In a briefing note dated 4 June and obtained by EUROPE, the Czech Republic, with the support of Bulgaria, Greece, Cyprus, Hungary, Romania and Slovakia, have asked the European Commission and all EU member states to further discuss the limitations of using the taxonomy as a reference system for European public funding.
Consisting of a set of environmental performance criteria that are intended to define which economic activities are considered sustainable, the EU taxonomy is initially intended to help investors direct their private investments towards ‘green’ activities.
However, the Czech Republic and the other six Member States supporting its note are of the opinion that it is “progressively becoming a new standard for EU policies, through its gradual implementation by the European Commission”.
They are therefore calling for “a broad discussion on its application outside of the original scope”, in order to have “a proper discussion about the limitations of using the taxonomy criteria as a reference system for public financing”, including the ‘do no significant harm’ criterion.
The Czech document is also critical of the interpretation of “transition activities” for climate change mitigation as they deem them to be “too narrow”.
The EU Regulation laying down the basis for the taxonomy states that transition 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”.
While natural gas and nuclear are not included in the sectors covered by the first delegated act on taxonomy (see EUROPE 12703/2), the Czech Republic and the other six Member States previously mentioned believe that the interpretation of transition activities “did not allow for different pathways to decarbonisation”.
“Even though the criteria are being developed to be science-based and technology neutral, several essential thresholds are based on indicators and metrics that do not take into account technological and economic feasibility, which still results in the exclusion of some transitional activities”, they said.
They also believe that the taxonomy is “broadly misunderstood” by the public, policy makers and businesses, including the financial sector. Their argument is that anything not included in the taxonomy is generally considered, wrongly, to be harmful to the environment, which can then have “detrimental practical consequences” for financing and insurance options.
The Czech paper will be presented to the European Commission and Member States on 10 June at the meeting of EU Environment Ministers (see EUROPE 12735/10).
Call to suspend the legislative process
Furthermore, while natural gas and nuclear power could be included in the taxonomy by means of a later delegated act, 91 civil society organisations called on the European Parliament on Wednesday 9 June to suspend consideration of the first delegated act on the taxonomy pending the presentation of other key legislation on bioenergy, gas, nuclear power and agriculture, which will take place later this year.
“Until there are assurances that fossil gas will be excluded, the European Parliament should not approve the proposed act”, said the organisations.
The regulators also added that: “That is why we ask you to suspend your judgement on the Act until the details of the next two sets of criteria (the two forthcoming delegated acts covering, inter alia, natural gas and nuclear) and the amendments to bioenergy and forestry legislation will be revealed”.
Read the document by the Czech delegation: https://bit.ly/3g90r9I and the letter from the civil society organisations: https://bit.ly/3zelCyE (Original version in French by Damien Genicot)