Tracy Heindrichs: How does the proposal align with existing EU regulations?
, head of the European Commission representation office in Luxembourg: The proposal is in line with the Green Deal and the commission’s aim: the EU must engage in a transition to achieve its [emission] goals. Achieving these has a high cost--it’s estimated at €360bn a year up to 2030. Public investments won’t allow us to get there unless they are complemented by massive private investments. The taxonomy--increasing transparency in financial markets for private sector sustainable investments--seeks to encourage companies to launch and upgrade projects, and to meet these criteria. Also, I want to underline that it considers the European reality, which is that member states have a very different energy mix. We need to pick up member states where they are.
, co-chair of Luxembourg’s Green party: Yes, but can these be called green investments? The governments of Luxembourg and Austria have already questioned the commission’s decision. Financial actors, like [European Investment Bank] president Werner Hoyer, have too. It’s a question of credibility. The initial goal of the taxonomy was to provide the reference for what is a green investment in Europe. If we include gas and nuclear, there is a risk of undermining the credibility of the whole framework. But also, whether or not we’ll be able to channel those huge investments that Anne mentioned--€360bn a year--into the right direction. Every euro spent on nuclear, every euro spent on gas is a euro missing for renewable energy.
A.C.: The aim of the taxonomy is not to present gas or nuclear energy as green or as climate-neutral activities. The aim is to present them as transitional activities. Its aim is to define what is compatible with the Paris agreement in terms of sustainable finance. It’s a financial services tool.
Every euro spent on nuclear or gas is a euro missing for renewable energy.
EU commissioner Thierry Breton said that the energy demand in Europe is growing and that nuclear is the path to follow. How are we going to meet this demand over the long term?
M.S.: First, I’d like to question the transitional nature of this [act]. The commission wants to invest in the renewal of old nuclear plants up until 2040 and the construction of new nuclear power plans until 2045. A nuclear reactor has an average lifetime of 40 years, so we’re talking about channelling investments into nuclear until the end of the century. The decisions that we take today will have an impact until the end of the century, so it’s not transitional.
When it comes to energy supply, the demand in electricity in Europe may be growing, but the gas demand for the past decade has stagnated thanks to energy efficiency policies put forward by the commission. Our number one priority is to consume less energy. I know this is also a priority for the European Commission, and I think that the development and the deployment of renewable energies have come a long way in the past decades. Our solution should be 100% renewable energy and making sure that interconnections between member states exist, so that energy can be shared between countries efficiently.
A.C.: I agree with Meris saying that the deployment of renewable energy has come a long way. It’s still our ultimate aim. That’s why, in July 2021, the commission set renewable energy targets and now works on good practices for renewables, and on the publication of a communication on solar energy.
On top of that, as the energy sector will be the biggest contributor in meeting the EU’s climate targets, we will propose an action plan for an accelerated digital transformation of the energy sector. The commission also announced a new strategy on international energy engagement for 2022, which goes beyond the EU. I think this will also give way to new opportunities in deploying and promoting a clean, safe and efficient energy system, while gradually moving away from fossil fuel.
Luxembourg and Austria considered legal action following this delegated act. Does the taxonomy highlight a divide between member states and their energy policies and priorities? What could this rift mean for EU energy policies?
A.C.: Being united in a field that lies under national competence is difficult, but this is what makes the EU. It’s just not possible to force members to adopt only specific energy mixes. We must deal with it and give the necessary incentives to member states to choose the right energy sources. But we have always been very good at putting into place instruments which, in the end, also encourage countries--even outside the EU--to adopt the same standards.
It’s about ensuring maximum transparency, and thus avoiding greenwashing.
Isn’t the inclusion of nuclear and natural gas in the taxonomy--even just as a transitional measure--sending out a certain message to countries outside of the EU?
M.S.: I agree. When it comes to energy, of course, there’s division or conflict, but a large majority of Europe--all 27 member states--agrees on the fact that we need more renewable energy. Regarding the taxonomy regulation--nobody is asking the commission to hinder France in their plans to develop nuclear energy. The only thing we ask is to make sure that these activities are not labelled as green and get investments that are needed elsewhere. I think that, in Europe, when we agree on something, we can be very efficient together. Regrettably, the commission decided that it wanted to include nuclear and gas. I can’t influence that, but I do think that the signal it sends out goes in the wrong direction.
A.C.: Two important elements are missing from this argument. What comes with this delegated act is that it sets even stricter conditions and screening criteria [for nuclear and gas-related activities]. Let’s not forget that. They are outlined in detail in the delegated act, and they must be complied with. The taxonomy also introduces specific disclosure obligations for businesses related to their activities in the gas and nuclear sector. So, it’s not about greenwashing, it’s about ensuring maximum transparency, and thus avoiding greenwashing. With this, we can help investors identify which investment opportunities include gas or nuclear, and thus allow them to make informed choices.
This article first appeared in the March 2022 edition of .