According to the latest information, EU has a plan to label nuclear energy along with natural gas as green sources for investment purposes under rules for promoting a carbon-neutral future despite internal disagreement over whether they truly qualify as sustainable options.
European countries are in need for a long-term and reliable source of energy to help reach ambitious climate goals, so they are turning to non-other than nuclear energy.
As mentioned before there is a disagreement among member states due to existence of different interests which is why some countries came into being advocates and some opponents. For example, Poland wants to end its reliance on coal with a fleet of smaller nuclear power stations, Britain is betting on Rolls-Royce to produce cheap modular reactors to complement wind and solar energy and in France President Macron plans to build on the nation’s huge nuclear program.
As world leaders pledge to avert a climate catastrophe, the nuclear industry sees an opportunity for a revival with new generation of nuclear reactors. They are smaller and cheaper than older designs, occupying the space of two football fields and costing a fraction of the price of standard nuclear plants. Such technology as a tool of “mass decarbonization” has the support from the Biden administration.
But some countries are not so keen on the idea that the solution for climate change can be found in nuclear energy. With main concerns about radioactive waste they produce, Germany is against more nuclear power, with support from Austria, Denmark, Luxembourg, and Spain. For the reason mentioned above, there are tensions with France and Eastern European countries (Bulgaria, the Czech Republic, Hungary, Poland and Romania) who are pressuring the European Union to classify nuclear energy as a “sustainable” investment, since that move would unlock billions of euros of state aid and investments from funds, banks and other investors seeking to put the money in environmental causes.
Nuclear industry has a main selling point in technology involving scaled-down plants, or small modular reactors, that supporters say are safe, cheap and efficient. The main argument is that wind and solar power alone won’t be enough to help countries meet the goals outlined at the United Nations climate summit which was held in Glasgow.
The EU commissioner for the internal market, Thierry Breton announced investment of €500 billion ($586 billion) in new nuclear energy facilities by 2050. Moreover, he believes nuclear energy will play major role in the transition away from fossil fuels especially because of the goal to achieve carbon neutrality with production of carbon-free electricity since the demand for electricity is going to double in 30 years.
The opposition sees sizeable problem in the release of large amounts of CO2 and big amount of money for investment that will be needed during the construction of new nuclear power plants because current nuclear power plants will not be able to meet demand. Currently the EU countries (France, Germany) agreed to disagree on the EU’s move to label nuclear energy as green. The unfolding of the situation will happen in the coming period.
How does the EU Taxonomy Regulation fit into the picture?
Finally, it is important to mention the EU Taxonomy Regulation, which will support investment flows in certain economic activities in accordance with two basic criteria (contributing to one of the objectives of the taxonomy and meeting the DNSH principle “do no significant harm”), so it is understandable that some members advocate to label investments in nuclear and gas power plants “sustainable”. This would ensure more favourable financial conditions for investment, i.e. investments in green technologies would receive more favourable loans on the financial markets.
The new EU taxonomy regulation is designed to support the transformation of the EU economy to meet the goals of the Green Agreement, including the goal of climate neutrality by 2050. As a classification tool, it seeks to provide clarity on sustainable economic activities to companies, capital markets and policy makers. The regulation will support investment flows in the sustainable economic activities listed in the regulation.
For a particular economic activity to be sustainable, it must be based on two criteria:
1) contribute to at least one of the six environmental objectives set out in the regulation itself;
2) be based on the DNSH principle, i.e. the principle “do not cause significant damage”.
The six goals of the Taxonomy are:
1) climate change mitigation,
2) adaptation to climate change,
3) sustainable use and protection of water and marine resources,
4) transition to a circular economy,
5) pollution prevention and control,
6) protection and restoration of biodiversity and ecosystems.
The Regulation also requires certain entities to report on the degree of compliance of their activities with the taxonomy, which is linked to the Non-Financial Reporting Directive (NFRD) and the Regulation on Sustainability Disclosures in the Financial Services Sector (SFDR).
The importance of the taxonomy regulation lays in the fact that projects that meet the taxonomy criteria will have more favourable financial conditions. The goal is for investments in green technologies to obtain more favourable loans in the financial markets.