Plenary vote on the EU taxonomy Complementary Climate Delegated Act

Ahead of tomorrow’s vote in the European Parliament on the Complementary Climate Delegated Act of the EU taxonomy (cDA), the Club of Rome outlines our expectations and analysis ahead of the vote on the objection resolution, against the inclusion of gas and nuclear in the “green” taxonomy framework.

Context and expectations

• On Wednesday 6 July, Members of the European Parliament will vote in a plenary on the motion for resolution objecting to the Complementary Climate Delegated Act (CDA) under the Taxonomy Regulation, against the inclusion of gas and nuclear in the “green” taxonomy framework. On Tuesday, 14 June 2022, the joint Committee on Economic and Monetary Affairs (ECON) and Environment, Public Health and Food Safety (ENVI) adopted this motion, tabling to plenary. If adopted in plenary, the European Parliament will veto the Act.
• It is expected that the vote on the objection resolution against the inclusion of gas and nuclear in the “green” taxonomy framework will be very close to reaching a majority of the MEPs in the European Parliament, with the possibility of passing the threshold of an absolute majority of MEPs needed to change the legislative direction.

Club of Rome analysis

• The final count of MEPs who will object to the cDA will be substantial. The threshold of an absolute majority of MEPs needed to change the legislative direction may be passed or narrowly missed, yet there will be a clear message that in light of Russia's invasion of Ukraine, the EU cannot legitimately go forward as planned at the start of the year.
• The vote will show once again that the process to develop the cDA has been coerced for national and self-interest, side-lining rigorous scientific, financial analysis and stakeholder dialogue. As an example of the politicisation of the process, the MEPs who are likely not to object to the cDA are largely those in the political centre to right of the spectrum from Member States with strong industry presence or future interests in the nuclear or gas industry. On the other hand, as an example of evidence-based process being side-lined, ahead of the vote in the joint ECON and ENVI Committees, MEPs voiced their displeasure of being excluding from the procedure and their feelings that the European Commission did not take due care to evaluate and consult on the Delegated Act before it was adopted. The resolution adopted by MEPs in the joint ECON and ENVI Committees requested that any new or amended delegated acts should be subject to a public consultation and impact assessments.
• The size of the expected objection to this Delegated Act, a procedure which is normally straightforward to receive the backing of the European Parliament and Council, shows that the MEPs are not happy with either the content of the cDA or the steps taken to develop it. The supplementary analysis below outlines the content-related reasons MEPs are expected to object at scale.
• It is likely that the European Commission will have to take time to consider its options for continuing with the cDA following the vote in the plenary (following a close vote or veto). There will be internal deliberations around completing an impact assessment and public consultation to make a fully-informed decision on the role and necessity of transition technologies in the EU taxonomy.

Quotes from Sandrine Dixson-Declève, co-president of The Club of Rome and member of the Platform for Sustainable Finance.

• “Tomorrow will be the day of reckoning for the proposal to classify nuclear and natural gas as "green" in the EU taxonomy”;
• “The final count of MEPs who will object to the cDA will be substantial, sending a clear message that in light of Russia's invasion of Ukraine, the EU cannot legitimately go forward as planned at the start of the year”;
• “The vote will show once again that the process to develop the cDA has been coerced for national and self-interest, side-lining rigorous scientific, financial analysis and stakeholder dialogue. MEPs will stand up and say ‘this has gone too far’”;
• “The large-scale, cross-party objection cannot be ignored, it’ll be back to the drawing board for the EU’s decision makers. A proper impact assessment and public consultation on how best to incentivise a sustainable and fair transition for all EU Member States, without adding extra dependence on Russia, should be completed.”

Supplementary analysis

• The following reasons are being discussed by MEPs considering objecting to the Complementary Climate Delegated Act (CDA) under the Taxonomy Regulation, against the inclusion of gas and nuclear in the “green” taxonomy framework:
  • The inclusion of nuclear and natural gas has been deeply controversial on environmental grounds and the proposal went against the scientific recommendations of the Platform on Sustainable Finance:
    • The European Commission’s advisory body, the Platform on Sustainable Finance, advised that activities related to energy generation from gaseous fossil fuels and nuclear energy facilities are not in line with the Taxonomy Regulation, should not be considered as taxonomy aligned and should be seen as a different level of environmental performance to the existing Taxonomy substantial contribution criteria. The Platform advised that these activities would “be better characterized with an intermediate or amber level of environmental performance”^[1].
    • Natural gas power plants emit a lot more than the 100g threshold set in the Regulation to be in line with the Paris Agreement, the EU’s net zero emissions target for 2050 and 55% emission reduction target by 2030;
    • For nuclear power, there are not sufficient guarantees that the “Do No Significant Harm” threshold would not be broken by its inclusion.
  • There is a strong case that the cDA breached the Taxonomy Regulation itself and a high probability that a court procedure will be launched against the cDA;
  • The Members of the European Parliament have felt excluded from the procedure on the cDA and that the European Commission did not take due care to evaluate and consult on the Delegated Act before it was adopted;
  • Russia's invasion of Ukraine has been a stark warning against incentivising future natural gas investments by labelling them as “green” under the EU taxonomy. As Russia’s invasion of Ukraine continues and EU energy ministers call for the replacement of Russian fossil fuels with energy efficiencies and renewable alternatives, the classification of gas projects as a sustainable activity is being increasingly questioned.
    • Oil and fossil gas sales accounted for nearly 36% of the Russian Federation’s budget in 2021, totalling over €100bn. Russia supplies around 40% of Europe’s demand for gas.
    • The European Commission presented The REPowerEU Plan on 18 May, its response to the hardships and global energy market disruption caused by Russia's invasion of Ukraine. This noted that there is a double urgency to transform Europe's energy system plan to rapidly reduce dependence on Russian fossil fuels and fast forward the green transition, accelerating the rollout of renewables.
  • Growing price instability in European energy markets has also highlighted concerns over European Commission plans to include fossil gas and nuclear in the EU sustainable finance taxonomy.
  • Country-level analysis, by WWF[2] and Transport & Environment, of the requirements of the Complementary Delegated Act, show that investments in gas or nuclear facilities will only be taxonomy eligible in a small minority of Member States.
    • Within the criteria for nuclear power, economic activities in the majority of Member States will not meet all the required criteria to guarantee eligibility. For example, 0% of new nuclear plants in Poland, Hungary, Romania, Czech Republic, Croatia, Slovakia, Slovenia, Netherlands, Spain, Greece and Lithuania.
    • Within the criteria for gas-fired power, economic activities in Eastern, Baltic and Mediterranean regions will in most cases be fully, or almost fully, excluded from taxonomy-eligibility, due to limited or zero coal capacity to replace or lack of sufficient phase-out plans. In addition, several countries which have coal plants to substitute find that a substantial percentage of their planned gas plants are in fact excluded – including Italy, Croatia, Hungary and Ireland. Spain, Denmark, the Netherlands, and Slovakia also see negligible alignment with the criteria.

Philippa Baumgartner, Head of Communications, pbaumgartner@clubofrome.org

Tom Jess, Program Manager, tjess@clubofrome.org 

The Club of Rome is a platform of diverse thought leaders who identify holistic solutions to complex global issues and promote policy initiatives and action to enable humanity to emerge from multiple planetary emergencies. 

The organisation has prioritised five key areas of impact: Emerging New Civilisations; Planetary Emergency; Reframing Economics; Rethinking Finance; and Youth Leadership and Intergenerational Dialogues. 

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