EU drafts plan to mark investments in gas and nuclear as green

Steam rises from cooling towers of the Electricite de France (EDF) nuclear power plant in Belleville-sur-Loire, France, October 12, 2021. REUTERS / Benoit Tessier

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  • European Commission draws up rules for green investments
  • Proposal designates nuclear power plants, some gas power plants as green
  • Countries do not agree on the environmental impact of fuels
  • EU advisors said gas is incompatible with climate targets

January 1 (Reuters) – After years of fighting between governments for truly climate-friendly investments, the European Union has drawn up plans to label some natural gas and nuclear energy projects as “green” investments.

The European Commission is expected to propose rules in January that will determine whether gas and nuclear projects are included in the EU sustainable finance taxonomy.

This is a list of the economic activities and the environmental criteria they must meet in order to be labeled as a green investment.

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By restricting the “green” label to really climate-friendly projects, the system aims to make these investments more attractive for private capital and to stop “greenwashing” in which companies or investors overestimate their environmental friendliness.

Brussels has also taken steps to apply the system to some EU funding, which means that the rules could decide which projects are eligible for certain public finances.

A draft of the Commission’s proposal seen by Reuters would label investments in nuclear power plants as green if the project has a plan, resources and location to safely dispose of radioactive waste. In order to be considered green, new nuclear power plants must obtain a building permit before 2045.

Investments in natural gas power plants are also considered green if they produce less than 270 g CO2 equivalent per kilowatt hour (kWh), replace a more environmentally harmful system with fossil fuels and receive a building permit by December 31, 2030.

Gas and nuclear generation would be marked green on the grounds that they are “transitional activities” – defined as those that are not fully sustainable, but whose emissions are below the industry average and do not tie up environmentally harmful assets.

“Taking into account the scientific advice and current technological advances, as well as the different transition challenges in different Member States, the Commission believes that natural gas and nuclear energy play a role in facilitating the transition to a predominantly renewable future,” the Commission said in a statement, adding that consultations on a draft began on Friday.

In order to support states with different energy backgrounds in the transition, “under certain conditions, solutions that do not look exactly” green “at first glance can be useful,” a source from the commission told Reuters.

However, strict regulations will apply to natural gas and nuclear energy, the official added.

EU countries and a panel of experts will review the draft proposal, which could change, before it is published in late January. Once published, the majority of EU countries or the European Parliament could veto it.

Politicians have been involved in government lobbying for more than a year, and EU countries disagree on which fuels are truly sustainable.

Natural gas emits roughly half the CO2 emissions of coal when burned in power plants, but gas infrastructure is also linked to leaks of methane, a potent gas that warms the planet.

EU advisors had recommended that gas installations should not be labeled as green investments unless they meet a lower emission limit of 100g CO2e / kWh, based on the profound emissions reductions that scientists say are needed to avoid catastrophic climate change.

Nuclear power has very low CO2 emissions, but this year the Commission asked expert advice whether the fuel should be classified as environmentally friendly given the potential environmental impact of radioactive waste management.

Some environmental activists criticized the leaked proposal on Saturday. WWF Austria said in a tweet that labeling gas and nuclear power as green would lead to “billions in investments in climate-damaging industries”.

Austria is against nuclear power, alongside countries like Germany and Luxembourg. EU countries such as the Czech Republic, Finland and France, which get around 70% of their electricity from fuel, see nuclear energy as crucial for phasing out CO2-emitting coal-fired power.

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Reporting by Kate Abnett; additional reporting by Sabine Siebold editing by Frances Kerry and Louise Heavens

Our Standards: The Thomson Reuters Trust Principles.

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