Europe wants to be a world leader in sustainability. To this end, green targets have been set in recent years. For example, the European Union yesterday approved the CO Agreement2By more than half by law by 2030. To achieve this goal (and complete climate neutrality by 2050), according to Brussels alone, 350 billion euros will be needed annually through 2030.
That money might come from the European Investment Bank (EIB), for example, but not all billions could come from tax money, according to European Commissioner Mered McGuinness (Financial Services) on Wednesday while presenting the rating. “Financial markets play a critical role.”
The Green Label should provide a solution. By precisely referring to green investments, rating investors will soon have clear guidelines and green washing (“flow” of unsustainable things with green sauce) will be prevented. By setting clear rules of the game, it is expected that more money will go to sustainable projects.
What is sustainability?
What is sustainable investing? At first glance, this question seems easy to answer. A new coal-fired power plant is not sustainable. But is a factory in plug-in hybrid cars a green investment? What about nuclear energy? Nuclear power generation produces very little carbon dioxide2 Hence it is good for the climate. But it also produces hazardous waste, and fuel for nuclear power plants is limited.
These persistent dilemmas have been the subject of intense debate and lobbying in recent months. On Wednesday, this led to the release of the first tentative (a “living document,” McGuinness asserts) of the classification.
The green classification is based on a number of basic principles. To be eligible for the Sustainable Investment Mark, at least one of the six conditions must be met. Moreover, investment based on one component should not undermine the others. The six essentials are:
Combating climate change.
Make a significant contribution to climate change adaptation.
Sustainable use and protection of water.
Transition to a circular economy.
Prevent and reduce pollution.
Protection and restoration of biological diversity and ecosystems.
The first version of the classification deals with the first and second climate components, the others will be discussed later.
Based on these principles – and a lot of discussions – the committee published a draft version of the classification last December. This revealed a number of dilemmas, the most important of which are: What do we do with gas?
Natural gas to generate electricity is not sustainable as it is a fossil fuel. In the draft classification, gas was not completely excluded, but the requirements were too stringent that the construction of large gas-fired power plants was not considered sustainable.
There was great excitement when a second version of the classification was leaked in March, as conditions were much less stringent and gas-fired power plants suddenly included in the classification. This change was the result of a lobby from Poland, Hungary and Germany. These countries want to use gas to replace coal-fired power plants. They argue that it is beneficial to the climate and the environment, because coal is quite dirty and climate-friendly.
But gas-fired power plants do not make it onto the list, as they are not sustainable, according to Bas Eckhout, among others, GroenLinks MEP and former chief negotiator for the classification. Eickhout appears to be legally right: according to classification rules, gas may only be allowed when an alternative is not available. “This may still be the case for heating homes,” says Eckhout. “But it is not for power generation.” Solar panels and wind power can also be used for this.
A dirty alliance
The commission was now faced with a major problem, because without the gas option, the classification was in danger of being voted on by the gas states, which France is now on their side. France relies heavily on nuclear power, which is a form of energy that will not be determined until later.
Paris seemed to have feared that nuclear investment would remain out of the classification, so it joined the gas lobby. If it promises to support Paris in absorbing nuclear energy, France will support the gas countries. Thus this “dirty alliance” formed a nugget that could destroy the classification.
The committee managed to prevent this by postponing the decision on gas. In the classification now published, gas-fired power plants still have to comply with stringent requirements from the first release, but, as the committee promises, the role that natural gas can play as a “transition fuel” from coal to sustainable energy. Is being scanned.
This appears to have saved the gas countries, but is there really a victory? The accompanying documents, published on Wednesday, states: “The Commission will consider specific legislation relating to gas activities that contribute to reducing greenhouse gas emissions.
The word “considered” is critical. This is what Brussels is aiming for: We make no promises. A verbal haemorrhagic cloth, apparently, with which the committee directed classification about dangerous slopes. To continue next fall.
No final decision has yet been made on the electricity from biomass. Whether biomass forms can be considered sustainable and which are soon to come depends on criteria that will be established in June. This is also the topic of discussion, says McGuinness. This topic is especially important for the Netherlands: biomass power plants are controversial due to the supposed pollution and negative impacts on the climate.