a tool for greenwashing.
When it comes to energy, Europe’s future lies with renewables (6). It is up to the European Parliament and Council to reject the European Commission’s proposal and oppose any future acts that would allow for fossil gas or nuclear to be included in the taxonomy framework.
Members of the EU Parliament and Council will also have to watch out for other “transitional activities” that the Commission will propose to include later on. The inclusion of such activities is a direct response to financial institutions’ demands for a “50 shades of green” (7) approach that negates the fact that some activities are incompatible with climate objectives and aims at branding funding to unsustainable activities as compatible with the EU transition.
Of course, it is doubtful that the Council members will step in to block a compromise that suits most of them. It will most likely be left to the Members of the European Parliament to step up and take their responsibility to avoid seeing the EU Sustainable Finance Strategy becomes a recipe for greenwashing that will jeopardize the EU transition and set an example not to be followed.