The Risk of Considering an Inclusion of Natural Gas and Nuclear Energy in the EU Taxonomy

© Dan Meyers

“The debate on the inclusion of natural gas and nuclear energy in the EU Taxonomy has intensified. It is not clear what the advantages of including these are. However, the risks of including these energy sources for the credibility of the EU sustainable finance agenda are significant. It will weaken the perception of the EU’s ambitions vis-à-vis international partners”, as stated by Victor van Hoorn, Executive Director, Eurosif.

In a statement issued today, Eurosif comments on the current debate. 

EU Taxonomy does not limit Member States’ strategic choices regarding future energy mix

The current global energy needs and the challenges of meeting the long-term climate objectives create a complex equation for Member States regarding their current and future energy mix, needing to align their plans with climate objectives while considering implications for the security and stability of energy supplies.

The EU Taxonomy does not limit these strategic choices. Some countries have already made their choice clear to rely on nuclear energy and to phase out thermal coal by switching to natural gas. The absence of these energy sources from the EU Taxonomy has not prevented these plans.

Including natural gas and/or nuclear energy
would fundamentally change the nature
of the EU Taxonomy, from a “green”
to a ‘transition’ list of activities

Including natural gas and nuclear energy brings little benefit, but carries profound risks for the credibility of the EU Sustainable Finance agenda more broadly.

The inclusion of gas and nuclear will result in less transparency and a greater risk of mis selling, undermining confidence in sustainable investment fund disclosures.

Regardless of the decision taken on natural gas and nuclear energy, Member States should approve the Climate Mitigation & Adaptation delegated act.

Nearly eight months after its publication, the EU Taxonomy Climate delegated act is still not approved. The adoption of the act is essential for the EU sustainable finance architecture to function properly: companies need it to start their reporting, financial institutions to start reporting how their SFDR financial products align with it and for financial advisors to appropriately advise investors on sustainable investment options.

The European Parliament has already endorsed the delegated act. Member States should do the same now, regardless of the decision taken on the inclusion of natural gas and nuclear energy in the EU Taxonomy.

See also: PRI Position Paper

See also: Articles on Net Zero

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