The European Commission intends to include fossil gas and nuclear energy in the European Union’s taxonomy as “transitional activities”, reveals the draft complementary delegated act on taxonomy sent to EU Member States for consultation on Friday 31 December, New Year’s Eve.
This long-awaited legislative text aims to complete the first delegated act relating to the climate component of the EU regulation (2020/852) establishing the taxonomy (see EUROPE 12850/13).
This is a classification system for economic activities deemed necessary to achieve six EU environmental objectives (climate change mitigation; adaptation to climate change; sustainable use and protection of water and marine resources; transition to a circular economy; pollution prevention and control; and protection and restoration of biodiversity and ecosystems) in order to guide private investment towards these activities.
It defines three categories of activities: “sustainable” activities, “empowering” activities and “transitional” activities.
It is in this latter category that the Commission proposes to include three types of fossil gas activities and three types of nuclear activities: (1) pre-commercial stages of advanced nuclear technologies that minimise radioactive waste; (2) construction and operation of new nuclear power plants (third generation or higher) for electricity or heat production, including hydrogen production; (3) electricity generation from nuclear energy in existing plants; (4) electricity generation from fossil gas; (5) combined heat or cold and electricity generation from fossil gas (cogeneration); (6) heat or cold generation from fossil gas in a district heating and cooling system.
On the basis of scientific opinions (see EUROPE 12754/7, 12688/5) and taking into account the current technological progress as well as the varying difficulties faced by Member States in the energy transition, the Commission says it considers that “there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominantly renewable-based future”.
However, a series of conditions are provided for.
“We are classifying these energy sources as compatible with the taxonomy regulation but only for a defined period of time and insofar as they contribute to the transition to the climate neutrality and they do not significantly harm the environment”, explained an EU official.
Fossil gas
In terms of gas, life-cycle greenhouse gas (GHG) emissions will have to be less than 100 g CO2e/kWh. A level unattainable for fossil gas power plants without carbon capture and storage technology.
The Commission therefore provides for a derogation from this condition for installations for which the construction permit is granted before 31 December 2030.
To be compatible with the taxonomy, they will have to have direct GHG emissions of less than 270 g CO2e/kWh, or annual emissions that do not exceed an average of 550 kg CO2e/kW of the installation’s capacity over 20 years.
The document also requires that the installation replaces an existing electricity generation installation that uses solid (coal) or liquid (oil) fossil fuels. The activity will thus have to take place on the territory of a Member State that has committed itself to phasing out the use of coal-fired power generation in its National Energy and Climate Plan (NECP).
Furthermore, this only applies if the electricity produced by the gas activity cannot be efficiently replaced by electricity produced from renewable energy sources for the same capacity.
The gas installation will also need to be compatible with the co-combustion of low carbon gases. The Commission intends to require the development of plans, or actual commitments, that the installation will use at least 30% renewable or low-carbon gas starting 1 January 2026, at least 55% from 1 January 2030 and 100% by 31 December 2035.
Compliance with these criteria will be verified by an independent third party. Each year, this one will submit a report to the Commission certifying the level of direct GHG emissions or assessing whether the annual life-cycle emissions of the activity are on a credible pathway to meet the 20-year average threshold.
In addition, the draft delegated act includes conditions on monitoring and reporting of methane emissions as well as on the elimination of methane leakages.
Nuclear
In the case of nuclear power plants, the activity will have to comply with the Treaty establishing the European Atomic Energy Community (Euratom Treaty) and the Union legislation adopted on its basis.
The threshold for GHG emissions is also set at 100 g CO2e/kWh on a life cycle basis. These emissions will have to be verified by an independent third party.
The Commission document also states that, in the case of new plants, the construction permit must be issued before 2045.
From 2025 onwards, the institution will review the technical parameters for new plants at least every ten years to ensure that they reflect the best available technology.
For existing plants, modifications for expansion must be permitted before 2040.
In addition, nuclear-related activities will have to be accompanied by: - operational disposal facilities for all very low, low and intermediate level radioactive waste; - a plan with detailed milestones for commissioning a disposal facility for high-level radioactive waste by 2050 (for projects authorised after 2025 in the case of extensions to existing power plants); - a radioactive waste management fund and a nuclear decommissioning fund in the case of new plants.
Next steps
The consultation, which began on Friday with Member States and the Platform on Sustainable Finance (a stakeholder group set up by the Commission to advise it), will end on 12 January.
The Commission will analyse their contributions and formally adopt the complementary delegated act before the end of the month (no precise date has been communicated so far).
This will then be forwarded to the Council of the EU and the European Parliament, which will have 4 months to examine the document and possibly object to it.
In the EU Council, this requires a reverse qualified majority vote, i.e. at least 20 Member States representing at least 65% of the EU population. For the Parliament, an objection requires a simple majority vote, i.e. at least 353 Members.
Both institutions may also request that the review period be extended by 2 months. However, they do not have the power to amend the text.
Austria, Luxembourg and Spain have already announced their opposition to the text, fearing that it will lead to greenwashing.
On Twitter, the Austrian Minister for Climate, Environment and Energy, Leonore Gewessler, even reaffirmed Austria’s intention to refer the matter to the Court of Justice of the European Union (CJEU - see EUROPE 12835/4).
The German government, for its part, seems divided on the inclusion of gas.
A criticised procedure
In addition, many stakeholders have criticised the timing of the Commission’s decision.
Asked about this during the daily press briefing on Monday 3 January, the institution’s chief spokesman, Eric Mamer, said that “there was obviously no reason to try to push this through on the sly, if I may say so, by choosing one date rather than another”.
And he added: “The reality is simply that this is a complex, delicate proposal that has required colleagues (...) to work over the Christmas break”.
See the draft delegated act: https://bit.ly/3JBU23d (Original version in French by Damien Genicot)