EU seals deal on green finance in breakthrough for climate goals

The deal ends a bitter fight between Parliament and EU member states over the recognition of nuclear and gas as a “transition” source of energy on the path to net-zero emissions. [European Central Bank / Flickr]

Lawmakers in the European Parliament have approved a compromise on the EU’s proposed sustainable finance rulebook, ending a bitter fight with EU member states on whether to recognise nuclear power as “green”.

The compromise proposal was approved late in the evening on Monday (16 December) during a meeting of lawmakers from the European Parliament’s political groups in charge of following the issue.

“I am delighted that a deal was reached between the European Parliament and the Council,” said Pascal Canfin, a French MEP who chairs the European Parliament’s powerful environment committee.

“We made history,” added Vladis Dombrovskis, the European Commission vice-president for the economy, who took to Twitter to hail the outcome of the negotiation.

The deal ends a bitter fight between Parliament and EU member states over the recognition of nuclear and gas as a “transition” source of energy.

Britain, France, and Eastern EU countries – the Czech Republic, Hungary, Poland, Slovakia, Romania, Bulgaria and Slovenia – rejected an earlier deal last week, fearing it would exclude investments in nuclear or gas projects from being labelled as green in the transition to net-zero emissions.

France, UK block green finance deal in setback for climate goals

Led by France and Britain, EU states yesterday (11 December) blocked a set of new rules governing which financial products can be called “green” and “sustainable”, fearing it would prevent investments in nuclear and gas projects.

Avoid ‘greenwashing’

“With this deal, we now have a common language and new rules for financial markets,” said Canfin who was among a group of MEPs leading the Parliament delegation in talks with EU member states.

“This will not only allow us to avoid greenwashing, or to allocate much more assets to financing an economy that is truly aligned with the Paris Agreement, but also enable to increase the transparency of financial markets,” Canfin said in a statement.

Finland, the current holder of the six-month rotating EU Presidency, made a final push to close a deal by tabling a compromise to the proposed green finance rules that was endorsed yesterday morning by EU member states’ representatives.

That amendment, seen by EURACTIV, appears to slightly water down previous wording on the so-called “Do no harm” principle that would have in principle excluded nuclear power from being considered “green”.

“Do no harm”

But the lead Parliament negotiator in the talks, Green lawmaker Bas Eickhout, told EURACTIV those were merely “cosmetic changes” with no major implications.

“It was already clear from the deal last week that nuclear could be identified as transitional source of energy – and only that,” Eickhout said.

“The European Parliament fought for a clear ‘do not harm’ principle for the disposal of waste before it can qualify as sustainable. That principal stands as well. So it reads like technical clarifications,” he told EURACTIV in emailed comments.

Canfin agreed, saying the deal reached last night “remains balanced” overall and does not undermine the objective of the EU’s sustainable finance rulebook.

“The taxonomy could have been hijacked by the fight between pro and anti-nuclear on the one hand, and pro and anti-gas on the other,” Canfin said.

“We have overcome this impasse with the following compromise: gas and nuclear can under no circumstances be included in the category of so-called ‘pure green’ investments, but they are neither included nor excluded in principle from the other categories. Like all technologies covered by the taxonomy, they will be subject to the strict test of the ‘do not significant harm’ (DNSH) principle.”

Even though the proposed green finance taxonomy does not explicitly mention nuclear or gas, EU countries were worried that it would have made it very difficult to label them as green, potentially reducing future funding for those industries as a “transition” source of energy.

‘Do no harm’: Nuclear squeezed out of EU green finance scheme

European Greens claimed victory on Thursday (5 December) after EU negotiators reached agreement on a green finance taxonomy aimed at channelling billions of private investor’s money into clean technologies. Coal, and – in principle – nuclear power, are out.

Battle over implementing rules lying ahead

Green campaigners hailed the agreement over green finance. “Evidence-based policy making wins out in the end. We have a deal which will be instrumental in the transition to a net-zero emissions economy,” said Tom Jess from climate think tank E3G.

The next steps should now be a formality, E3G says. EU governments will sign off the deal on Wednesday followed by a plenary in the European Parliament at a later date, to be confirmed.

However, campaigners say other battles are now lying ahead. By the end of next year, the European Commission is expected to draft technical thresholds that will determine what type of industries can qualify as “low-carbon”, “transition” or “enabling” activities.

Those rules will be drafted based on recommendations from a Technical Expert Group on Sustainable Finance advising the European Commission. And campaigners warn political pressures might still be applied when detailed rules and thresholds are defined.

“Last week’s minor blip shows that it’s crucial going forward to ensure the process to update and maintain the taxonomy is completely independent from political interests and rooted in science,” said Sandrine Dixson-Declève, Senior Associate at E3G.

“The European Commission should bear this in mind” when drafting future implementing rules, she said.

EU strives to clarify ‘transition activities’ on path to zero-carbon goal

The European Commission has attempted to define “transition” and “enabling” economic activities on the way to net-zero emissions as part of efforts to reach compromise on a draft EU green finance taxonomy.

> Read the compromise amendment below or download here:

COREPER new text 161219

(Edited by Benjamin Fox)

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