EU faces major rebuttal over plan to call gas and nuclear ‘green’

Cooling towers release water vapor at the Nogent nuclear power plant in Nogent-sur-Seine, France, on December 21, 2021. (Cyril Marcilhacy/Bloomberg)

Europe’s executive arm is facing an increasingly intense wave of pressure to drop a proposal to add gas and nuclear power to its green regulations.

A key body created to help the European Union ensure it can achieve net zero carbon emissions by mid-century intends to criticize the bloc’s proposal, according to documents seen by Bloomberg on Thursday.

The rebuttal is expected to be presented by the Sustainable Finance Platform, according to the documents, which are still subject to change. The group is one of only two the European Commission has consulted for comment in a process that is due to end on Friday.

Europe faces growing opposition to its proposal to add gas and nuclear power to its green taxonomy, as investors, civil society and some member states express dismay at the process. The European Commission says the adjustment is needed to wean some countries off coal and ease the transition to renewable forms of energy. Critics argue the arrangement marks a reckless dilution of what had been touted as the world’s most ambitious climate framework.

–The Sustainable Finance Platform states:

The draft feedback document shows that the platform on sustainable finance is preparing to distinguish the proposal on gas. The European Commission wants fossil fuels to have a higher emissions cap than other technologies, when used to replace dirtier sources of electricity, such as coal. The concern is that this could lead to higher emissions, if new facilities are granted up to 15% more production capacity than the plants they replace, as is currently planned.

The draft also reveals the group’s concerns that the criteria set for new nuclear power plants do not adequately address the environmental impact of waste and do little to help the EU achieve its goal of climate neutrality by 2050. .

The body, made up of key civil society groups, banks and companies like Airbus, will recommend that the Commission drop adjustments to green label gas and nuclear during the transition. Bloomberg LP, the parent company of Bloomberg News, is a member of the Platform.

The reactions are unlikely to derail the Commission’s plans. But this has the potential to undermine the integrity of the taxonomy and undermine the EU’s goal of making it the “gold standard” of global ESG finance.

Meanwhile, top lawmakers in the European Parliament say adding gas may not even be legal because it is not in line with the goal of limiting global temperature rise to 1.5° vs.

“We have serious doubts about the legality of the technical selection criteria proposed in the supplementary delegated act,” said Bas Eickhout and Sirpa Pietikainen, co-rapporteurs for the taxonomic regulation. “Due to the complexity of the case, we are asking the Commission for more time to be able to seek additional legal advice on the issues.”

E3G, an influential European climate think tank, advised the Commission to urgently withdraw the proposal or revise it to avoid “losing credibility and climate leadership”. He said the regulation would incentivize investment in stranded assets and recommended member states or lawmakers reverse the law if the Commission goes ahead.

–The current EU plan:

Gas projects that replace coal and emit no more than 270 grams of carbon dioxide equivalent per kilowatt hour, would be awarded a green label as long as they have obtained building permits before the end of 2030 and plan to switch to renewable or low-carbon energy by the end of 2035. Nuclear power plants should obtain building permits by 2045 and meet a set of criteria to avoid significant damage to the environment and resources in water.

The regulation is currently in a consultation period with the platform and the group of experts from the Member States. The Commission is then expected to adopt it before the end of the month, before it goes to Parliament and member states for possible objections. The bar for canceling the proposal is high. At least 20 member states – representing at least 65% of the EU’s population – are expected to reject the rule in the coming months.

Asset managers are already warning that they will boycott gas and nuclear when allocating capital to green projects. The Institutional Investors Group on Climate Change, which includes the asset management arms of JPMorgan and Goldman Sachs, said it was “strongly opposed” to any inclusion of gas in the taxonomy.

A letter to the EU executive was sent this week by the chairs of the joint committee on the economy and the environment in parliament asking for a public consultation. Eickhout and Pietikainen also said they “deplored the lack of a proper impact assessment”.

“We insist that the Commission carry out a proper impact assessment and open a proper public consultation on such a controversial proposed delegated act,” they said.

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