The European Parliament has rejected a proposal requesting the exclusion of gas and nuclear activities from the EU’s Taxonomy Delegated Act.
With 278 MEPs voting in favour of the resolution, 328 against, and 33 abstaining, the Commission has not objected to including the sectors within the Taxonomy.
This could come into effect from January 2023.
The Commission also believes there is a key place for both gas and nuclear in the green economy. Both energy sources could be a vital means to transition to net-zero emissions.
As such, the inclusion of certain gas and nuclear activities would be time-limited and dependent on specific conditions and transparency requirements.
The inclusion of both nuclear and gas within the Taxonomy had been met with strong resistance from member countries such as Austria and Luxembourg – both threatened legal action against the proposal.
Following the outcome of the result, it is expected both nations will challenge the law in court.
Commenting on the objection, Henrik Pontzen, head of ESG at Union Investment, said: “The EU Parliament has agreed that nuclear power and gas-fired power generation will be classified as sustainable under the EU taxonomy.
“This puts the EU taxonomy’s credibility on the line. The claim to be a global pioneer in setting sustainability standards cannot be fulfilled in this way.”
“In our sustainability funds, we have excluded nuclear power producers for many years. We are sticking to this assessment due to the catastrophic risks of nuclear power plants and the unresolved question of final storage.”
Simonetta Spavieri, senior engagement analyst at Royal London Asset Management, added: “Allowing for unabated gas to be labelled ‘green’ undermines the rigorous science-based approach the EU Technical Expert Group on sustainable finance had taken.”
“It highlights the political nature of sustainable development. Investors are left to deal with this incoherence and knowing other taxonomies that are being developed globally are taking a slightly different stance on key issues, complexity will only expand.”
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