The European Commission has developed a proposal for classifying natural gas and nuclear power as green in the context of climate change-related objectives under the EU’s taxonomy framework.

On 1 January, the Commission announced that it had begun consultations on a draft delegated act the day before with the Platform on Sustainable Finance and a Member States sustainable finance expert group, as it is required to do under the taxonomy regulation.

There will be no public consultation. In a leaked copy of the draft delegated act, available on the EURACTIV news website, the Commission said “advanced disclosure of a draft delegated act to the public would have been likely to influence the markets”.

It also said the “relevant technical and policy issues concerning the natural gas and nuclear energy have […] been in the public domain” throughout the course of legislative deliberations on the taxonomy regulation, the work of the first sustainable finance advisory group, and the finalisation of the main taxonomy climate delegated act itself.

The latter was adopted by the Commission in the first half of 2021 and was cleared in December to enter into force on 1 January this year. It did not cover nuclear and gas, however, with the Commission having promised to address these in a separate set of rules. These have been mired in intense political lobbying.

The long-awaited taxonomy complementary delegated outlines the criteria for natural gas and nuclear energy to be considered sustainable, with think tank E3G noting that both are included as “transitional” activities under the green category as per Article 10 (2) of the taxonomy regulation.

In a press statement, the Commission said: “Taking account of scientific advice and current technological progress, as well as varying transition challenges across Member States, the Commission considers there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominantly renewable-based future.

“Within the Taxonomy framework, this would mean classifying these energy sources under clear and tight conditions (for example, gas must come from renewable sources or have low emissions by 2035), in particular as they contribute to the transition to climate neutrality.”

The Commission also said that “to ensure transparency”, it would amend taxonomy disclosure rules “so that investors can identify if activities include gas or nuclear activities, and to what extent, so they can make an informed choice”.

The draft delegated act paves the way for green-labelled investment in nuclear power plants until at least 2045, which is by when the leaked draft states that permits for new plants must be approved. There is also provision for existing plants to be considered green under the taxonomy framework.

Specific requirements are set out for radioactive waste management, nuclear decommissioning, and “operational final disposal facilities for all radioactive waste”, including with a view to avoid any export of radioactive waste for disposal in third countries. Requirements are also spelled out for the use of accident-tolerant fuel.

With regards to gas, detailed conditions include that for new gas plants approved before the end of 2030, life-cycle greenhouse gas (GHG) emissions must be less than 270g of CO2 per kilowatt hour or satisfy another annual threshold over 20 years. A host of other conditions must also be met if the plant is replacing traditional fossil fuels such as coal generation.

As for the other activities under the taxonomy regulation, the criteria for the gas and nuclear activities would be updated as technology evolves, the Commission has said.

Green groups criticise, next steps

According to the Commission, the Platform on Sustainable Finance and the member states’ expert group have until 12 January to “provide their contributions” to its proposal. The Commission’s plan is to formally adopt the complementary delegated act later this month.

Upon receiving the proposed rules, the European Parliament and the Council would have four months, plus a possible two months extension, to review and, if they want to, object to them. They do not have the right to make amendments, only to veto it.

According to the Financial Times, EU diplomats said the text was likely to win widespread support from governments, but the green classification for gas and nuclear was criticised by environmental groups.

“Gas and nuclear energy have no place in the EU taxonomy,” said Lisa Fischer, programme lead, climate neutral energy systems at climate change think tank E3G. “Gas investments are not only harmful to the climate they are also increasingly financially risky. Nuclear makes the EU’s energy transition more costly than it needs to be.

“Such a sustainability label makes neither environmental nor economic sense – we need to incentivise investment into the best we have got, not into yesterday’s solutions.”

For the Council to reject the Commission’s proposal at least 20 member states representing at least 65% fo the EU population would need to object. Fourteen EU member states reportedly operate nuclear power plants. In the Parliament a simple majority would suffice.

France in particular has pushed for nuclear power to be classified as sustainable in the context of the taxonomy, with Poland and some other eastern European states also understood to be in favour.

Austria, Germany and Luxembourg are among a minority of EU Member States that have decided against nuclear. Austria has previously indicated it was ready to go to court if the EU decided to include nuclear power into the taxonomy.

According to German media reports the coalition government appears to be divided over the Commission’s proposal.

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