Sat. Jan 22nd, 2022

Brussels wants to recognize nuclear power and forms of natural gas as “green” activity as part of a landmark EU classification scheme to help financial markets decide what counts as sustainable investment.

In long-awaited plans, the European Commission has paved the way for investment in new nuclear power plants for at least the next two decades and natural gas for at least a decade, under a green labeling system known as the “taxonomy for sustainable finance ”.

The labeling system, which will cover industries that generate around 80 per cent of all greenhouse gas emissions in the EU, is the first attempt by a major global regulator to decide what counts as truly sustainable economic activity and help so-called greenwashing in the financial sector.

A draft text, seen by the Financial Times, says the EU’s green label should be allocated to controversial energy sources, including nuclear power and natural gas, under certain circumstances.

The decision was taken after a vocal group of pro-nuclear countries, led by France, and pro-gas governments in southern and eastern Europe, demanded that the taxonomy not penalize energy sources that provide most of their power generation. not.

Nuclear power does not emit greenhouse gases, but produces toxic waste that requires safe disposal and may pose radiation risks. Natural gas does produce carbon dioxide, but its proponents say it is far less polluting than traditional fossil fuels and is an essential way to help pave the way for lower emissions.

Brussels was forced earlier this year to postpone a decision on how to classify the two energy sources following disputes within the college of commissioners over whether they should get the green label. The struggle to recognize nuclear power and natural gas as green has intensified in recent months as EU countries faced record electricity prices this winter, driven by rising demand for natural gas imports.

The draft taxonomy text says nuclear power should be considered a sustainable economic activity as long as EU countries that house power stations can safely dispose of toxic waste and meet criteria to cause “no significant damage” to the environment. The construction of new nuclear facilities will be recognized as green for permits granted until 2045, the text reads.

Investment in natural gas is also included in the green label as a “transitional energy” but must meet a more detailed set of conditions, including the production of emissions of less than 270g CO2 per kilowatt and if it replaces traditional fossil fuels such as coal generation.

The EU imports about three-quarters of its natural gas needs, most of which are supplied by Russia. The bloc’s energy crisis has drawn criticism from some member states that Moscow is artificially inflating gas prices and the EU must accelerate away from gas imports to renewable energy.

The taxonomy text will require the approval of a majority of EU Member States and members of the European Parliament. EU diplomats have said the text is likely to win widespread support from governments, but the green classification for gas and nuclear power has been criticized by environmental groups.

France’s EU Commissioner Thierry Breton said he was in favor of labeling both technologies as green, as it would help the EU achieve a goal of reducing CO2 emissions to net zero by 2050, compared to 1990- levels.

“Gas is not the best way to achieve our goal because you generate some CO2, but it’s at least better than a transition than coal,” Breton told reporters last month. “We need to have the right financing in taxonomy, including nuclear energy.”

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