Brussels persists and signs. Unless voted otherwise in the European Parliament or during the European Council, gas and nuclear will indeed integrate the European green taxonomy, a sort of guide to sustainable economic activities intended for private investors. This text been discussed for many months at European level. The delegated act, which had been submitted for consultation since the beginning of 2022, has just been adopted by the College of Commissioners. A victory for Paris, which saves its nuclear power, but also Berlin, which benefits for its gas from even more relaxed conditions. Despite opposition within the college, illustrating the huge divisions that exist between member states on the subject, the draft complementary act has been the subject of “consensus”, said Wednesday the Commissioner for Financial Services Mairead McGuinness .
The agreement comes after several weeks of controversy. The proposal made in early January was attacked from all sides. By environmentalist NGOs of course, which immediately denounced the lack of credibility of a text including gas and the atom. A new blow came from the group of experts advising Brussels on green finance (Platform for Sustainable Finance). On January 21, this committee split a severe analysis of the Brussels proposal, judging that the two energies could not decently “be considered as sustainable within the meaning of the regulation on taxonomy”. “Neither the recommendations of the Platform for Sustainable Finance nor the voices of the European Parliament have been recognized by national governments or the Commission in the design of the delegated act. The politicization of the taxonomy shows that corridor agreements between Member States remain at the heart of the EU decision-making process, which translates into bad results for the environment, investors and the economy”, summarizes this Wednesday Lucie Mattera, of the Brussels organization E3G.
Brussels has always claimed a pragmatic approach on this subject, not denying the difficulties associated with the two energies, but deeming them necessary on a transitional basis to achieve the decarbonization objectives of the Old Continent by 2050. “We must use all means at our disposal”, justified Mairead McGuiness, hammering however that the taxonomy was “not an instrument of energy policy” and was not intended to “favor” or “crowd out” energies. A way to whistle the end of the recreation, while the debate around the taxonomy has turned into a real European fistfight on the choice of the electric mix of all the Member States. The Commissioner’s position is also defended by the head of the European Parliament’s environment committee, Pascal Canfin. “Our priority, in Europe, is to get out of coal as quickly as possible. To do this, gas can have a role of ‘useful activity for the transition’ when it replaces coal – and only when it replaces coal (…) Electricity demand is expected to double by 2050. Ultimately, this means massive additional volumes of carbon-free electricity generation. there is a place for nuclear power – as a supplement to a renewable energy system”, recalls the MP on Wednesday. The latter, like others, is worried that debates on taxonomy will taint the European Green Deal as a whole.
A half-victory for the atom
Still, in the camp of nuclear pros, the victory is considered incomplete. As early as January 6, the French deputy François-Xavier Bellamy denounced in a tribune at the Echoes “a false nuclear victory” on reading the proposal. A singular story, in the concert of self-satisfaction sung by the Quai d’Orsay and more generally the tricolor nuclear industry. “We were starting from so far that we should not be choosy”, justifies an industrialist in the sector at L’Express. The president of the French EPP delegation to the European Parliament was much more critical, observing very (too) restrictive criteria in the conditions imposed on the atom.
He is not the only one. The nuclear industry lobby in Europe Foratom welcomes the general ambition of the taxonomy. But regrets “strict criteria that no nuclear project is likely to be able to achieve”. Foratom addresses several criticisms of the text published this Wednesday by the College of Commissioners. First of all, the transitory character accorded to nuclear energy is worrying. Indeed, new nuclear power plants must have obtained a building permit before 2045 to be included in the taxonomy. With regard to work to extend the life of old existing power plants, they must for their part have been authorized before 2040. Too short, in this long-term industry that is nuclear power. In France alone, the very first EPR 2s planned by EDF (out of the six envisaged) will not be able to come out of the ground before 2035 at best. On nuclear fuel, the delegated act also requires new power plant projects to use accident-tolerant fuel (ATF) from 2025. “This technology is still in the testing phase in the United States. finished, it will have to be licensed in Europe. This is a criterion which again excludes existing and future reactors, “said Jessica Johnson, executive of Foratom. Europe has nevertheless provided for a review clause on this point.
The European nuclear industry is not leading the fight alone. On Tuesday, the Finnish Minister of Economy and that of Energy in Sweden, also denounced some of the technical criteria of the delegated act. And in particular the poor assessment by the Commission of their efforts in waste management. The two countries are among the only ones, with France, to have planned storage sites for high-level waste or spent fuel.
Gas concession, and uncertain future
Yves Desbazille, president of Foratom, denounces Brussels’ intransigence on nuclear power, as well as the analysis of the taxonomy developed by the European Platform for Sustainable Finance. “There is a lot to complain about. It’s a collection of unfounded anti-nuclear arguments. The conclusions of the JRC (Commission’s scientific expert group) have been completely ignored”. The lobbyist also regrets an “unequal treatment” between gas and nuclear, while the first obtained some concessions in the latest version of the delegated act. The text, which mentioned for power plants the obligation to use renewable gases or hydrogen up to 30% from 2026 and 55% in 2030, no longer shows this condition. Pascal Canfin also denounces this relaxation, regretting that the Commission has yielded on this point to “pressure” from the new German coalition in Berlin.
And now ? The text must be submitted to the European Council and to the European Parliamentarians, who will have four months to oppose the text with a reinforced majority vote for the first of the two bodies (20 Member States out of 27) and a majority vote easy for Parliament. We imagine that the debates will be stormy within the European Assembly. The Greens will obviously try to derail the text. “The Commission is making a historic mistake with this proposal. It undermines the credibility of the whole taxonomy,” said Bas Eickhout, Dutch vice-president of the political group, recently. With this text “Europe is abandoning its global leadership in green finance”, he said. What will be the vote of the German deputies or of the European People’s Party, who are marching in dispersed order on this question? An actor familiar with the negotiations wants to be optimistic. “There is nothing in the state to say that there will be a majority against the text”. One thing is certain. The delegated act will be voted on as a single block. No gas without nuclear, and vice versa.
As for the reaction of investors, it already looks lukewarm or even frankly hostile to the text. The European Investment Bank, the largest public investor in the euro zone, also announced that it would not use the taxonomy in its investment doctrine, not considering it compatible with the Paris agreements. A few days ago, the financial analyst Xavier Regnard of the bank Bryan Garnier judged that this classification would not “give a new dynamic to the atom”. “In reality, private investors have long excluded nuclear from sustainable activities. It is a largely public or parastatal industry.” A European negotiator puts a damper. “It’s true for France. But in many countries, in Finland or Sweden for example, it is indeed private investment that finances nuclear power”. Above all, Foratom recalls that Brussels intends to link the taxonomy to many other legislations, such as the Just Transition Fund (FTJ), European green bonds, or the question of the European budgetary stability pact. State aid, on the other hand, is not linked to this mechanism in the nuclear sector, the fate being settled by the Euratom Treaty.