Commission under pressure over sustainability credentials for nuclear and gas

14 January 2022

Over the last fortnight, the European Commission has come under significant fire over its draft plans on classifying some nuclear and natural gas energy under its sustainable finance taxonomy. According to the draft proposal, which was shared with EU Member States in the dying hours of the last year, the Commission plans to classify both “transitional” green sources. 

The EU’s sustainable finance taxonomy sets out which products or industrial processes can be classified as sustainable, thus encouraging institutional and retail investment into them. By restricting what accounts as sustainable and “green”, it also aims to set clear guidelines and prevent so-called “greenwashing” by some companies and investors. 

Under the Commission’s draft plans, which are expected to be formally adopted in late January or early February, investments into nuclear power would be considered a transitionary energy source, it must receive all its construction permits prior to 2045, and must be in possession of plans, funds and a site to safely dispose of radioactive waste. With most countries still struggling to find and build long-term radioactive waste disposal sites, the latter will most likely be a key obstacle for funding new plants. 

Meanwhile, according to EurActiv, lifetime extensions of existing power plants, as currently planned in France, may also be classified as sustainable if their operators “include modifications and safety upgrades” to ensure they comply with “the highest achievable safety standards.”

Despite uproar by Germany and Austria over the inclusion of nuclear power, a large majority of EU Member States consider nuclear as the only short-term means of achieving carbon-neutrality.  

With regards to natural gas, however, Germany and Austria are the key proponent of its classification and inclusion in the taxonomy as they argue the fossil-fuel’s short-term needs and the long-term benefits of its pipeline infrastructure. While natural gas is still a fossil-fuel, its direct carbon impact is considerably less than emitted in the burning of coal. 

According to the Commission’s draft proposal, investments in natural gas power plants may only be considered sustainable if they meet three qualifying criteria: emitting less than 270g of CO2 per kWh, replace a more polluting fossil-fuel plant, and have received all necessary construction permits by 2031, thus ensuring their time-limited transitionary use. In addition, they must either be fully equipped or easily adapted to the use of low-carbon fuels such as hydrogen.