In a major development, the European Union has drawn up plans which labels nuclear energy and some natural gas projects as “green” investments.
The development comes in the wake of a year-long battle between governments over which investments are truly climate-friendly.
Later this month, the European Commission is expected to propose rules which will decide whether gas and nuclear projects will be included in the EU “sustainable finance taxonomy”.
The proposed rules will list economic activities and environmental criteria which must be met for projects to be labelled as green investments.
By placing the “green” label to truly climate-friendly projects, the European Commission aims to make such investments more attractive to private capital, and stop “greenwashing”.
Greenwashing is a term used when investors or companies overstate their eco-friendly credentials.
According to a draft proposal by the European Commission, investments in nuclear power plants would be labelled as “green” provided the project has a plan, funds and a site to safely dispose of radioactive waste. To be deemed green, new nuclear plants must receive construction permits before 2045.
Investments in natural gas power plants would also be deemed green if they produce emissions below 270g of CO2 equivalent per kilowatt hour (kWh), replace a more polluting fossil fuel plant, receive a construction permit by December 31, 2030 and plan to switch to low-carbon gases by the end of 2035.
Gas and nuclear power generation would be labelled green on the grounds that they are “transitional” activities – defined as those that are not fully sustainable, but which have emissions below industry average and do not lock in polluting assets.
“Taking account of scientific advice and current technological progress as well as varying transition challenges across member states, the Commission considers there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominantly renewable-based future,” said the European Commission in a statement.
As per a source from the EC, in order to help states with varying energy backgrounds to transition, “under certain conditions, solutions can make sense that do not look exactly ‘green’ at first glance”. The source went on to add, gas and nuclear investments would face “strict conditions”.
A panel of experts as well a EU countries will scrutinise the draft proposal, which could change before it is due to be published later this month.
Once published, it could be vetoed by a majority of EU countries or the European Parliament.
While natural gas emits around 50% of CO2 emissions when burning coal in power plants, gas infrastructure is also associated with leaks of methane, a potent planet-warming gas.
Advisors to the EC have recommended that gas plants be labelled as green investments only if they meet a lower 100g CO2e/kWh emissions limit; this is based on the deep emissions cuts scientists say are needed to avoid disastrous climate change.
Although nuclear power plants produce very little CO2 emissions the EC has sought expert advice on whether they should be deemed green given their potential environmental impact of radioactive waste disposal.
Austria opposes nuclear power, alongside countries including Germany and Luxembourg.
EU states including the Czech Republic, Finland and France, which gets around 70% of its power from the fuel, see nuclear as crucial to phasing out CO2-emitting coal fuel power.