Last June, the European Commission published a series of reports proposing the creation of a voluntary, non-legislative EU Green Bond Standard to support and promote the development of the European Green Bond market; to encourage the issuing and investment in EU Green Bonds building on market best practices; and as part of its plans to develop sustainable finance within the EU. The Commission expects the EU-GBS to boost the Green Bond market allowing investors to scale up sustainable and green investment.
The reports built on an interim report, published in March 2019, which included the feedback from more than 100 organisations and stakeholders that supported the creation of a voluntary EU-GBS. The Commission’s Technical Expert Group (TEG) considered this feedback and produced these reports: A classification system (taxonomy) for activities suitable for Green Bonds, an European Green Bond Standard (EU-GBS) linked to that taxonomy, and a third report on EU climate benchmarks and benchmarks’ ESG to guide investors and address the risk of greenwashing.
The Taxonomy includes the activities considered suitable within its eligibility criteria to be financed by Green Bonds, and these comprise from low-carbon activities, such as zero emission transport, to transition activities like manufacturing of iron and steel.
The TEG proposed to leave nuclear outside the Taxonomy(1) because, although it recognises nuclear is zero-carbon emissions and can contribute to climate mitigation objectives, there are reservations regarding its potential harm to other environmental objectives and the risk of significant harm to pollution and biodiversity objectives arising from the nuclear value chain. This position is backed by Germany, Austria, Luxembourg and the European Parliament.
In September, the European Council decided by majority to include nuclear in the Taxonomy. The Council and the European Parliament are co-legislators in this area, and they are in disagreement not only over whether to include nuclear energy in the Taxonomy, but also over how fast to implement the EU-GBS: The Council wants a longer time, establishing the Taxonomy by the end of 2021 with full implementation of the Green Bonds Standard by the end of 2022, while the European Parliament – backed by the Commission – wants a quicker approach going ahead with full implementation as soon as possible.
The decision to include nuclear energy in the final version of the Taxonomy must be confirmed by both: The Council and the European Parliament. The outcome of their negotiations is uncertain, and it is not guaranteed that nuclear will remain included in the Taxonomy.
In order to support the inclusion of nuclear in the Green Bonds’ Taxonomy, a petition has been launched to the TEG. The petition needs at least 5,000 signatures to be officially submitted and its closing date is 11th November, which is approaching soon.
To sign the petition go to: https://www.openpetition.eu/petition/online/include-nuclear-in-the-eu-sustainable-finance-taxonomy
(1) The TEG’s reasoning regarding nuclear energy is explained in pages 234 and 235 of the taxonomy report.