atw - International Journal for Nuclear Power | 10.2020

atw Vol. 65 (2020) | Issue 10 ı October
482
ENERGY POLICY, ECONOMY AND LAW
Sustainable Finance Initiative of the EU
and Taxonomy – How Green Is Nuclear?
Nicolas Wendler
For more than a year since June 2019 a struggle has been ongoing over the treatment of nuclear power in the context
of the Sustainable Finance Initiative of the European Union and particularly in what is called taxonomy, a set of rules
and categorizations to make sustainable finance implementable and operational. The debate of weather to include
nuclear in the taxonomy as sustainable for its huge potential to mitigate climate change or to disregard it for alleged
violation of the “Do no significant harm” (DNSH) principle with regard to other environmental policy objectives will
probably continue till 2021, when the Joint Research Center of the European Union will give its evaluation on the issue
and the European Commission will subsequently take its decision.
Background
In March 2018 the European Commission
published the Commission
action plan on financing sustainable
growth in response to the recommendations
of the High Level Expert
Group Sustainable Finance. Next to
aspects of financial market regulation
and transparency, the elaboration of a
classification system to rate the
sustainability of financial products
was a focus of its work. This classification
system for economic activities
that includes many sectors particularly
of industry next to the energy
sector was called taxonomy in the
context of the sustainable finance
initiative. The European Parliament
agreed to the regulation initiative
(action plan on financing sustainable
growth) subsequently presented by
the European Commission. Additional
demands from the ranks of the parliament
like a taxonomy of nonsustain
able activities (so called
brown- listing) were at this occasion
rejected in the parliamentary committees.
Nevertheless, the modified
proposal of the parliament defined
that investment in coal, gas and
nuclear infrastructures cannot be
considered sustainable.
The birth of the taxonomy
Parallel to the legislative/prelegislative
process a Technical Expert
Group on sustainable finance (TEG)
appointed by the European Commission
in June 2018 worked out a
draft of a sustainability classification
system. This Taxonomy Technical
Report was published in June 2019
and was opened up for a public
consultation by the responsible Directorates
General of the Commission.
In the report of the TEG which was
made up primarily by financial experts
and representatives of NGOs but
hardly by scientific and technical
experts of the concerned industries, it
was decided on nuclear energy, that
the group does not consider itself
capable of a judgement if nuclear
power does inflict significant harm
to the environment. It was recommended
to not include nuclear in the
taxonomy despite the recognition that
nuclear can make a substantial contribution
to the mitigation of climate
change. The rejection was justified
particularly with regard to the issue of
waste management and it was recommended
to come back to the subject of
nuclear power later for in-depth consideration
in other expert groups. This
classification was criticized markedly
in the consultation among other by
the German nuclear industry association
Kerntechnik Deutschland and its
European counterpart FORATOM.
The report was criticized by many
other industries too in the respective
relevant parts.
Why is taxonomy important?
The problem with being excluded
from the category „sustainable“ for all
concerned industries and activities is
that long term financing conditions
might deteriorate. The sustainable
finance initiative stipulates better
conditions for „green“ investment e.g.
lower equity requirements, institutional
investors will develop their
portfolios towards green investments
more and more often and public institutions
or business development
banks will align their decisions on
subsidies, guarantees or loans at
reduced interest rate with the standards
of the green finance regulation of
the EU. So, it seems likely that the
taxonomy will play an important role
in the allocation of budgets in the
context of the so-called Green Deal of
the European Commission till 2030 or
with regard to the funds mobilized for
the green recovery program following
the economic effects of the corona
pandemic. It is possible too that with
the future development of sustainability
rules a negative taxonomy
might be introduced.
Further development 2019
The Council of the European Union
decided its position on taxonomy in
September 2019 and issued a mandate
for the so called trialog negotiations,
an informal conciliation pro cedure
between the European Commission,
the European Parliament and the
Council. Here it was decided as
council position and opposed to the
parliamentary position, to not exclude
nuclear projects from the taxonomy
and thereby from the classification as
sustainable investment.
In the trialog negotiations the
Finnish Council Presidency and the
representatives of the parliament
initially agreed 5 December 2019 on
the introduction of a taxonomy that
shall include such activities that are
in a transition to sustainable production
(transitional) and activities
that can enable others to become
sustain able (enabling) next to sustainable
activities in the proper sense.
Con trary to this agreement the
Energy Policy, Economy and Law
Sustainable Finance Initiative of the EU and Taxonomy – How Green Is Nuclear? ı Nicolas Wendler