Drowned in comments, European Commission postponed green finance rules

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The European Commission was forced to delay publication of detailed implementing rules on the EU’s sustainable finance taxonomy because of the sheer number of comments received. In addition, EURACTIV writes that 10 eastern and southern EU member states wielded veto; they complained that natural gas had been denied “transition” fuel status in the draft guidelines, even when it replaces coal in power generation.

The EC published on 20 November 2020 the draft for implementing rules for the EU taxonomy (a classification system for sustainable investments used at EU level) with the ambition to adopt the first global “green list” of economic activities aimed at encouraging private investment in the green economy.

Between 20 November and 18 December, the Commission received 46.591 comments on the draft rules – known as “delegated acts”, compared to only 431 comments at the previous public consultation held between 23 March and 27 April. Thus, although the Commission’s final proposal was to be published by 1 January, it was postponed in order to analyze the feedback received.

Among these are calls from Nuclearelectrica and Romatom for the adoption of the EC’s delegated act on energy to be postponed “until the completion and validation of the life-cycle analysis for nuclear power, in compliance with the level playing field and technology neutrality principles “. Otherwise, other forms of electricity generation would be favored by an “incomplete regulatory framework which excludes nuclear power at this point, [with an]destabilizing effect on the energy and financial markets”.

Gas, transition fuel or not

The guidelines are aimed at steering private investors towards environmentally sustainable companies, by laying down detailed emissions thresholds defining which economic activity can be considered “sustainable”. Other categories in the taxonomy include “transition” and “enabling” economic activities.

But the proposal also caused uproar among eastern and southern EU member states, who complained that natural gas had been denied “transition” fuel status in the draft guidelines, even when it replaces coal in power generation. Poland in particular “has been critically vocal” about the draft taxonomy delegated act, said an EU diplomat familiar with Warsaw’s position, according to EURACTIV.

On 18 December, the day when the public consultation came to a close, a group of 10 EU countries submitted a “working non-paper” to the European Commission expressing their concerns.

The joint paper “emphasized the need to maintain the possibility of using gas as a transition fuel,” and also insisted on “the possibility of using hydrogen from various energy sources” – not just renewables, the diplomat told EURACTIV.

The paper was signed by Bulgaria, Croatia, Cyprus, Czechia, Greece, Hungary, Malta, Poland, Romania, and Slovakia and sent out to the European Commission one week after an EU summit meeting where heads of states haggled through the night about the bloc’s new climate target for 2030, which is reducing pollutant emissions by at least 55% by 2030 compared to 1990 – up from the previous 40% target, but below the 60% target desired by the European Parliament.

European leaders promised in the summit’s conclusions that they would respect the right of each country “to decide on their energy mix and to choose the most appropriate technologies to achieve collectively the 2030 climate target, including transitional technologies such as gas”, thus opening the way for gas projects to be financed in the future.

The explicit mention of gas in the summit’s final communiqué was subsequently picked up by the group of 10 EU countries, who said their demands were “in line with the conclusions of the December European Council”.

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