The European Union is poised to delay a decision on what it means to be “green” in certain sectors in an effort to diffuse tensions over the roles of natural gas and nuclear in the clean energy transition.
Next week, the bloc will set out draft plans to highlight criteria for the first set of sustainable investments, potentially unlocking billions of euros for green projects. Almost every part of the EU’s economy will be assigned rules to qualify as environmentally sound; from iron and steel production to energy infrastructure. However, investors won’t have a clear view on how to treat gas and nuclear until the end of this year.
The cumbersome and complicated process — known as taxonomy — is crucial because it will keep the EU on track to meet its commitment to climate neutrality. The challenge for the EU is to ensure it gets the political and social support while avoiding the risk of greenwashing, or overstating the significance of emissions reductions.
Europe wants to become the world’s first continent to reach net-zero emissions by the middle of the century under the Green Deal, an unprecedented overhaul that aims to make cleaner every corner of the economy. To help meet the goal and provide investor certainty, the bloc agreed to create a classification system for environment- and climate-friendly activities.
However, the thorny issue of natural gas’s role in the energy transition isn’t going to be dealt with quite yet. Initially the commission was planning to label some new gas-fired power plants green under certain conditions. A move the EU regulatory arm was criticized for.
Defending the role of natural gas as a bridge fuel, a group of 80 members of the EU Parliament representing various political groups and countries including Poland, Greece, the Czech Republic and Germany called on the commission earlier this week to further relax the sustainability criteria for new projects.
The EU is now planning to establish “specific screening criteria” for the fossil fuel and perhaps nuclear in a separate proposal, according to a document seen by Bloomberg News and due to be published on April 21.