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Delegated Act on Taxonomy adopted: inclusion of gas and nuclear confirmed

On 2 February, the European Commission published the Taxonomy Complementary Delegated Act on climate change mitigation and adaptation confirming the inclusion of several gas and nuclear activities among sustainable initiatives under the sustainable finance taxonomy. Three Commissioners voted against the Act and four others “expressed reservations”.

The Delegated Act provides for "clear and stringent conditions, within the meaning of Article 10 of the Taxonomy Regulation, for which certain nuclear and gas activities may be added as transitional activities to those already provided for in the first Delegated Act on climate mitigation and adaptation", applicable from 1 January 2022.

These new conditions, for both gas and nuclear, require that the activities in question must contribute to the transition to climate neutrality.

For nuclear energy, the European Commission requires that the activities meet certain environmental safety requirements. More specifically, new nuclear plants must achieve construction permits before 2045 and commit to having a high-level radioactive waste disposal facility in place by 2050.

Regarding gas, new plants must replace the existing coal-fired power plants and they must be completed by 31 December 2030, to be deemed sustainable and obtain the EU green label. Moreover, by 31 December 2035, new gas plants must be able to run entirely on renewable or low-carbon fuels and contribute to "at least a 55% decrease in emissions" over their lifetime.

European Commission divided on the final vote

Three EU Commissioners who voted against the proposed delegated act on taxonomy were Commissioners Johannes Hahn, the Josep Borrell, and Elisa Ferreira. According to media sources, four other Commissioners expressed reservations on the measure: Paolo Gentiloni, the Vice-President Frans Timmermans, Margrethe Vestager, and Didier Reynders.

Next steps

Once translated into all official EU languages, the Complementary Delegated Act will be formally transmitted to the EU Parliament and Council. As with the other Delegated Acts under the Taxonomy Regulation, the European Parliament and the Council cannot amend it, however, they will have four months to examine the document and, if they deem it necessary, to object. Both institutions may request a further two months for scrutiny.

The Council will have the right to object by an enhanced qualified majority, which means that at least 72% of the Member States representing at least 65% of the EU population must approve the Delegated Act. It will be extremely difficult to reach this threshold: immediately after the publication of the Delegated Act, Luxembourg's Energy Minister Claude Turmes tweeted that he and his Austrian counterpart are ready to take legal action against the European Commission.

The voting system of the European Parliament also leaves some hope for those opposed to the adoption of the Act. In fact, a simple majority is sufficient to reject the Delegated Act, and given the internal differences between the major groups, its adoption is not a foregone conclusion.

After the scrutiny period, and if neither institution objects, the Complementary Delegated Act will enter into force from 1 January 2023.


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