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Julia GroteJan 14, 2022 3:01:00 PM2 min read

Taxonomy: Nuclear and Gas

Suddenly green: What you need to know now 

Just in time for New Year's Eve 2021, the EU Commission delivered a proposal that left us with many questions to start the new year with.  

WHAT HAPPENED? 

The 2020 Taxonomy Regulation aims to steer capital flows into sustainable investments through a uniform definition of sustainable business models and technologies, thus pushing the "dirty" industries out of the market without government bans. The regulation itself forms the framework and is supplemented by so-called delegated acts. These define the specific formal and technological requirements. The general principle becomes a concrete instruction for action. The third delegated act now regulates the conditions under which natural gas and nuclear power can be considered sustainable transition technologies.  

WHAT DOES THIS MEAN IN CONCRETE TERMS?  

Nuclear power plants are considered sustainable if their construction has been approved until 2045, a plan for the disposal of nuclear waste is in place and the best technology is applied from 2025. Measures to extend the operating lives of nuclear power plants until 2040 can also be subsumed under this. For France as a nuclear power country, this means that they do not have to fear any significant difficulties in financing repairs or the construction of power plants. Banks, insurance companies or funds doing business with state-owned electricity producer Électricité de France SA  also have no problem with their ESG reporting as a result. Similarly, in Germany, which relies on natural gas as a bridging technology, new gas-fired power plants are green as long as they are approved by 2030, emit a maximum of 270g CO2e/kWh and can also run on e.g. hydrogen.   

WHERE DO WE GO FROM HERE?  

Environmentalists are not enthusiastic about the Commission's plans. In fact, national ministries are supposed to comment on the draft by 18 January 2022. After that, the European Parliament (EP) and the European Council have up to six months to decide on the proposal. It is considered adopted if neither institution raises objections within the deadline or if both institutions indicate that they will not raise objections. In the Council, a majority of 20 states representing 65 percent of the EU population is needed for a rejection - experts see little chance of this. In the EP, an absolute majority of 353 votes would have to be cast against the Commission's proposal, which also seems unlikely. 
A wild card remains the action before the European Court of Justice, which Austria has already announced with regard to nuclear energy. It remains to be seen whether the ECJ will trust an Austrian legal opinion on the sustainability of nuclear power more than that of the EU - but at least the prospect of a legal dispute lasting for years could scare away investors.   

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