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Gas and nuclear in the EU Taxonomy: what it means and why its approval is an uphill struggle

It is only a draft, but it has already created turmoil among the European institutions. The text of the Taxonomy Complementary Delegated Act covering certain gas and nuclear activities, sent by the European Commission to the Member States on New Year's Eve, has been at the centre of debate for days now and will probably remain there for a long time. National governments have until 21 January to submit their valuations, after which the text will be officially submitted to the Council and European Parliament for a vote. Approval is not a foregone conclusion: there have been many criticisms of the inclusion of natural gas and nuclear energy among the investments considered sustainable.

The taxonomy is the EU's classification of economic activities that can be defined as 'sustainable'.

In 2020, gas and nuclear accounted for 25% and 20% respectively of energy production in the EU, and the Commission considers them to be transitional energies necessary for a pragmatic approach to the Green Deal objectives.

However, gas and nuclear-related projects are included for a limited period of time and subject to certain conditions, i.e. the "Do no significant harm" (Dnsh) principle.

Specifically, three different types of economic activities are allowed for nuclear:

· The so-called 'pre-commercial' phases of nuclear production – research, development, and implementation of new technologies, involving a minimum amount of nuclear waste – are authorised.

· The construction of new reactors using the best available technology to produce electricity, heat, and hydrogen is also allowed.

· Electricity production from existing plants can also be considered sustainable, provided that investments to extend their operation are permitted by 2040.

· Nuclear projects must include a fund for the disposal of waste and for decommissioning.

When it comes to natural gas, it will be covered under sustainable labelling when used to generate power. Only investments in cutting-edge manufacturing facilities with CO2 emissions of fewer than 100 grams per kilowatt-hour will be considered ‘sustainable’.

The Commission's Delegated Act cannot be amended by other European institutions; instead, it may only be approved or rejected as a whole. Rejection requires a simple majority in the European Parliament (353 out of 705 MEPs) or a reinforced qualified majority in the Council, i.e. 72% of Member States with at least 65% of the total population.

This is a difficult threshold to reach, even though several major Member States have spoken out against the proposal, in particular against the sustainable labelling of nuclear production.

Already in November, during COP26 in Glasgow, five EU countries had formally called for a nuclear-free taxonomy: Germany, Austria, Luxembourg, Portugal, and Denmark.

Many countries, on the other hand, support this classification precisely because it includes nuclear energy. In recent months, Bulgaria, Croatia, the Czech Republic, Finland, Hungary, Poland, Romania, Slovakia, and Slovenia have all shown explicit support for the nuclear option.

If the Council's arithmetic makes a rejection difficult, the European Parliament offers some hope to the environmental associations that have come out against the Delegated Act. A simple majority of MEPs is enough to reject the delegated act and the votes of the entire progressive part of the Eurochamber will be decisive, considering the weight of the group of Socialists&Democrats (145 seats) and the liberals of Renew Europe (101). The two political families have not yet taken a position on the issue and the internal debate within the national delegations promises to be complex.

The coming months will be decisive in understanding what decisions the European institutions will take on the inclusion of gas and nuclear in the taxonomy.


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