First Climate’s position on the vote to expand the EU Taxonomy
On July 6, 2022, the EU voted to expand the EU Taxonomy to classify investments in gas and nuclear power as green. The decision has left mixed reactions across Europe and the world. What it means for investments, the journey to net zero, and First Climate’s position.
This past week the European Parliament voted to expand the EU Taxonomy to include certain investments in gas and nuclear energy as “green” options, meaning they could be credited as sustainable. While Parliament was split on the issue (278/639 lawmakers voted to block the proposal), the proposal passed and is likely to become law once the Taxonomy enters into force in 2023.
The EU Taxonomy is a classification system that aims to avoid greenwashing and set Europe on the path to climate neutrality by 2050 by defining standards on what economic activities can be considered sustainable. In First Climate’s view, this new proposal pushes policy in the opposite direction.
“The EU Taxonomy takes one step forward, then suddenly two steps back. Allowing investment in gas and nuclear power to be labelled green will likely divert much-needed investment in clean renewable energy sources to sources that will continue to be a burden for generations to come,” says Mike Hatert, COO of First Climate Markets AG. He adds, “I want to assure our clients that we will continue to promote investments in sustainable renewable energies, like wind, solar, hydro and geothermal power. First Climate will not be referring to gas or nuclear power as green energy.”
Why is this proposal controversial?
Gas is a fossil fuel that releases emissions and is generally not considered to be a green energy source. However, it releases less emissions than other fossil fuels like coal, and proponents of natural gas claim that it can act as a “bridge” to ease into the energy transition.
The conversation around nuclear power is a bit more nuanced. Proponents for nuclear power claim that it doesn’t release carbon emissions in energy production and is a highly efficient option that can meet high energy demands. However nuclear power generates radioactive waste with high potential to be extremely dangerous if mishandled. Nuclear accidents, though very rare, leave an immense impact on the environment. And while nuclear power plants are carefully zoned and placed, an area deemed safe at one point in time may be completely unsafe during another. In Ukraine, for example, previously safe nuclear power plants are now under extreme threat from the war and pose a high risk to both the environment and public health. For some, this environmental risk makes a "green" label questionable.
What's next?
The proposal could still be blocked before officially going into law, but only if 20 of the 27 member states oppose it. The chances of this happening are slim.
First Climate will continue to not refer to gas and nuclear power as sustainable or green. When procuring green energy, First Climate offers Energy Attribute Certificates (EAC’s) which provide relevant information on the procured energy (type, source, etc.) to ensure full transparency on the green energy delivered. First Climate will continue to keep our clients informed of key developments in this ongoing debate.
