The European Commission published on Friday 20 November the first draft of its delegated regulation establishing the taxonomy for climate change mitigation and adaptation (see EUROPE 12453/25).
The Regulation laying down the basis for the future taxonomy for sustainable finance (see EUROPE 12393/20) indeed charges the Commission to adopt the technical selection criteria for determining whether an economic activity is environmentally sustainable.
This much-awaited, first, delegated act should help companies and investors to identify activities that already contribute substantially to climate change mitigation and adaptation. It covers a range of activities such as agriculture, forestry, manufacturing, energy, water supply, waste management, transport and construction.
The criteria are broadly based on the final recommendations (see EUROPE 12442/14) of the Technical Expert Group (TEG) on Sustainable Finance, but depart from it, in particular to include some additional activities “to cover other activities with significant potential while maintaining the coherence of the EU taxonomy”, explains the Commission.
In particular, the Commission decided that, in order for energy investments to be classified as sustainable, they should be made in projects emitting less than 100g CO2/kWh, which de facto excludes fossil fuels.
However, according to the organisation Greenpeace, some gas facilities could be considered as meeting this threshold, thanks to controversial techniques for capturing and storing their emissions.
For its part, the WWF regretted that burning trees can be considered a “green” activity, even though it produces more greenhouse gas emissions than coal and the TEG advised against its inclusion in the taxonomy.
According to the text, by the end of the year 2025, cars will have to emit 0 grams of CO2 per kilometre driven to be considered sustainable. However, until then, cars that emit less than 50g CO2/km will be able to be included in the category “green” – a decision criticised by Greenpeace, which fears it could open the door to hybrid cars, which use fossil fuels.
The environmental NGO ECOS has also expressed concerns about the criteria for the manufacture of plastics. According to it, the proposed criteria encourage recycling rather than reuse of plastics and could lead to plastics labelled as “green” being able to be used for single-use items.
The Commission further specifies that certain activities, contained in the TEG report and for which a thorough technical assessment has yet to be carried out, have not been included in this delegated Regulation. This is particularly the case for nuclear energy, on which the Commission intends to report its findings in the context of the revision of the Regulation.
Both at the time of the negotiation of the legislative text and during the drafting of this first delegated act, the EU taxonomy was the subject of intense lobbying (see EUROPE 12546/12). The 4-week public consultation on the delegated act, launched on Friday, gives stakeholders a further opportunity to make their voices heard.
The Commission has until 31 December 2020 to adopt its delegated act. This will then be forwarded to the European Parliament and the Council of the EU, which will then have 2 months to accept or reject it. Once adopted, it will apply from 1 January 2022.
See draft text: https://bit.ly/35Olc5l; Annex I (climate change mitigation): https://bit.ly/3lSJ6SS; and Annex II (climate change adaptation): https://bit.ly/2HiRJXC (Original version in French by Marion Fontana)