The European Commission is divided over whether to postpone a decision on classifying gas produced from fossil fuels as green energy in its historic classification system for investors.
Brussels had planned to publish an updated draft of a taxonomy for sustainable finance later this week. The document is designed to guide those who want to spend their money on environmentally friendly investments and help eliminate false claims about the environmental impact of businesses, known as greenwashing.
The committee was forced to revisit its initial proposals earlier this year after the text was criticized by member states for wanting gas to be explicitly recognized as a low-emission technology that can help the EU meet its goal of become a net zero polluter by 2050..
Now, the publication of the draft rules could be postponed again, as the committee seeks to break the deadlock. According to a draft text seen by the Financial Times, the committee proposed delaying the decision in order to conduct a separate assessment of how gas and nuclear “contribute to decarbonization” to allow for a more “transparent” debate on technologies .
But officials told the FT that some commissioners were pushing for the gas to receive the green label now, rather than postponing the decision until later this year.
“There are a significant number of voices on the committee who want gas included in the taxonomy,” an official said. A final decision to approve the current text or to postpone it again for redrafting will likely be made on Monday.
EU taxonomy is being watched closely by investors as the first major attempt by a leading regulator to create a labeling system that will help guide billions of euros of investment in financial products green.
But the process proved to be divisive, as several EU governments demanded recognition of low-emission energy sources such as gas.
Coal-dependent countries such as Poland, Hungary, Romania and others who rely on gas to help cut emissions don’t want the labeling system to discriminate against them. France and the Czech Republic, for their part, are also pushing for the recognition of nuclear power as a “transitory” technology in taxonomy.
A legal text disclosed seen by the FT earlier this month paved the way for gas to be considered green under certain limited circumstances. This has since been removed along with other sensitive topics such as the best classification of the agricultural sector, according to the latest draft the FT saw.
EU governments and the European Parliament have the power to block the project if they can muster a qualified majority of countries and MEPs against it.
Environmental groups hailed the exercise and urged Brussels to stick to scientific criteria to define thresholds for sustainable economic activity.
Luca Bonaccorsi of the NGO Transport & Environment said that postponing decisions on gas and nuclear risk allowing pro-nuclear countries like France and the Czech Republic to join pro-gas member states “to forge an alliance that will achieve the greening and inclusion of both. sources of energy”.
“If they come together, it will be impossible to resist the greenwashing of these two unsustainable energy sources,” Bonaccorsi said.
Delays in adopting the taxonomy have forced Brussels to abandon any attempt to use it as the basis for EU green bonds to be issued as part of the € 800 billion recovery and resilience fund. the EU. Around € 250 billion of debt will be issued in the form of sustainable bonds over the next few years, making the commission one of the world’s largest issuers of sustainable debt.