Movers and SHAKERS
Will Uranium, Natural Gas, and Coal be Severely Impacted by EU Taxonomy
Should natural gas and nuclear energy initiatives have green investment status? They both have a role, even if shorter-term, in bridging the gap to energy more acceptable to environmental “purists.” Providing a green investment label to natural gas and uranium is rumored to be under consideration in the European Union.
As reported by Bloomberg News, more than one credible person and are reporting the EU is considering classifying as a “sustainable investment” gas-fired plants that replace coal and emit no more than 270 grams of carbon dioxide equivalent per kilowatt-hour. Bloomberg also reported the conversion projects would need to be finalized by 2030.
What is (Investment) Taxonomy?
For those not familiar, the EU has an investment classification system known as EU Taxonomy, where it ranks “Sustainable Activities.” It strives to set standards and a “common language” and clear definition of what is considered “sustainable.”
Investors worldwide follow the EU investment classification system, as it can sway billions in funds from flowing into or out of a sector. In this case, coal, natural gas, and uranium could be severely impacted. Known as taxonomy, the system is closely watched by investors worldwide and could potentially attract billions of euros in private finance to help the green transition. The challenge is to ensure the decision on nuclear and gas gets political support while avoiding the risk of greenwashing or overstating the significance of emissions cuts.
The commission, the EU’s executive arm, plans to unveil new rules “in the near future,” its spokesman said this week. There was no elaboration on any proposal.
EU Investment Taxonomy
Covering almost every sector of the economy, the taxonomy aims to guide investors to understand “clean projects.” The decision on whether it should include gas and nuclear power was already delayed in April following warnings by some investors, governments, and environmental activists that the addition could undermine the credibility of the taxonomy system.
Argument for Natural Gas Inclusion
Giving a temporary green label to gas projects with emissions not exceeding 270 grams of CO2 equivalent could facilitate investments in cleaning up coal-based district heating systems in countries such as Poland. It could be very helpful to Eastern Europe argue some East European politicians.
Argument for Nuclear Inclusion
The inclusion of some nuclear energy projects in the taxonomy would help attract private finance in nations from France to the Czech Republic, which plan to rely on nuclear power as part of their transition to net-zero emissions.
Europe wants to become the world’s first continent to reach carbon neutrality by the middle of the century under the Green Deal, a sweeping overhaul that aims to accelerate pollution cuts in all areas from energy production to transport.
Last Month European Commission President Ursula von der Leyen said that while the EU needs more renewable and clean energy, it also requires “a stable source, nuclear energy, and during the transition, also natural gas.”
This is a problem that other economic blocks are also faced with, there needs to be a source of uninterrupted dependable power while the transition-infrastructure to green, and technology for that transition is being developed.
Conversations suggesting these low or no carbon sources of more reliable energy fill lag-time are becoming more common. Whether they will be accepted as “green” because they help reach the ultimate green goal, is beginning to seem to be more likely.
Managing Editor, Channelchek
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