Foratom urges fact-based approach to sustainable finance

The taxonomy is a set of criteria and procedures that provide businesses and investors with a common language to identify what economic activities can be considered environmentally sustainable. It had been due to take effect next year, but the Council says it should now be established by the end of 2021, in order to ensure its full application by the end of 2022.

It launched its Action Plan on Financing Sustainable Growth in March 2018, and adopted a package of measures two months later. Then, in July, a Technical Experts Group (TEG) on sustainable finance set up by the Commission began assisting it in developing a unified classification system for sustainable economic activities. The TEG published its Taxonomy Technical Report in June this year. Nuclear energy was excluded from the list of sustainable economic activities, a decision which Foratom said ought to be reviewed as it contradicted EU climate policy.

Today, Yves Desbazeille, Foratom director general, welcomed the Council's decision to remain technology neutral.

"Decarbonising Europe's economy by 2050 will require significant investment and therefore it is essential that such financing initiatives support all low-carbon technologies. We strongly believe that this initiative should not aim to exclude a particular technology without providing a valid justification," he said.

"In order to identify whether an energy source is sustainable or not, it is important to evaluate each source equally on the basis of objective criteria (including CO2 emissions, air pollution, raw material consumption and land use impacts) and using a whole life-cycle approach."

Regarding the decision to delay implementation of the taxonomy until 2022, he referred to the TEG Taxonomy Report.

"The TEG could not, at this stage, recommend the inclusion of nuclear as they felt more work needed to be undertaken by a group of experts with the right knowledge," he said. "Therefore, we call on the European Commission to set up a new group of experts with in-depth technical expertise on nuclear life-cycle technologies to take another look at nuclear power. This work must be undertaken before the development of delegated acts and implementation of the taxonomy."

The text of the sustainable finance proposal agreed by EU governments needs the approval of the European Parliament, and Foratom said it hoped the Council would maintain its technology neutral stance in further dialogue.

"It is essential the discussion focuses on the ultimate goal of decarbonising the EU, and therefore the debate should remain rational and fact-based," it said.

Green light

Announcing that EU ambassadors had 'greenlighted' its position on a proposal to create an EU-wide classification system for environmentally sustainable activities, the Council said yesterday that private sector participation was "absolutely crucial" in addressing the challenges posed by climate change.

Hundreds of billions euros of investment are required to achieve the transition to a sustainable economy, it said, and the capital needed cannot come from public budgets alone. In order to help investors contribute to the transition, it said, a first important step is to have a shared understanding of what 'sustainable' means.

In the Council's statement, Finnish Finance Minister Mika Lintilä said: "At present, there is no common classification system at EU or global level which defines what is an environmentally sustainable economic activity. The proposed regulation is meant to address two challenges: reduce fragmentation resulting from market-based initiatives and national practices; and reduce 'greenwashing', i.e. the practice of marketing financial products as 'green' or 'sustainable', when in fact they do not meet basic environmental standards."

The proposal identifies and defines six EU environmental objectives: climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; transition to a circular economy, including waste prevention and recycling; pollution prevention and control; and protection and restoration of biodiversity and ecosystems.

In order to qualify as environmentally sustainable, economic activities would have to fulfil the following requirements: contribute substantively to at least one of the six environmental objectives; not significantly harm any of the environmental objectives; be carried out in compliance with minimum social and governance safeguards; and comply with specific technical screening criteria.

The European Commission would then be tasked with establishing the actual classification by defining ‘technical screening criteria’ for each relevant environmental objective, the Council said. Legally, the criteria would take the form of delegated acts as regards the sector classification of economic activities, it said. They would be supplemented by implementing acts defining quantitative and qualitative thresholds which must be met by the economic activity in order to be considered environmentally sustainable, it added.

The Commission would be assisted by a technical expert group, the 'platform on sustainable finance', which would be mandated to provide advice for developing the technical screening criteria and analyse their impact in terms of the potential costs and benefits of their application. In addition, the Commission will be advised by a group of experts from member states on the appropriateness of the technical screening criteria.

The European Parliament voted on its position on this file in March and negotiations between the Council and the Parliament are therefore ready to start.

Environmental responsibility

World Nuclear Association welcomed the Council's decision not to exclude nuclear projects from being eligible for sustainable finance grants.

The organisation's director general, Agneta Rising, said: "Nuclear energy is an integral part of several European Union member states’ climate mitigation efforts. It has shown - be it in France or Sweden - that it has the potential to deliver sustainable energy transitions. Excluding nuclear energy from our future would be a disastrous decision for the climate.

"It is time for European institutions to acknowledge that nuclear energy is an important solution to tackle climate change. Several international organisations have already pointed out nuclear energy’s contribution to sustainable development, such as the International Energy Agency, United Nations Intergovernmental Panel on Climate Change, OECD Nuclear Energy Agency, and World Energy Council.

"It is crucial that we evaluate energy sources in an equal way, based on objective criteria, be it CO2 emissions, air pollution or their physical footprint throughout the entire life-cycle.

“Decarbonising the European economy by 2050 requires significant investment, and financing initiatives must support all low-carbon technologies."

Germany’s decision to phase out its nuclear plants by 2022, but leave its coal plants running until 2038, as announced by Chancellor Angela Merkel at the UN Climate Action Summit earlier this week, is "environmentally irresponsible", the Association said.

"Despite massive investments in renewables, Merkel’s government was recently forced to scrap the country’s 2020 emissions target after observing Germany’s carbon emissions had barely changed over the last decade," it added.

Nuclear energy remains the largest source of low-carbon generation in the EU, supplying more than one-quarter of the region's electricity. “But, too often, a small number of dissenting voices prevent Europe from taking effective action,” the Association said. For the EU to “catch up" on climate action, it must "reject efforts to discount nuclear energy for political purposes", and assess all low-carbon technologies on their relative merits.