Montel Magazine 1 2022 - Uproar over green investm Montel Magazine 1 2022 - Uproar over green investm - Page 20

power plants which meet specific criteria could gain a “ transitional ” sustainable investment label was to speed up the EU ’ s shift away from coal to lower carbon sources .
The end game remained “ a low-carbon future , powered by renewable energy ”, said McGuinness . But there were not enough renewables available to achieve that yet , and during the transition the EU may need to accept “ imperfect solutions ” to move more quickly .
The existing taxonomy includes an unequivocal “ sustainable ” or “ green ” investment label that any power plants except nuclear with lifecycle greenhouse gas emissions under 100g CO2 / kWh are eligible for under the existing taxonomy criteria .
The proposed “ transitional ” criteria for gas plants include that they must have a building permit granted by 31 December 2030 , and that they replace existing high-emitting power plants running on coal or oil .
The proposed “ transitional ” investment label criteria for gas plants include that they must have a building permit granted by 31 December 2030 , and can be deployed only where using direct renewables such as wind or biomass is not yet an efficient option .
The criteria require the gas plants to only replace existing highemitting power plants running on coal or oil , and to switch to using 100 % low carbon or renewable fuels by 31 December 2035 .
The EC dropped its plans to require such gas plants to co-fire with shares from low carbon or renewable fuels from 2026 after feedback from industry – and the German government – that the volumes of alternative fuels needed may not be available by then .
The gas plants would have to choose between two ways to manage their emissions . One is to have direct greenhouse gas emissions lower than 270g CO2 / kWh for energy output . This is potentially within the range of highly efficient combined heat and power plants , while standard combined cycle gas turbine plants without carbon capture and storage are closer to 350g CO2 / kWh .
The other is to have average annual emissions below 550kg CO2 / kW for energy output over 20 years . This would allow plants that are above the 270g CO2 / kWh threshold to meet the criteria by limiting their running hours to around 2,000 / year , or by switching earlier to low carbon and renewable fuels .
The criteria for nuclear include that new plants must use best available technologies and have a building permit by 2045 , while existing plants would need any lifetime extensions approved by 2040 .
Lifetime extensions granted after 2025 and new plants would also need a detailed 2050 plan for disposing of high-level radioactive waste , and to use “ accident tolerant ” fuel from 2025 .
The EC ’ s own formal advisory group , the EU platform on sustainable finance , had urged it to put natural gas and nuclear in a separate “ amber ” taxonomy focused on transitional activities , rather than adding them to the existing “ green ” taxonomy .
The platform criticised the “ weaker ” transitional emissions criteria for gas plants in the EC ’ s final proposal , while welcoming new requirements to identify and separate nuclear and natural gas-related elements in corporate reporting and financial products .
The Institutional Investors Group on Climate Change , which has more than 370 members representing EUR 50tn of assets under management , said including gas in the taxonomy created “ an unhelpful precedent and muddies the waters for investors looking to do the right thing ”.
Meanwhile , anti-nuclear governments Austria and Luxembourg are considering legal action against the EC , while pro-nuclear France has backed including gas – which is not a major part of its energy mix -- to shore up support on including nuclear from coal-heavy eastern European countries .
Nuclear lobby Foratom said that meeting the transitional criteria would be challenging , particularly on using accident-tolerant fuel certified and approved by the national regulator .
Such fuels were still in the testing phase and would not be commercially available nor certified and approved by 2025 , it said .
The EC ’ s proposal has to be scrutinised by the European Parliament and the EU Council of ministers , representing the 27 national governments .
If either of these object within a specified time – potentially up to six months – the EC would have to rethink its plans from scratch .
The parliament and council can only object or accept the proposal as a whole , they cannot amend it . That means either accepting both nuclear and gas are included , or rejecting both of them .
It would need at least 20 of the 27 national governments representing a minimum of 65 % of the EU population to object for the council to reject the proposal . At least 12 governments have publicly supported including both nuclear and gas , making it unlikely the council will object .
The parliament could block the updated taxonomy by a simple majority – which means at least 353 MEPs – objecting to it . MEPs may not always follow their national government line , so this outcome is less clear .
If the updated taxonomy is approved , it would be the responsibility of national financial regulators to ensure it is used correctly . n
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Montel Magazine 1 – 2022