Large number of MEPs object to the inclusion of gas and nuclear in the EU taxonomy – but vote passes

06 July 2022 – Today, a substantial number of Members of the European Parliament have objected to the Complementary Climate Delegated Act of the Taxonomy Regulation. This act labels gas and nuclear as sustainable investments. An absolute majority of MEPs would have been required to change the legislation – which was narrowly missed by 75 votes.  

“The European Commission cannot ignore the large-scale, cross-party objection to the Complementary Climate Delegated Act” says Sandrine Dixson-Declève, co-president of The Club of Rome and member of the Platform for Sustainable Finance. 

“In light of Russia’s invasion of Ukraine, it is ludicrous that the EU continues to legitimise gas as green as planned at the start of the year. No credible institution can sanction the Russian invasion of Ukraine with one hand, and push ahead with plans to incentivise investments which include Russian fossil gas supplies with the other.”

The vote has showed that the process to develop the Complementary Climate Delegated Act has been coerced for national and self-interest, side-lining rigorous scientific, financial and market analysis as well as stakeholder dialogue.  

“National politics once again dictated the outcome of this vote with MEPs being swayed to follow their nation’s vested interests” continues Dixson-Declève. 

The MEPs who did not object to the cDA are largely those in the political centre to right of the spectrum from Member States with strong industry presence or future interests in the nuclear or gas industry. The size of the objection to this Delegated Act, a procedure which is normally straightforward to receive the backing of the European Parliament and Council, shows that the MEPs are not happy with either the content of the cDA or the steps taken to develop it.  

It is likely that the European Commission will have to take time to consider its options for continuing with the cDA following this vote. Especially as some Member States are considering taking the European Commission to Court. There will also be internal deliberations around completing an impact assessment and public consultation to make a fully-informed decision on the role and necessity of transition technologies in the EU taxonomy.  

“The European Commission should complete an impact assessment and public consultation on the proposal, which has never been done, to make a fully informed decision on how best to incentivise a sustainable and fair transition for all EU Member States without adding extra dependence on Russia or creating new unholy dependencies around gas supply rather than focusing on renewable supply and demand side management.” 

Further considerations for objecting to the Act

The following reasons are being discussed by MEPs considering objecting to the Complementary Climate Delegated Act (CDA) under the Taxonomy Regulation, against the inclusion of gas and nuclear in the “green” taxonomy framework: 

– The inclusion of nuclear and natural gas has been deeply controversial on environmental grounds and the proposal went against the scientific recommendations of the Platform on Sustainable Finance:

  • The European Commission’s advisory body, the Platform on Sustainable Finance, advised that activities related to energy generation from gaseous fossil fuels and nuclear energy facilities are not in line with the Taxonomy Regulation, should not be considered as taxonomy aligned and should be seen as a different level of environmental performance to the existing Taxonomy substantial contribution criteria. The Platform advised that these activities would “be better characterized with an intermediate or amber level of environmental performance[1]. The Spanish government is also advocating for this position. 
  • Natural gas power plants emit a lot more than the 100g threshold set in the Regulation to be in line with the Paris Agreement, the EU’s net zero emissions target for 2050 and 55% emission reduction target by 2030; 
  • For nuclear power, there are not sufficient guarantees that the “Do No Significant Harm” threshold would not be broken by its inclusion. 

-There is a strong case that the cDA breached the Taxonomy Regulation itself and a high probability that a court procedure will be launched against the cDA; 

– The Members of the European Parliament have felt excluded from the procedure on the cDA and that the European Commission did not take due care to evaluate and consult on the Delegated Act before it was adopted. Ahead of the vote in the joint Committee on Economic and Monetary Affairs (ECON) and Environment, Public Health and Food Safety (ENVI), MEPs voiced their displeasure of being excluding from the procedure and their feelings that the European Commission did not take due care to evaluate and consult on the Delegated Act before it was adopted. The resolution adopted by MEPs in the joint ECON and ENVI Committees requested that any new or amended delegated acts should be subject to a public consultation and impact assessments; 

-Russia’s invasion of Ukraine has been a stark warning against incentivising future natural gas investments by labelling them as “green” under the EU taxonomy. As Russia’s invasion of Ukraine continues and EU energy ministers call for the replacement of Russian fossil fuels with energy efficiencies and renewable alternatives, the classification of gas projects as a sustainable activity is being increasingly questioned. 

  • Oil and fossil gas sales accounted for nearly 36% of the Russian Federation’s budget in 2021, totalling over €100bn. Russia supplies around 40% of Europe’s demand for gas. 
  • The European Commission presented The REPowerEU Plan on 18 May, its response to the hardships and global energy market disruption caused by Russia’s invasion of Ukraine. This noted that there is a double urgency to transform Europe’s energy system plan to rapidly reduce dependence on Russian fossil fuels and fast forward the green transition, accelerating the rollout of renewables. 

-Growing price instability in European energy markets has also highlighted concerns over European Commission plans to include fossil gas and nuclear in the EU sustainable finance taxonomy. 

-Country-level analysis, by WWF[2] and Transport & Environment, of the requirements of the Complementary Delegated Act, show that investments in gas or nuclear facilities will only be taxonomy eligible in a small minority of Member States.  

  • Within the criteria for nuclear power, economic activities in the majority of Member States will not meet all the required criteria to guarantee eligibility. For example, 0% of new nuclear plants in Poland, Hungary, Romania, Czech Republic, Croatia, Slovakia, Slovenia, Netherlands, Spain, Greece and Lithuania. 
  • Within the criteria for gas-fired power, economic activities in Eastern, Baltic and Mediterranean regions will in most cases be fully, or almost fully, excluded from taxonomy-eligibility, due to limited or zero coal capacity to replace or lack of sufficient phase-out plans. In addition, several countries which have coal plants to substitute find that a substantial percentage of their planned gas plants are in fact excluded – including Italy, Croatia, Hungary and Ireland. Spain, Denmark, the Netherlands, and Slovakia also see negligible alignment with the criteria. 

 

Footnotes

[1] Platform on Sustainable Finance’s response to the consultations on the taxonomy draft complementary Delegated Act

[2] Please contact Henry Eviston, WWF, for more information on this analysis – 0032 485 69 27 58.

 

For more information contact:

Tom Jess
Program Manager
E: Tjess@clubofrome.org
Philippa Baumgartner
Head of Communications
T: +43 664 414 4456
E: pbaumgartner@clubofrome.org

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