Brussels faces the threat of legal action and the possible sideline of its landmark-sustainable financial rules by EU governments that do not want nuclear power or natural gas to be. described as green investments.
Energy ministers of Austria and Luxembourg have told the Financial Times that they will sue the European Commission over its so-called green “taxonomy” rules, while a Spanish deputy prime minister said Madrid could choose to create its own green framework use, excluding nuclear power. power and natural gas.
The complaints put pressure on the European Commission, which has proposed that nuclear technology and some forms of natural gas be designated as sustainable investments under comprehensive rules designed to help eradicate greenwashing in the financial industry.
The anti-nuclear governments of Austria and Luxembourg have begun preparations for a lawsuit against the Commission if the rules are approved in their current form. They argue that nuclear power, which has no carbon footprint but produces toxic waste with radiation risks, does the EU’s “no significant damage” to the environmental principle.
“There is a solid and strong argument to go to the European Court of Justice if the Commission decides to go ahead and introduce the taxonomy,” said Leonore Gewessler, Austria’s green energy minister. “We need to make sure financial markets stay true to the alternatives of renewable energy.”
Critics of the taxonomy are looking for legitimate routes to challenge the text, as it will almost certainly be approved by an alliance of pro-gas and pro-core EU governments in the coming months. The draft can only be overturned if it is rejected by a super-majority of both Member States and members of the European Parliament.
The taxonomy regulation categorizes industries that generate about 80 percent of the EU’s greenhouse gas emissions, in an effort to help investors channel capital into sustainable economic activity. The labeling system will then be applied to financial products and green bonds, leading EU government spending to the climate transition.
But the exercise, which began three years ago, has become entrenched in the sensitive politics of energy sovereignty, as pro-gas countries in Eastern Europe and pro-nuclear states such as France have demanded that the rules not penalize energy sources that part of their electricity needs and is crucial in the transition to net zero emissions.
Germany’s coalition government is divided over the taxonomy between the anti-nuclear Greens and more pro-gas coalition partners, the Free Democrats. German Green Economy Minister Robert Habeck and Environment Minister Steffi Lemke said on Saturday that if the concept remained unchanged, the German government should reject it.
Teresa Ribera, Spain’s deputy prime minister for the environment, said the categorization of nuclear power and gas was a “mistake” that did not prepare the EU for net zero carbon emissions by 2050. She warned that Madrid could choose to apply its own standard when issuing green bonds rather than using the EU taxonomy as a basis for issuing debt.
“If it better suits our own needs and priorities, we will apply our own standard,” Ribera said. “There can therefore be different standards: a silver standard at EU level and a gold standard, at the level of some member states.”
Claude Turmes, Luxembourg’s energy minister, who will join the Austrian lawsuit, also said there was a risk that, rather than providing a common standard for sustainable finance, the taxonomy “would lead to more fractures”. , as countries will go their own way. ” .
The legal uncertainty hinders the taxonomy’s widespread acceptance among investors who want to align their portfolios with net zero-emission targets. The Institutional Investor Group on Climate Change, whose members have € 50tn of assets under management, warned that the inclusion of gas would create an “unnecessary headache” for investors with green ambitions.
An independent group of advisers who helped the European Commission design the rules also called for drastic changes, including that gas only qualifies for the green label if it produces less than 100g CO2 per kilowatt / hour when replacing higher polluting sources such as coal word.
Marta Toporek, a lawyer at the environmental charity ClientEarth, said the current taxonomy “conflicts with a number of EU laws, including the EU’s obligations under the Paris Agreement, the European Climate Act and the taxonomy regulation itself”.