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No green label to gas and nuclear. Eu Parliament adopts its first position on European Taxonomy delegated act

Photo credit: European Union 2022 - Source : EP - Alain RollandIn a joint meeting, the European Parliament's environment and economic committees decided to object the inclusion of certain nuclear- and gas-based economic activities in the list of environmentally sustainable economic activities proposed by the European Commission in the delegated act supplementing the Eu Taxonomy (Regulation 2020/852).

With 76 in favour, 62 against and 4 abstentions, MEPs "acknowledged the role of nuclear and fossil gas in ensuring a stable energy supply during the transition to a sustainable economy" - the text reads - while describing them as inconsistent with the four criteria in Article 3 of the regulation considered for qualifying an economic activity as environmentally sustainable.

In adopting its position, the European Parliament recalled the the EU Sustainable Finance Platform, which on January 21, 2022 stated that the relevant activities included in the Delegated Act cannot be considered sustainable under the Taxonomy Regulation. In addition, the two EU parliamentary committees criticized the fact that "the draft complementary Delegated Act has not been subject to a proper public consultation or impact assessment".

In addition, in the voted resolution, MEPs called on the committee to subject any new or amended delegated act under the EU Taxonomy Regulation to public consultation and impact assessment. If the political groups in the European Parliament maintain the same position adopted in these votes, the objection will force the EU Commission to withdraw the delegated act or amend it.

In fact, EU law allows the Commission to adopt delegated acts to supplement or amend nonessential parts of EU legislative acts, but this power of the Commission is conferred by the European Parliament or the Council. Each delegated act, however, enters into force only if no objection has been expressed by the European Parliament or the Council within a period set by the legislative act. The plenary of the European Parliament will vote on the complementary delegated act at its session in Strasbourg from July 4-7.

Regardless of the outcome of the vote, the EU Taxonomy regulation (more precisely "Regulation on the establishment of a framework to facilitate sustainable investment") is not a document aimed at determining what economic activities can or cannot be financed as sustainable. The EU Taxonomy is a transparency tool that aims to introduce a common language across the EU and "introduces disclosure obligations for some companies and some financial market participants requiring them to disclose their share of Taxonomy-aligned activities", as the European Commission wrote in a Communication in 2021. Disclosure of the share of green assets aligned with the Taxonomy will allow companies and investment portfolios to be compared, and companies that wish to do so can rely on the EU taxonomy to plan their climate and environmental transition and source financing for the transition. At the same time, financial market participants who wish to do so can use the EU Taxonomy to design green and credible financial products.