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Green finance package raises ambition but disappoints on gas

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Sustainable finance strategy

The European Commission adopted a package of measures (6 July) aimed at stimulating additional sustainable finance to deliver the European’s green goals and to lead the world in setting green standards.

A new Sustainable Finance Strategy

The EU’s green deal has taken centre stage in the EU's recovery from the COVID-19 pandemic. While the EU’s funds are vital, the huge and continuing investment of at least €350 billion a year will need private sector financing. 

Executive Vice President for the Economy Valdis Dombrovskis said: “Today's Sustainable Finance Strategy is key to generate private finance to reach our climate targets and tackle other environmental challenges.”

A European Green Bond Standard (EUGBS)

The Commission has also proposed a regulation on a voluntary European Green Bond Standard (EUGBS). This proposal aims to create a high-quality voluntary standard available to all issuers (private and public) to help financing sustainable investments, a sort of quality guarantee that the Commission hopes will enable investors to avoid accusations of greenwashing.

External reviewers who are supervised by the European Securities Markets Authority (ESMA) will ensure that issuers are compliant with the EU’s green taxonomy. 

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Green group Transport & Environment (T&E) are unhappy that gas-fired power plants which had been kicked out of the first part of the taxonomy of green investments, has been reintroduced after what they describe as pressure from pro-gas governments, T&E said allowing gas energy to be counted as green would destroy the credibility of the EU’s gold standard for sustainable finance.

Luca Bonaccorsi, director of sustainable finance at T&E, said: “Sustainable finance in 2021 should be about driving investment away from fossil fuels like gas and nature-wrecking bioenergy. This strategy doesn’t shut out either. If the first part of the taxonomy, which greenwashes indiscriminate logging, is anything to go by we must remain vigilant.”

Sven Giegold MEP (Green, DE) shared T&E’s criticism of the inclusion of gas, however he welcomed the Green Bond Standard, but would like it to be made mandatory: “The EU Commission is finally presenting a public standard for green bonds. This is a credible alternative to the often lax private standards. The proliferation of private standards threatens the credibility of Sustainable Finance. However, a voluntary standard will not end the greenwashing of private standards. The Commission should protect the term “green bond” and make the application of its standard mandatory in the EU.”

Nuked!

The EU has not yet made a decision on whether to include nuclear, but Giegold urges them to resist pressure from “the Elysée Palace”, saying that until the final disposal of nuclear waste is resolved it could not be considered sustainable.

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