The Commission’s draft law has caused some outrage in Germany: According to plans by the Brussels authorities, investments in nuclear and gas-fired power plants are to be considered sustainable under certain circumstances from 2023 onwards. The operating companies could then benefit from investor money from eco-funds. The proposal was on New Year’s night sent to the EU governments, by this Friday the member states should submit their assessment to the Commission. After the cabinet meeting in the evening, the federal government will probably announce what it has given the authority.
There is no doubt that Berlin will reject the inclusion of nuclear power plants. Environment Minister Steffi Lemke from the Greens announced this a week and a half ago. When it comes to gas, the answer is likely to be more nuanced. The Greens are against declaring gas-fired power plants as sustainable, but the old federal government fought vehemently for this classification, and the SPD and FDP can now live with it.
Spain’s government is also among the skeptics. she makes in a letter to the Commission, which the governments of Austria, Luxembourg and Denmark co-signed, expressed “serious doubts” about the green seal for gas and nuclear energy. In addition to the member states, an EU expert committee is also to give its opinion by Friday, the platform for sustainable finance. According to one draft, the experts will call for the law to tighten up the criteria under which circumstances a gas or nuclear power plant can be considered sustainable. Conversely, the Czech government wrote to the Commission that the requirements were too strict. This is reported by the local business newspaper “Hospodarske noviny”.
However, critical submissions from experts or from some EU capitals will probably not change much in the draft law. The Commission negotiated intensively with European governments over the past year, and the authority considers its draft to be a good compromise that it would be better not to open up again. The Commission will therefore pass the law quickly – perhaps as early as next Wednesday.
Since this is a so-called delegated act, it will come into force automatically unless the EU Parliament or the Council of Ministers, the body of the member states, object within four to six months. But the hurdles are high: in the Council of Ministers, 20 out of 27 governments would have to call for a blockade, which is unrealistic.
A normal majority in the European Parliament is enough for a rejection, but the Commission estimates that a grand coalition of nuclear and gas friends among MPs will prevent a veto. However, the dissatisfaction of many parliamentarians is enormous – and not only among the Greens.
The law belongs to the so-called taxonomy. This classification system determines which economic activities are climate and environmentally friendly. This is to prevent companies or investment funds green washing operate, i.e. sell themselves as greener than they really are. With this, the Commission wants to increase confidence in eco-financial products and attract more investor money.
Already in last April the authority presented a legal act with criteria for many important sectors and goods, but the thorny question of what applies to nuclear and gas power plants was left out and postponed. In the end, the commission wanted to give the new federal government the chance to get involved. So it was New Year’s Eve.
German gas-fired power plants could go away empty-handed
It is said in the environment of the Commission that the legal act would have looked different without the change of power in Berlin. At the request of the Greens, the new government has pushed through tougher requirements for gas-fired power plants. In fact, these requirements are now so strict that industry representatives in Germany complain that it is almost impossible to meet them – new gas-fired power plants are therefore not considered sustainable and can be financed with cheap green bonds.
After all, the taxonomy only gives gas piles the coveted green seal if they switch completely from natural gas to climate-friendly fuels such as biogas or hydrogen by 2035. But it is uncertain whether hydrogen can be produced or imported in such large quantities in Germany by then.
While the old federal government fought for the inclusion of gas, France committed itself to nuclear energy. As early as October, the government in Paris, together with Finland and eight Eastern European EU countries, published a call for nuclear power to be included in the taxonomy.
In November, the outgoing German Chancellor, Angela Merkel, admitted that this admission could “probably” not be averted due to the majority situation. Because the camp of staunch nuclear opponents is small: only Germany, Austria, Luxembourg, Denmark and Portugal signed in the fall a position paper against nuclear power in taxonomy.
The Commission argues that nuclear power and gas can help EU countries shut down dirty coal-fired power plants – a difficult task as demand for electricity is set to rise sharply, for example because of the rise of electric cars. However, the agency is aware that many investors would find it odd if their green fund included shares in nuclear companies. The solution should lie in gradations and transparency requirements.
That’s how the taxonomy looks anyway three subgroups of climate and environmentally friendly activities: The best are classic green activities such as operating wind turbines. There are also enabling activities – including the manufacturer of the rotors – and transitional activities. This weakest subgroup is reserved for technologies that are needed on the way to the low-carbon economy, but not after that. Nuclear and gas power plants should only fall into this transitional group.
Funds must warn if they contain nuclear stocks
And eco-funds must be crystal clear about whether they contain only stocks and bonds from companies from the green subgroup or also paper from gas and nuclear power companies. To this end, the Commission wants to amend a law on disclosure requirements. Ultimately, investors decide how much the nuclear industry will benefit from green financial products.
Admittedly, this does not convince critics. They warn against a devaluation of the taxonomy from the point of view of investors looking for orientation. This is what the Institutional Investors Group on Climate Change, an association of fund companies, says in one word open letter against the inclusion of gas – but not nuclear energy. In addition, MEPs wrote several letters of protest. A good 60 parliamentarians signed a letter to the Council of Ministers complaining that the consideration of gas and nuclear energy was unscientific. One of the initiators is the Left MP Cornelia Ernst.
The Green MP Michael Bloss is one of the initiators of a letter to Commission President Ursula von der Leyen. In it, the politicians demand that the authority first start a four-week consultation in which citizens and associations can express their opinions. The chairmen of the environmental and economic committees called for the same thing in a letter earlier this week.
The SPD agrees unanimously against it
Joachim Schuster, the economic policy spokesman for the SPD MEPs, has already stated that the German Social Democrats in the EU Parliament would vote unanimously to block the legal act. Many social democrats from other countries would also vote in this way, he says.
The environmental policy spokesman for the Christian Democratic EPP group, Peter Liese, also expresses doubts – although this largest group in the EU Parliament is comparatively nuclear and gas-friendly: “There is great dissatisfaction with the generous regulations for nuclear power, even in parts of the EPP”, says the CDU MP Liese. “If I had to make a bet, I’d still bet that the European Parliament wouldn’t end up blocking the delegated act, but I wouldn’t put a lot of money on it anymore.”