Yesterday evening, on 16 December, the European Parliament’s negotiating team accepted a compromise proposal from the Council of Ministers on the classification of sustainable investments (taxonomy). The text is based on the agreement reached by the Member States in the Council on the morning of the same day. The Finnish Presidency had presented this text after the Member States had blocked the original compromise with the Parliament last Wednesday. The text has been fought over in recent days. The new text contains slight changes to the original compromise regarding the so-called “no harm principles”, which are among other things intended to make it impossible to define nuclear power as a “sustainable investment”. The symbolic changes have also allowed the nuclear-friendly Member States to agree, in particular France. But the substance will not change, because the hurdles for nuclear power in the Commission’s technical screening remain so high that nuclear power will most likely never find its way into a sustainable financial product. It is telling that because of the symbolic nature of the changes, the Council and the European Parliament also decided against a trialogue.
The Taxonomy Regulation defines throughout Europe which economic activities can call themselves sustainable and thus be included in a financial product advertised as sustainable. A sustainable product is one that makes a positive contribution to climate protection without harming the environment in other areas (“do-no-harm principle2). In principle, the classification should apply to all financial products. Issuers who do not use the taxonomy must state this in a disclaimer. Coal is explicitly excluded from sustainable financial products. Since the environmental protection standards (do-no-harm principle) are very high, nuclear power will not be able to qualify and will thus de facto be excluded from sustainable financial products.
The exact threshold values for the definition of sustainability will be worked out by the Commission. The Council and the EU-Parliament will then have to agree to this proposal before the classification is ready for use. Then, the consumer label for sustainable financial products and the EU Green Bonds standards can be introduced. The obligation to disclose the share of sustainable activities applies not only to sustainable financial products but also to very large companies. The EU Commission has been tasked to present an impact study by the end of 2021 for a comprehensive taxonomy that also classifies environmentally harmful activities and a social taxonomy. The rapporteurs for the now completed negotiations were the Green Bas Eickhout (Netherlands) and the Finnish Christian Democrat Sirpa Pietikäinen.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group explains:
“The agreement on the classification of sustainable investments is a breakthrough for sustainable financial markets. The final compromise is a great success because it brings a European market for sustainable financial products. The way is now clear for credible sustainable financial products without nuclear greenwashing. Now the Commission must rapidly work out the detailed rules in a broad dialogue, so that Europe actually becomes the global lead market for sustainable investment products. It is crucial that all financial products must now apply the classification or clearly state that they do not. This brings sustainable financial products into the mainstream of financial investments.
The new transparency on the sustainability of financial products will channel more investment into the greening of our economy. In this way, the financial sector will play its part in ensuring that Europe achieves the objectives of the Paris climate agreement. In the forthcoming elaboration of the technical thresholds for defining sustainability, the Commission must be ambitious to make a real contribution to climate and environmental protection. Now co-legislators and the Commission must do their utmost to make the classification operational as soon as possible”.
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The decisive text regarding the exclusion criteria that nuclear power would have to invalidate in order to be classified as sustainable in the sense of taxonomy:
Line 300 (Article 12(1)(d)):
Before (Trilog compromise 5.12.):
“(d) circular economy, including waste prevention and recycling, where that activity leads to significant inefficiencies in the use of materials and the direct or indirect use of natural resources such as non-renewable energy sources, raw materials, water and land in one or more stages of the life-cycle of products, including in terms of durability, reparability, upgradability, reusability or recyclability of products; or where that activity leads to a significant increase in the generation, incineration or disposal of waste, with the exception of incineration of non-recyclable hazardous waste, or in particular where the long term disposal of waste may pose material and long-term risks to the environment.”
New text (agreed by Council (16.12.) and approved by European Parliament):
“(d) [ …] , or where the long term disposal of waste may cause significant and long-term harm to the environment.”
Green assessment: Nuclear fission-based nuclear energy cannot seriously refute the fact that long-term waste management can cause significant and long-term environmental risks to the environment.
Also in this mandate the EU Commission will present a new action plan for sustainable financial markets: https://sven-giegold.de/dombrovskis-hearing/