Where do gas and nuclear fit into, on the transition to a green energy future?
On July 6th 2022, gas and nuclear energy effectively became a part of the EU Taxonomy, as the European Parliament voted down an objection to labelling gas and nuclear power as sustainable energy sources.
The European Commission had proposed that gas and nuclear be added to the EU Taxonomy, which was met by much contention, thus further igniting the debate of whether nuclear and gas can be viewed as sustainable.
What is the EU Taxonomy?
The EU Taxonomy is a green classification system that translates the EU’s climate and environmental objectives into criteria for specific economic activities; it is used primarily for investment purposes.
The European Commission defines it as a system that “recognises green, or ‘environmentally sustainable’, economic activities that make a substantial contribution to at least one of the EU’s climate and environmental objectives, while at the same time not significantly harming any of these objectives and meeting minimum social safeguards.”
The Split Decision on Inclusion of Nuclear and Gas
The inclusion of nuclear and gas in the EU Taxonomy has been met with significant opposition. An objection to the inclusion of these two energy types was brought against the proposal and lodged in the European Parliament. This objection was voted on, on July 6th 2022.
328 MEPs voted against the objection, based on the opinion gas and nuclear are necessary for energy supply and form a part of the transition away from other ‘dirty’ fossil fuels. 33 abstained from the vote and 278 voted in favour of the objection, recognising the drawbacks to gas and nuclear energy.
EU Taxonomy Objectives
In order for an economic activity to be recognised as Taxonomy aligned, it must make a substantial contribution to at least one environmental objective, whilst simultaneously doing no significant harm to any other environmental objective.
The EU Taxonomy lays out the six EU climate objectives as:
- climate change mitigation,
- climate change adaptation,
- sustainable use and protection of water and marine resources,
- transition to a circular economy,
- pollution prevention and control, and
- protection and restoration of biodiversity and ecosystems.
Therefore nuclear and gas must help with one of these six objectives whilst also not impacting negatively on the remaining five objectives in order to be Taxonomy aligned. So the question is, are they considered sustainable investments?
Natural Gas is a Fossil Fuel
The core argument against the inclusion of natural gas is that it is a fossil fuel. Whilst it does have lower carbon dioxide emissions than other fossil fuels such as coal, the methane emissions released can have a short term climate warming potential that is up to 80 times that of carbon dioxide.
On the flip side, the primary argument for natural gas is that it is viewed as a transition fuel by many. Countries who do not yet have the infrastructure or investment available for large-scale renewable projects will need natural gas to help transition over time to these newer technologies. Under the EU Taxonomy, natural gas projects will be required to replace coal infrastructure in order to be considered a sustainable investment.
The Issue With Nuclear
Nuclear plants require a significant amount of investment to get up and running, and whilst many also view this as a transition technology, others argue that the funds invested in nuclear could instead be directed towards renewable projects. Nuclear does have the capability to produce large amounts of consistent energy, however, the inclusion of it as a ‘sustainable’ fuel is still up for debate due to the problems with safe nuclear waste disposal in particular in the long term.
Many countries are against the inclusion of gas and nuclear in the EU Taxonomy, as it creates more competition for ‘green funds’. The investment into these two energy types ultimately takes away funds from renewable projects, which is what many view as truly sustainable forms of energy. The Austrian Minister for Climate Action has said they plan to challenge the decision in the E.U.’s highest court in partnership with Luxembourg.
They believe that the EU Taxonomy is diverting away from its purpose, which is stated as a way of offering “support companies in their efforts to plan and finance their transition, help mitigate market fragmentation, protect against greenwashing and accelerate financing of those projects that are already sustainable and those in transition, to deliver on the objectives of the European Green Deal.” The question remains to be seen what impact will the inclusion of nuclear and gas in the EU Taxonomy have on companies and ultimately countries ability to successfully invest in true green and sustainable technologies.