EU Parliament: Classifying Gas and Nuclear Power as Sustainable
The EU Parliament approved the classification of natural gas and nuclear power as sustainable, causing a big furore. For example, Climate Action Network Europe wrote that the EU Commission “sacrifices the scientific integrity of the taxonomy on the altar of fossil gas and nuclear lobbies” and has failed to “redirect financial flows towards truly climate-friendly investments”. Other critics accuse the EU of “greenwashing”.
Find out what exactly happened, what this means for you as a private investor and all the small details you need to be able to discuss the topic over the weekend. ?
What exactly happened?
The EU Parliament voted on whether natural gas and nuclear power can be classified as sustainable in the EU under certain conditions. Currently, this (gas and nuclear power being defined as sustainable) is stated in the so-called taxonomy regulation of the EU Commission. However, it is relatively controversial and for this reason, an objection was lodged against the taxonomy. This objection was then put to the vote on Wednesday.
The outcome?
There were 328 votes against, 278 MPs in favour and 33 abstentions.
To stop the green label for nuclear power and gas, at least 353 of the 705 MPs would have had to vote against.
What is this taxonomy thing, anyways?
We know, today’s topic has a loooooot of legal and regulatory aspects so here’s some super quick background information.
The idea of the EU taxonomy is to create incentives for private investors to invest in sustainable technologies by dividing investments into three classes on the financial market. In theory, this should divert the flow of money away from non-sustainable investments and towards more environmentally friendly investments.
Actually a very good idea, because where private investors’ money goes is decisive when it comes to the question of which projects companies have money for.
What does it mean for you?
Basically, the new rules will add gas and nuclear power plants to the EU taxonomy rulebook from 2023, enabling investors to label and market investments in them as green. In other words: investments that include gas or nuclear power plants will be “approved” as sustainable by the EU officials.
The Takeaway
I think we can all understand that the current situation in the energy markets is difficult for some countries. It is also understandable that gas and nuclear energy are being discussed as transitional solutions. But whether one has to declare them environmentally friendly in the long term and encourage private investors to invest in them is another question altogether.
Capital markets are already confusing enough for private investors, greenwashing is well hidden and the availability of data is not exactly manageable. With the new taxonomy rules, the EU is not really improving this situation.
