The European Commission welcomed the adoption of the delegated act on the climate part of the EU taxonomy regulation (2020/852) on Thursday 9 December, with no opposition from the EU Council and the European Parliament.
“I am pleased that the Council of the EU has approved the EU Taxonomy Climate Delegated Act. This will help channel sustainable finance towards projects and businesses to help reach our climate targets”, reacted Financial Services Commissioner Mairead McGuinness on Twitter .
Presented in April (see EUROPE 12703/2), this text completes the EU taxonomy which aims to better direct capital flows towards sustainable activities by guiding investors.
It thus sets out technical criteria for defining which economic activities contribute substantially to climate change mitigation or adaptation while doing no significant harm to any of the other four environmental objectives of the taxonomy (see EUROPE 12509/12).
The act covers, inter alia, the production of steel, cement and other building materials, forestry, energy production (excluding fossil gas and nuclear), transport, water supply, communications and buildings.
In particular, it establishes that only electricity and heat generation infrastructure emitting less than 100 g CO2 equivalent per kWh (gCO2e/kWh) throughout its life cycle can be considered “sustainable” or “green”. This de facto excludes energy production from fossil fuels, as only renewable energies are able to meet this ceiling.
The text also sets a ceiling for meeting the criterion of not causing material injury. It thus excludes any electricity generation system with direct emissions from the activity exceeding 270 g CO2eq/kWh.
In addition to the Commission, several stakeholders welcomed the adoption of the delegated act.
Nathan Fabian, chairman of theSustainable Finance Platform- a stakeholder body that advises the Commission on the taxonomy - said that the adoption of the taxonomy was “an important step forward for all those working towards a sustainable world”.
The NGO ECOS regretted that the act classifies forestry and bioenergy as sustainable activities, while some current forestry practices “lead to soil erosion and degradation and bioenergy can emit more CO2 than coal, when emissions are properly accounted for”.
The delegated act, which was opposed by a dozen Member States including France, Finland, Sweden and Eastern European countries, will apply from 1 January 2022.
It will be followed by further delegated acts on the other environmental objectives of the taxonomy as well as a complementary delegated act, expected before the end of the year, on the inclusion of nuclear and fossil gas in the taxonomy.
See the delegated act: https://bit.ly/33jUWkB (Damien Genicot)