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MEPs back controversial EU plan to label nuclear and gas investments as 'green'

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By Alice Tidey
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Climate activists demonstrate outside the European Parliament, July 5, 2022 in Strasbourg, eastern France.
Climate activists demonstrate outside the European Parliament, July 5, 2022 in Strasbourg, eastern France.   -   Copyright  AP Photo/Jean-Francois Badias

MEPs on Wednesday backed a controversial plan to label certain nuclear and gas investments as sustainable.

The objection raised by two key parliamentary committees in mid-June to not label the two power sources as green as part of the upcoming taxonomy was rejected by 328 MEPs, with 278 in favour, and 33 abstentions.

Shouts of "traitors" and jeers could be heard in the plenary room in Strasbourg when the result of the vote was revealed.

The governments of Austria, Luxembourg -- as well as Greenpeace -- have already announced they plan to challenge the decision in court.

What is the taxonomy?

The taxonomy is a planned EU classification to give the financial sector clarity on which economic activities can be considered sustainable that has been in the works for years.

But in February, the European Commission unveiled a controversial Delegated Act to label nuclear and gas as sustainable, caving to pressure from France and Berlin, which are currently respectively dependent on nuclear and gas. 

Opponents, including environmental NGOs, however, argued that this could lead to billions of euros being invested in these two energy powers rather than in renewables or other green technologies which would, in turn, endanger commitments made under the Paris Climate Agreement as well as the European Climate Law that aims for the bloc to become the world's first carbon-neutral continent by 2050 and to cut its greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels.

Russia's war in Ukraine increased the opposition to the Commission's proposal as it fuelled a power crunch and boosted inflation to skyrocketing levels. It also prompted the 27-country bloc to impose an embargo on Russian seaborne oil imports  — to come into force at the end of the year — and to pledge to slash Russian gas imports by two-thirds.

Including nuclear and gas in the taxonomy, opponents then stressed, would result in plenty of funds being channelled to the Kremlin when the EU and Western countries have been trying to cripple Russia's economy and ability to wage war. 

Two parliamentary committees objected to the Delegated Act in mid-June arguing that although both power sources will be necessary to guarantee stable energy supply during the transition to a sustainable economy.

Legal battle ahead

The EU's executive welcomed the result of the vote with Mairead McGuinness, Commissioner in charge of Financial Services, Financial Stability, and Capital Markets Union stressing in a statement that only transitional gas and nuclear activities will be included in the taxonomy.

"The Complementary Delegated Act is a pragmatic proposal to ensure that private investments in gas and nuclear, needed for our energy transition, meet strict criteria. Investment in renewables is already prioritised in our Taxonomy - this is our future. Our proposal ensures transparency so investors will know what they are investing in. Today brings much-needed clarity to the EU position," she said.

Yet, swiftly after Wednesday's vote, Luxembourg energy minister Claudes Turmes announced that his government and Austria would proceed with an earlier threat to "press legal charges", stressing that he "deeply regret(s)" the decision by MEPs.

Greenpeace also announced a legal challenge with Ariana Rodrigo, the NGO's EU sustainable finance campaigner, writing in a statement that "it’s dirty politics and it’s an outrageous outcome to label gas and nuclear as green and keep more money flowing to Putin’s war chest, but now we will fight this in the courts."

"The EU Commission’s shameful backroom dealing on behalf of the fossil fuel and nuclear industries won’t help them there," she also said, adding that they "are confident that the courts will strike down this politically motivated greenwashing as clearly in breach of EU law".

WWF, another environment NGO, also vowed in a statement that they "won't give up the fight".

"We believe that this act is inconsistent with the taxonomy regulation, so together with other organisations like ClientEarth, WWF will explore all potential avenues for further action to stop this greenwashing and protect the credibility of the whole EU Taxonomy - and calls on Member States and MEPs to do the same," Ester Asin, Director at WWF European Policy Office, said.

For the Greens/EFA group in the European Parliament, Wednesday will be known as "a dark day for the climate and the energy transition."

"By clearing the way for this delegated act, the EU will have unreliable and greenwashed conditions for green investments in the energy sector," the group's Vice President of the Environment Committee and European Parliament rapporteur for the taxonomy regulation, Bas Eickhout, said.

"This decision will have negative global ramifications, opening the door for governments around the world to label fossil gas ‘green’," he warned.

What's next?

A Delegated Act from the Commission can only be struck down by Parliament or the European Council, which is made up of leaders of EU countries. As MEPs have now backed it, it's in the council's hands.

Member states should quickly give their approval. The permanent representative to Coreper for the Czech Republic, which now holds the rotating six-month presidency of the EU Council, told reporters on Monday that Council "is in favour" given despite eight member states coming out against it — this issue does not require unanimity at the council level but a qualified majority.

Prague has already convened an extraordinary Energy Council for 26 July.