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bneGREEN: Brussels labels both gas and nuclear as green

  • Jan 5, 2022
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Source: 
bne Intellinews

The call by the European Commission (EC) to recognise both gas and nuclear energy as sustainable investments has prompted a fierce backlash from some member states, exposing cracks in the EU’s vision for how a net-zero future can be achieved.

The EC is drafting changes to the EU taxonomy for what investments should qualify as sustainable. This taxonomy is designed to help companies, investors and policymakers decide what can and cannot be considered environmentally sustainable economic activities, and avoid providing support for so-called “greenwashing.” Its proposals will be debated both by EU member states and the European Parliament before being finalised.

Under the leadership of President Ursula von der Leyen, the EC has adopted a decidedly more hostile attitude to natural gas. Nevertheless, from recent news reports it has become clear that the Commission intends to classify gas as sustainable. 

This recognition comes as Europe grapples with its worst energy crisis in decades. Wholesale gas prices have risen to heights not previously thought possible, following a strong rebound in demand after coronavirus (COVID-19) lockdowns. A lack of investment in indigenous gas supply in Europe, coupled with poor performance across the continent’s wind farms, has exacerbated the crisis. With gas prices so high, some countries have been forced to turn coal-fired power plants back on, meaning their emissions are now higher than they were prior to the pandemic.

Against this backdrop, the EC has acknowledged the value of gas as a cleaner replacement for coal that is more reliable than intermittent renewable supply. Meanwhile, nuclear power plants (NPPs) can create nearly zero-carbon baseload energy supply, albeit producing radioactive waste in the process that must be safely stored.

Sustainable with conditions

The EC issued a statement on January 1 saying it had begun consultations with a member states expert group on proposed changes to the taxonomy. In the statement, it noted that EU member states had varying energy mixes, and some were still heavily dependent on coal for their power and heating needs.

“The taxonomy provides for energy activities that enable member states to move towards climate neutrality from such different positions,” the Commission said. “Taking account of scientific advice and current technologically progress, as well as varying transition challenges across member states, the Commission considers there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominantly renewable-based future.”

The EC included some caveats, however. There would be “clear and tight conditions” for classifying gas and nuclear investments as sustainable, it warned. By 2035, these gas investments must produce low emissions, it said, potentially through their conversion to renewable sources such as bio-methane and hydrogen. 

Differing views

The Commission’s position will be welcomed by those member states that have positioned gas and nuclear as central parts of their strategy for reaching net-zero emissions. Leading the gas lobby is Germany, which has turned to gas as a near-term solution for replacing coal and nuclear, both of which it is phasing out, until its renewable capacity has been sufficiently scaled up. Many former eastern bloc countries will also be satisfied, including Poland, the Baltic States, Romania and Hungary.

On the nuclear side there is France, whose President Emmanuel Macron recently announced that the country would resume the construction of nuclear power plants (NPPs) to ensure a stable and affordable supply of clean energy. Poland too supports atomic energy, with plans to construct its own NPP by 2030.

Some member states were not happy with either gas or nuclear being labelled as sustainable, including Austria, which has threatened to sue the Commission if its proposals are adopted. But in upcoming negotiations on the taxonomy, it is likely that gas will be included, given its broad support among member states. Critically both France and Germany, the EU’s most influential members, are in favour of gas.

What is less clear is whether nuclear will remain on the list. Germany is staunchly against its inclusion, putting it on a collision course with France. Indeed, Berlin’s firm commitment to ending nuclear energy use was demonstrated when it followed through on its plan to shut down 4 GW, or half, of its atomic energy capacity at the end of last year, in spite of the crunch in its energy supply.  And there are other member states without any current nuclear capacity that would be against its labelling as sustainable.

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