EU Parliament members cite Russian conflict in vote to oust gas from green taxonomy

European Parliament committees have moved to block an amendment greenlighting natural gas-fired and nuclear power as key technologies for Europe's energy transition.

On 14 June, the economic and environment committees jointly voted to uphold an objection to the controversial amendment attempting to add the two technologies to the list of those the EU certifies as sustainable investments under its Taxonomy Regulation.

A second vote on the objection by the parliament, starting on 4 July, could see the entire amendment sent back to the European Commission (EC) for revision if an absolute majority of MEPs (353) agrees with it.

The objection said that the EC, delivering the amendment on New Year's Eve 2021, deprived the parliament of a chance to provide its views, a move also attacked by nonprofits.

Nonprofit Bellona, calling for a veto of the amendment in May, noted the EC made "significant breaches of laws and has not respected the democratic processes" by avoiding a consultation.

The EC's move also prevented the parliament and Council of the EU from amending the text, which the parliament can now only veto by absolute majority vote.

In the objection, the committees also found the amendment didn't comply with the existing Taxonomy Regulation, which set in stone the idea technologies must "do no significant harm" to EU environmental objectives.

The amendment, they said, failed to live up to the taxonomy's aim to tackle "greenwashing" in green finance and undermined its creditability, a misstep that could cause "fragmentation and confusion" across EU markets.

Coming to similar conclusions in its own report on the amendment, EC advisory group Platform on Sustainable Finance said the two technologies "cannot be considered sustainable within the meaning of [the Taxonomy] Regulation.

Legal charity ClientEarth, in a statement siding with the majority vote, also believes the amendment clashes with the Taxonomy Regulation. "MEPs in the [committees] have seen through this and have decided to object to the farce. Today's vote ought to be the final nail in the coffin for gas in the taxonomy," said ClientEarth lawyer Marta Toporek.

"Today MEPs gave a red card to 'greenwashing' and sent a strong signal to market investors: fossil gas and nuclear should not receive preferential treatment on the basis of a 'fake green' classification. The climate emergency requires every single eurocent to be steered to the real no regret solutions: energy efficiency and renewables," Esther Bollendorff, gas policy expert at CAN Europe, said in a statement.

Regulation's scope

The Taxonomy Regulation up for amendment entered effect in 2020.

The regulation had a list of specific technologies approved for green investment called Technical Screening Criteria that entered into force in December 2021, but excluded gas-fired power and nuclear power.

The Taxonomy Regulation and others related to disclosures on sustainable finance are part of a broader plan: The EC wants investors to report on and direct investments to businesses that contribute to meeting the EU's net-zero aims.

The regulation helps define how member states should spend €723.8 billion ($874 billion) in EU pandemic recovery funds under the Recovery and Resilience Facility (RRF), which has been pouring money into member states' energy projects.

Under an 18 May amendment, the RRF will also help to finance REPowerEU, the EU's package of proposed energy policies responding to market disruption caused by Russia's invasion of Ukraine.

Ukraine shifts debate

The EU's changing relationship with its main gas supplier, Russia, has inspired energy security concerns for member states, changing the debate on the role of gas in the EU economy and taxonomy.

Bellona Sustainable Finance and Economy Manager Lina Strandvåg Nagell said last week that the taxonomy "is a fossil gift" to Russian President Vladimir Putin, whose invasion of Ukraine kicked off a global panic over gas supplies.

Echoing this statement closely, German MEP Jutta Paulus, a member of the Committee on the Environment, Public Health and Food Safety, said in a 14 June blog: "It would be absurd if the lobbying of Russian lobbyists in particular for the inclusion of nuclear power and gas in the taxonomy were successful."

Members of the Committee on Economic and Monetary Affairs shared the sentiment. Paul Tang, a Dutch member of the economic committee, tweeted: "We say no to institutionalized greenwashing and yes to an energy independent [EU]."

Bas Eickhout, a member of both of the voting committees affiliated with the European Green Party, warned in a statement: "We are facing a climate crisis, a cost-of-living crisis, and the war in Ukraine means the EU urgently needs to become independent of Russian uranium and gas. Artificial incentives to invest in expensive nuclear and fossil energy at the expense of renewables and other sustainable sectors is the last thing we need."

Others, like European Parliament Vice-President Othmar Karas, emphasized the vote was a victory for campaigners against nuclear. "The rejection of nuclear power is not a partisan issue, but a common concern. The rejection of nuclear power is not a partisan issue, but a common concern. That's why I initiated a cross-party objection by the Austrian MPs, which will be voted on in the committees today," he said.

Posted 14 June 2022 by Cristina Brooks, Senior Journalist, Climate and Sustainability

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.