View from Brussels: Atom-smashers and gas guzzlers

Last year, EU officials published a set of guidelines for investors that spells out what should be considered a sustainable option for their cash injections. It essentially doles out green labels and could unlock billions in investments.

But the guidelines - known as the taxonomy, a classic piece of incomprehensible EU jargon - omitted two major issues: nuclear and gas power. The European Commission, the EU’s executive branch, said that particular chapter would be filled in at a later date.

Well that later date ended up being the 31 December, just a few minutes before midnight. The Commission, in some sort of mad rush to get it off its 2021 books, published its plan before the new year clock started to strike twelve.

Nuclear and gas power both should be included in the taxonomy, according to the EU’s executive, albeit under certain conditions and with strict eligibility deadlines. It is a suggestion that has left few people happy.

According to the EU’s big climate targets, the bloc has to scrub greenhouse gas emissions by 55 per cent by the end of this decade and bring them down to a net-zero level by 2050. Much has been made about how much money such a sea change will require.

Hundreds of billions of euros will be needed every year up to 2050 to make that net-zero target possible. Although public money will play a part, much of the investment will have to come from the private sector.

That is where the taxonomy comes in. By giving investors a hefty dose of regulatory certainty by affixing a green label to technologies like wind and solar, a degree of future-proofing is injected into the cost-benefit equation that financers calculate.

Green policies are a safe place to stash your cash, to put it bluntly.

Unfortunately for the Commission’s climate plans, this latest taxonomy addition muddies the waters.

On the anti-nuclear side, critics say there are still too many safety concerns and radioactive waste disposal is too problematic. They also point to the emissions released during construction and the trade-off of one fuel source, fossil fuels, for another, uranium.

Even for those in favour of ramping up nuclear, a 2045 cut-off date included in the taxonomy draft has already been criticised, given the long timelines involved with building new reactors. It does not grant atom-smashing the long sunny future its advocates are after.

Including gas is meant to accelerate coal power’s demise and establish it as a bridge fuel to renewables. An emissions intensity target is designed to make sure only the cleanest gas facilities are eligible for green investments.

Here, the criticism is perhaps even more fierce, as the concept of gas as a bridge fuel or a transition technology is already denounced by green groups, who warn that renewables could lose out on billions if gas is included.

They also point to the fact that burning gas produces CO2, albeit in smaller quantities than coal, and losses release methane, which is an even more potent greenhouse gas, into the atmosphere.

The Commission may also fail in its aim to provide regulatory certainty, as legal uncertainty may undermine the entire project. Anti-nuclear EU members are already threatening legal action against the executive if atom-smashing is labelled as green.

Austria and Luxembourg are considering referring the matter to the European Court of Justice, with bigger hitters like Denmark and Spain also mulling their options.

Austria has form in this regard, having launched legal action a few years ago against the Commission’s decision to approve UK state aid for the Hinkley nuclear plant.

This may drag out the already Byzantine approval process even further for the taxonomy. An expert group has another week to produce its findings on the Commission’s effort, after which a four-month scrutiny period will be triggered.

During this time, the European Council of 27 member states and the European Parliament will have to go through the plan with a fine-tooth comb. They can push for amendments or vote down the acts entirely.

That last option is only possible if a big majority of countries oppose it (roughly 20 members) or if a majority of MEPs vote against it. Neither option is particularly likely at this stage, as the likes of Germany, which also opposes nuclear, would probably abstain for any vote.

MEPs are also fickle creatures and may agree not to oppose the taxonomy in exchange for concessions or guarantees elsewhere. Such is the nature of politics.

Ultimately, the Commission has shot itself in the foot whatever happens, from taking so long to publish its decision in the first place to releasing it late on New Year’s Eve - prompting accusations they were trying to hide something.

Making sure the transition to green energy and technology is already an extremely challenging prospect. The EU probably cannot afford too many more missteps like these if it is to pull off its admirable net-zero quest.