On Wednesday 21 April, the European Commission presented the delegated act on the ‘climate change mitigation’ and ‘climate change adaptation’ parts of the European Union’s taxonomy. Although natural gas and nuclear power are not among the sectors covered by this first delegated Regulation, they could be included in the taxonomy by the end of the year, through a second delegated act on the climate component.
This long-awaited text establishes technical criteria to define which activities contribute substantially to climate change adaptation or mitigation - two of the six environmental objectives set out in the Taxonomy Regulation (2020/852) adopted in June 2020 (see EUROPE 12509/12) - all while they ‘do no significant harm’ to any of the other six objectives.
The ultimate goal is to encourage private investment in sustainable activities by providing a common reference for investors.
“Today, we are taking a leap forward with the first-ever climate taxonomy which will help companies and investors to know whether their investments and activities are really green”, said the Commissions’ Executive Vice-President for An Economy that Works for People, Valdis Dombrovskis.
Temporary exclusion of gas and nuclear power
As expected (see EUROPE 12700/5), the Commission decided not to include nuclear energy and natural gas.
These sectors could, however, be integrated into the taxonomy through a subsequent delegated act, the institution announced, while already specifying certain conditions.
Gas
As far as gas-related activities are concerned, they will only be included in the future delegated act if they meet the requirements set out in the Regulation on the taxonomy for transitional activities, the Commission said.
According to this Regulation, “those transitional economic activities should qualify as contributing substantially to climate change mitigation if their greenhouse gas emissions are substantially lower than the sector or industry average, they do not hamper the development and deployment of low-carbon alternatives and they do not lead to a lock-in of assets incompatible with the objective of climate-neutrality, considering the economic lifetime of those assets”.
For gas activities meeting these requirements, the technical selection criteria for assessing the substantial contribution to climate change mitigation and compliance with the ‘do no significant harm’ criterion will be specified in the future delegated act.
But that is not all. In order to “acknowledge the role of natural gas as an important technology in reducing greenhouse gas emissions”, the Commission announced that it will consider specific legislation (Mr Dombrovskis mentioned a Regulation) “to ensure that activities contributing to emissions reduction would not be deprived of appropriate financing”.
Nuclear
For nuclear energy, the institution wishes to await the conclusions of the evaluation of the report of the Joint Research Centre (JRC), the Commission’s internal scientific service, according to which nuclear energy meets the criteria for inclusion in the taxonomy (see EUROPE 12688/5).
The assessment of the JRC report by a group of national experts on radiation protection and waste management and the ‘Scientific Committee on Health, Environmental and Emerging Risks’ (SCHEER) is expected to be completed in the summer.
It should be noted that, like the first delegated act presented today, the future delegated act dealing with gas and nuclear power will therefore include the two climate objectives of the taxonomy (mitigation and adaptation).
The delegated act for the other four environmental objectives of the taxonomy (sustainable use and protection of aquatic and marine resources; transition to a circular economy; prevention and reduction of pollution; and protection and restoration of biodiversity and ecosystems) is not due until next year.
Bioenergy and forestry
As the latest draft of the act leaked to the press suggested (see EUROPE 12701/16), the main criterion for agricultural and forestry biomass activities is that they comply with the requirements set out in the EU Renewable Energy Directive (2018/2001) (RED II), in particular regarding sustainable harvesting.
These provisions, which have been the subject of much criticism, are due to be reviewed in June as part of the revision of the RED II Directive.
The technical criteria for bioenergy activities will also be revised when the delegated act on the biodiversity target is published, taking into account in particular the RED II Directive and its future revisions, the Commission said.
For forestry, the Commission has revised the size of the operation below which an analysis of the climatic benefits of the activity is not required. While it was 25 hectares in the draft version, it is now 13 hectares.
Agriculture
It should also be noted that agricultural activities are temporarily excluded from the taxonomy pending an agreement between the co-legislators on the Common Agricultural Policy (CAP). Like natural gas and nuclear, they will be addressed in the next delegated Regulation.
The delegated act will be formally adopted at the end of May, as soon as the translations are available in all EU languages.
See the delegated act: https://bit.ly/3eldd2z and its annexes: https://bit.ly/2QEi4DT; https://bit.ly/3xdMGwR (Original version in French by Damien Genicot)