Brussels wants to recognise nuclear power and forms of natural gas as “green” activity as part of a landmark EU classification scheme to help financial markets decide what counts as sustainable investment.
In long-awaited plans, the European Commission has paved the way for investment in new nuclear power plants for at least the next two decades and natural gas for at least a decade, under a green labelling system known as the “taxonomy for sustainable finance”.
The labelling system, which will cover industries that generate about 80 per cent of all greenhouse gas emissions in the EU, is the first attempt by a major global regulator to decide what counts as truly sustainable economic activity and help stamp out so-called greenwashing in the financial sector.
A draft legal text, seen by the Financial Times, says the EU’s green label should be awarded to controversial energy sources including nuclear power and natural gas under certain circumstances.
The decision was taken after a vocal group of pro-nuclear countries, led by France, and pro-gas governments in southern and eastern Europe, demanded the taxonomy should not punish energy sources that provide a bulk of their power generation.
Nuclear power does not emit greenhouse gases but produces toxic waste that requires safe disposal and can pose radiation risks. Natural gas does produce carbon dioxide but its supporters say it is far less polluting than traditional fossil fuels and is a vital way to help pave the way for lower emissions.
Brussels was forced to delay a decision on how to classify the two energy sources earlier this year after disputes inside the college of commissioners over whether they should be awarded the green label. The battle to recognise nuclear power and natural gas as green has intensified in recent months as EU countries have faced record electricity prices this winter, driven by soaring demand for natural gas imports.
The draft taxonomy text says nuclear power should be considered a sustainable economic activity as long as EU countries that host power stations can safely dispose of toxic waste and meet a criteria to cause “no significant harm” to the environment. The construction of new nuclear plants will be recognised as green for permits granted until 2045, says the text.
Natural gas investment is also included in the green label as a “transitional” energy but must meet a more detailed set of conditions, including producing emissions less than 270g of CO2 per kilowatt and if it is replacing traditional fossil fuels such as coal generation.
The EU imports around three quarters of its natural gas needs, most of which is supplied by Russia. The bloc’s energy crisis has sparked criticism from some member states that Moscow is artificially driving up gas prices and the EU should accelerate away from gas imports to renewable energy.
The taxonomy text will need approval from a majority of EU member states and members of the European Parliament. EU diplomats said the text was likely to win widespread support from governments but the green classification for gas and nuclear was criticised by environmental groups.
France’s EU commissioner Thierry Breton has said he is in favour of labelling both technologies as green as it would help the EU meet a goal of cutting CO2 emissions to net zero by 2050, compared to 1990 levels.
“Gas is not the best to achieve our goal because you generate some CO2 but at least it’s better as a transition than coal,” Breton told reporters last month. “We need to have the right financing in the taxonomy, including nuclear energy.”