EU sets technology-neutral threshold for ‘sustainable’ energy production ‘in line with science’, but gas threat remains

The first 'taxonomy' delegated act has been adopted, setting a technology-neutral level at 100g of CO2/kWh for any investments in energy production activities to be considered as ‘sustainable’. The set threshold is in line with science, and will help the EU reach its 2050 carbon-neutrality goal and fulfil its Paris Agreement commitments. Specific provisions for gas are not off the cards, and will be considered by EU Council in the next weeks as part of a second delegated act. Including fossil gas in the climate ‘taxonomy’ would go against the technology-neutral and science-based threshold enshrined in EU law, now that the first delegated act was passed. It would undermine the credibility of the ‘taxonomy’.

The first half of the EU ‘taxonomy’ has officially been approved and will enter into force in January. [1] A second delegated act will be discussed by EU member states in the coming days. It could potentially allow investments in gas infrastructure to be included in the list. The ’taxonomy’ is a list of activities that are to be officially considered as sustainable investments, aiming to lure investors into activities supporting a change towards a truly sustainable world. ECOS is a member of the Platform on Sustainable Finance, a group of experts officially advising the Commission on the matter.

EU member states had time until yesterday midnight to reject the first delegated act for the ‘EU taxonomy’. Despite opposition from a few countries, the proposal passed. A technology-neutral 100g CO2/kWh limit for electricity and heat production Following the approval of yesterday’s bill, the EU law now establishes that only energy and heat-production infrastructure emitting less than 100g of CO2/kWh can be considered ‘environmentally sustainable’. These criteria can only be met by renewable sources such as solar, wind and hydropower. This emission threshold is in line with the Paris Agreement.

It is also scientifically in line with the EU objective to become carbon neutral by 2050 [2]. In addition, the EU law now defines as causing ‘significant harm to the environment’ any power generation system whose direct emissions exceed 270 g CO2/kWh. No fossil fuel production can go below that level of emissions, not even the most efficient combined heat-and-power natural gas-fired plants. Both the 100g ‘sustainable’ limit, and the 270g ‘significant harm’ threshold are technology-neutral. This is required by Article 19 of the Taxonomy Regulation, which applies to all technologies.

Despite these positive aspects, yesterday’s first delegated act is far from perfect and includes provisions which could have a negative impact on the environment, in particular for land-based sectors. It classifies forestry and bioenergy as sustainable, even though current forestry practices such as industrial logging lead to erosion and [3] and that bioenergy can emit more CO2 than coal, when emissions are properly accounted for. Mathilde Crêpy, Senior Programme Manager, ECOS – Environmental Coalition on Standards 'The first half of the taxonomy sets a clear path towards climate neutrality for heat and power generation. Unfortunately, nothing is set in stone: the EU might still end up favouring industry interests over climate if a few national leaders have their way a couple of weeks from now. We cannot label energy produced from fossil gas as "sustainable". Doing so would mean that the Commission denies the science-based and technology-neutral principles, now enshrined in the regulation. Member states must ensure that the taxonomy stays credible, and truly serves the planet'.

Approved delegated act in official EU journal

EU Technical Expert Group on Sustainable Finance (TEG). Briefing on the eu technical expert group’s recommendation for the eu taxonomy electricity generation threshold – 7 key points about the EU Taxonomy’s 100g emissions threshold )

ECOS analysis after Commission’s proposal in April 2021. EU climate taxonomy: the good, the bad, and the ugly.

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