Stockholm (NordSIP) – On 9 December, the first part of the EU Taxonomy Climate delegated act was passed after the EU Council’s extended scrutiny period expired. The proposal, establishing technical criteria for the economic activities that contribute to the climate objectives, will come into force on 1 January 2022. It means that corporates and financial institutions will be able to start using the criteria to report on the taxonomy alignment of their activities. However, they are only required to do so from January 2023. For now, they will only need to report on the activities’ taxonomy eligibility.
Now that the first part of the taxonomy has been cleared, the European Commission is expected to unveil the second, much more controversial delegated act, on 22 December, following a meeting of EU heads of government on 16 December. Among the parts left out by the first delegated act are the politically sensitive criteria for natural gas and nuclear energy. Frans Timmermans, Vice-President of the European Commission, sent some mixed signals on Thursday, acknowledging that “nuclear and transition gas play a role in the energy transition,” yet pointing out that this “does not make them green.”
Most investor groups welcomed the news of the first taxonomy climate delegated act becoming official. “The EU Taxonomy provides a clear common language on what is a green investment. The approval of this Delegated Act brings the two vital objectives of climate mitigation and adaptation into force,” writes Sean Kidney, CEO of Climate Bonds Initiative. In their commentary, the Platform emphasises the importance of the 100g CO2e/kWh declining threshold for electricity generation, which provides clear guidance to Europe’s electricity sector on how to align their activities with net zero and has been replicated in other national taxonomies.
Certain scepticism remains, however. “While Eurosif is broadly supportive of this Climate delegated act, it is already clear that the criteria for a number of sectors will need to be re-examined to ensure this science-based alignment,” comments Victor van Hoorn, Eurosif’s Executive Director. “As Eurosif has already stated, inclusion of natural gas and nuclear energy would change the nature of the EU Taxonomy from a list of sustainable activities to a list of transitional activities,” he adds.
Fiona Reynolds, PRI’s outgoing CEO, focuses on the Commission’s future priorities in her comments. “Any proposal from the European Commission should consider investors’ need for objective criteria,” she said. “Recognising activities that have a role in the transition, for example via an extension of the EU sustainable taxonomy, should be prioritised by EU policymakers,” added Reynolds.
All eyes are now on the European Commission and their upcoming decision whether to compromise between the gas and nuclear-supporting member states on one side and countries opposing these on the other.