Guide to the EU’s ‘green’ taxonomy – and nuclear’s place in it: Energy and the environment

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February 10, 2022

The European Union wants to encourage investment in “sustainable” activities to help it reach net zero by 2050.

Mairead McGuinness, EU Commissioner for Financial Services, Financial Stability and Capital Markets Union, at the unveiling of the CDA last week (Image: EC)

What is the story?

The European Union aims to be climate neutral by 2050. To facilitate this process, it has developed a system to “facilitate sustainable investment”. The Taxonomy Regulation provides investors with guidance on economic activities that can be considered environmentally sustainable. It also obliges European companies to declare their level of commitments aligned with the taxonomy. Any activity excluded from the list risks being excluded from sustainable financial products and will be in contradiction with the long-term political objectives of the EU.

Was nuclear energy therefore included?

There has been a split within the European Union over whether or not nuclear energy – and natural gas – should be included as “sustainable”. Nuclear energy was excluded from the initial delegated act pending further assessment. But this new assessment by the EU’s Joint Research Centre, reviewed by two other expert bodies, concluded that the technology is sustainable. Accordingly, the Commission has now taken steps to include nuclear energy among the of transition activity in the taxonomy through the adoption of a Supplementary Delegated Act (ACD).

Why was it controversial?

Proponents of nuclear energy, including 12 EU member states who have publicly supported its inclusion, say nuclear is a low-carbon energy source that must be part of any energy mix to combat climate change. climate change and does not cause greater damage than other industries included in the taxonomy. They say science and evidence-based policy support its inclusion. Opponents say it shouldn’t be included because radioactive waste means it’s not sustainable. For the European Union, this has been one of the most publicized recent issues where France – which supports nuclear – is on the opposite side of Germany.

What areas does the taxonomy cover?

Sectors that are responsible for around 80% of direct EU greenhouse gas emissions were initially targeted, including:

  • Agriculture
  • Manufacturing
  • Supply of electricity, gas, steam and air conditioning
  • Water, Sewer, Waste and Sanitation
  • Transport
  • Information and communication technologies
  • Buildings

In the future, the taxonomy should be expanded to cover more economic sectors.

How does the EU judge if something is sustainable?

An economic activity must contribute substantially to at least one of the six environmental objectives without causing significant harm to the others:

  • Climate Change Mitigation
  • Adaptation to climate change
  • Sustainable use and protection of water and marine resources
  • Pollution Prevention and Control
  • Protection of healthy ecosystems
  • The transition to a circular economy

What does the complementary climate delegated act propose?

The European Commission has included certain nuclear and gas activities in the category of “transitional” activities – those which “cannot yet be replaced by technologically and economically feasible low-carbon alternatives, but which contribute to the mitigation climate change and which have the potential to play a major role in the transition to a climate-neutral economy, in line with EU climate goals and commitments, and subject to stringent conditions, without crowding out investment in renewable energies.

What specific nuclear investments are included?

– Advanced closed fuel cycle technologies (“Generation IV”) to encourage research and innovation in future technologies in terms of safety standards and waste minimization (there is no end date for this bit);

– New nuclear power plant projects for the production of energy, which will use the best existing technologies available (“Generation III+”), will be recognized until 2045 (date of approval of the building permit);

– Modifications and upgrades of existing nuclear installations for the purpose of life extension will be recognized until 2040 (date of approval by the competent authority).

What other special conditions have been included for nuclear?

The CDA sets out numerous safety and waste requirements for nuclear activities to be considered sustainable, in addition to specific Do No Significant Harm criteria. Many of these are in line with existing EU regulations and expectations, but some go above and beyond. In general, the requirements are more restrictive than for other energy technologies already included in the first delegated act. Special requirements include:

– Accident tolerant fuel, which is not yet commercially available for all reactor types, is to be used in all existing plants and new Gen III builds by 2025.

– The project has been notified to the Commission and the latter has indicated whether all the criteria have been satisfactorily met.

– A repository for high level waste to be operational by 2050, and disposal facilities for low and intermediate level waste to be operational in the country where a given project is based.

– Nuclear fuel cycle activities are currently not included in the CDA as enabling activities and nuclear investments outside the EU remain excluded from the taxonomy.

What was the reaction to the adoption of the supplementary delegated act?

The European College of Commissioners backed the plan and among pro-nuclear power nations, the inclusion of nuclear power in the taxonomy was welcomed, but the warmth of the welcome was tempered by some of the restrictions and conditions on what was included, as well as expiration dates.

Countries opposed to nuclear power were disappointed by its inclusion. Austrian Energy and Climate Minister Leonore Gewessler has called it “greenwashing” and is threatening to take legal action. WWF Europe called on the European Parliament to reject the plan.

What has the nuclear industry said?

The chief executive of European nuclear trade body Foratom, Yves Desbazeille, hailed the CDA, but said some of the criteria proposed for nuclear “would be very difficult to meet” and “we remain disappointed that nuclear continues to be treated as a transitional technology…we strongly believe that it contributes to climate change mitigation goals and does no more harm than any other power generation technology already considered taxonomy compliant.”

Sama Bilbao y León, Director General of the World Nuclear Association, said: “The adoption of this CDA is an extremely important step that the international financial community cannot afford to ignore…the Commission was right to reject political pressure to keep nuclear out of the taxonomy. But in seeking a politically acceptable compromise, it has produced certain conditions that are not scientifically justified or consistently applied to other energy technologies. This will prevent the EU from achieving its energy and environmental goals.”

What are the wider implications of the EU decision?

The European Union’s decision to include nuclear in its “sustainable” list has been closely watched around the world. This will have implications for EU investors and companies operating outside the Union, as well as for foreign investors in Europe. The EU decision is also likely to set a precedent for countries around the world as they define their own sustainable investment frameworks and determine which technologies to prioritize for support on the road to net zero.

What happens next?

The European Parliament (whose members are elected every five years by the voters of the Union) and the European Council (which is made up of the governments of the 27 Member States) have four months to examine the supplementary delegated act. They can request an additional two months of review time if they need it.

To prevent the entry into force of the CDA, it needs an enhanced qualified majority to oppose it in the European Council – so at least 20 member states representing at least 65% of the EU population would have to oppose it. Given the number of countries known to support it, this seems extremely unlikely. The European Parliament because it can oppose it if a majority of its members vote against in plenary (i.e. at least 353 deputies).

If the European Council and the European Parliament do not object, the supplementary delegated act will enter into force and apply from 1 January 2023.

Research and writing by World Nuclear News



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