AUGUST
Ref. Ares(2020)6967261 - 20/11/2020
2020
IOGP Initial Feedback to the Taxonomy:
Final report of the Technical Expert
Group on Sustainable Finance
a) TEG R
eport (short paper – here)
Topic/section
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Comment
Rationale
Supporting documents
Sectors covered by the
13
We recognise the challenges imposed by the ambitious timeline
The energy transition will require enabling policies, significant
Taxonomy
to deliver the detailed TEG report and we welcome the progress
investments and behavioural changes across the economy.
made so far. However, we believe that each sector must
contribute to the energy transition and therefore we encourage
further efforts to be made to cover a wide(r) range of activities.
Types of economic
14
The adopted EU Taxonomy Regulation introduced an additional, new
The Taxonomy Regulation agreed by the Council and the Parliament
Taxonomy Regulation 2018/0178
activity that
category of “transitional activities” which is considered to contribute
clearly sets 3 different categories of activities that substantially
(COD) –
Final Compromise Text
substantially contribute
substantially to climate change mitigation by phasing out greenhouse
contribute to climate change mitigation: 1) activities that directly
gas emissions, in particular from solid fossil fuels (article 6.1.a).
contribute to climate change mitigation, 2) transition activities and
The addition of transitional activities is supported by the industry
3) enabling activities. However, TEG’s proposed technical screening
as enormous potential exists in the market for the transformation
criteria do not sufficiently consider item 2) transitional activities.
of existing carbon-intensive industries and processes.
Given this development, we believe that a separate, additional
list of transitional activities (including retrofit options) with its
own specific Technical Screening Criteria (TSC) reflecting its
transitional nature, should be created in the delegated acts
(instead of having these activities as a subcategory of “green
activities” as outlined in the TEG report).
Establishing such a list will add clarity to the framework and will
help the EU to deliver its climate and energy objectives while
providing a wide range of opportunities for the energy transitions
across Europe. The policy focus should include feasible, near-term
steps that act as building blocks and timely reduce emissions
to deliver the Paris Agreement and the EU’s long-term climate
targets. There is no silver bullet to combat climate change. All
technologies reducing GHG emissions in all economic activities
will need to be considered to deliver on the Green Deal ambition,
and will be necessary for this energy transition.
1
Topic/section
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Rationale
Supporting documents
Life-cycle
16
‘Greening by’ and ‘greening of’ activities should be based on
Having a simple indicator such as % reduction in GHG emissions per
(1)
HERE (2)
HERE
considerations
a Life Cycle Analysis to create a level playing field among all
unit (e.g. kWh or tonne of product produced) or considering the total
technologies and assess their total impact on climate.
CO2 reduction is the most suitable metric. Overall, to achieve a long-run
We believe a lifecycle requirement should be technology neutral.
transition to a climate-neutral economy, there is a need for the wider
In order to ensure an operational taxonomy, it is important that
greening of markets and other incentives to promote innovation (2).
any LCE or LCA methodology has a clearly defined scope and
is aligned with EU policies both in terms of design and time of
introduction.
Thresholds
The entire
The threshold level should be technology-neutral and be based
Technical screening criteria should reflect a gradual approach and
doc
on GHG emission to be achieved and not technology types. It
efficiently incentivise transitional efforts. Setting thresholds and ceilings
should allow all energy types that meet the threshold to be
too low at the beginning could de facto exclude relevant activities
accepted.
regardless of both their potential contribution to the transition and their
The first step in the 5 yearly threshold reduction cycle is an
ability to improve their own environmental performance, running the
independent review of power generation and power systems/
risk of unintentionally creating a niche market. Therefore, the threshold
grid technologies to set guidance on the capabilities of existing
level should be technology-neutral and based on GHG emission
technologies with the aim to set the reduced threshold and still
reductions on life-cycle analysis to be achieved, and not on technology.
allow for stable power supplies to all.
In our view, the single threshold proposed by the TEG is not appropriate
for the transitional activities. We, therefore, encourage the Commission
to determine a methodology for establishing dedicated thresholds for
these activities. For example, the transitional activity threshold should
be aligned with existing legislation such as the Electricity Regulation.
Such an alignment will ensure a trajectory for meeting the targets and
ensure inclusion of activities that contribute to emission reduction
including retrofitting of existing processes. The threshold can be
reduced with time but should not be set too low too early as otherwise
suitable technology, that can contribute to the transition or could be
retrofitted, will be excluded already at this stage.
The threshold is proposed to reduce to 0g CO2e / kWh by 2050. With
current technologies, in order to provide stable electricity grids, there is
the need to have a range of different power generation sources feeding
into the grid. Renewables are critical for the supply of electricity, but
there is a need for other power generation sources to be operational
to address the times when renewable sources are unavailable due to,
e.g. lack of wind or darkness. Care needs to be taken that the Taxonomy
and the proposed 5 yearly threshold reductions process takes account
of power generation technology developments and any challenges
toCO2e g / kWh reductions. There is a need to ensure that there is a
stable electricity grid from a variety of power generation sources – if
the technology faces a hurdle and can’t meet the threshold for a certain
period of time, decisions on allowing for this in the Taxonomy need to
be taken to prevent there being a potentially unstable and/or unreliable
power supply.
2
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Comment
Rationale
Supporting documents
Minimum safeguards
17
The European Parliament and the Council established that for an
The TEG report refers to the risk-based approach to due diligence as
economic activity to be Taxonomy-aligned, the activity should be
promulgated by the OECD Guidelines and Due Diligence Guidance
carried out “in alignment with the OECD Guidelines for Multinational
for Responsible Business Conduct. However, there is no overarching
Enterprises and UN Guiding Principles on Business and Human
recognition in the report that the means through which a business
Rights, including the International Labour Organisation’s (‘ILO’)
enterprise meets its responsibility to respect human rights is
declaration on Fundamental Rights and Principles at Work, the eight
proportional to factors like size amongst others (as provided in UNGP,
ILO core conventions and the International Bill of Human Rights”.
commentary to GP 14). In addition to this recognition, a statement which
Where applicable, more stringent requirements in EU law still apply.
notes that there is no “one-size fits-all” approach in aligning with these
Section 2.1.5 of the TEG report aims to provide understanding
Guidelines and Principles is important as it underscores the practical
of these standards’ frameworks and how to apply them in the
reality of implementation. This statement would not take away from the
context of the Taxonomy. There are a few additional elements that importance of aligning but would show that the TEG recognises that the
we believe should be considered in this context (see rationale).
way of alignment may differ depending on a variety of factors.
International use of the
18
The EU Taxonomy should recognise that other regions and
For example, the Report of the Expert Panel on sustainable finance
HERE
EU Taxonomy
jurisdictions may have different drivers and boundary conditions
“Mobilizing Finance for Sustainable Growth” outlines recommendations
and, therefore, the proposed EU requirements may not be
for Canada.
applicable as such globally.
The Taxonomy should aim for international coordination, in this
context, we recommend that the EU continue its efforts at the
global level.
Definition of lock-in/
20
The EU Taxonomy should be inclusive and allow all sectors
The Taxonomy Regulation only excludes solid fossil fuels. The Taxonomy
carbon lock-in
and technologies/activities that can contribute to the energy
screening criteria should be consistent with this Regulation and not go
transition to be part of the solution. To meet EU targets it will
beyond.
be necessary for all economic sectors to lower their carbon
emissions. Therefore, all sectors should have the ability to be
recognised for decarbonisation efforts within the scope of the
Taxonomy.
Fossil fuels
20
Natural gas should be recognised for the enabling and transition
Switching from coal to gas can be done easily contributing to deliver
HERE
role that it can play alongside renewables in the energy
immediate CO2 emissions reduction (up to 50%) and to improved air
European Commission, Electricity
transition.
quality by reducing emissions of NOx, SOx and particulate matters.
Market Report
here
The challenges that certain regions face to decarbonise and
In the long-term natural gas can decarbonise (e.g. with CCS, via
switch to low carbon solutions should be acknowledged and
hydrogen).
addressed. Investment in transitional activities that can become
In 2019, the EU electricity sector decreased its GHG emissions by
low carbon in the long-term should be encouraged in these
approx. 12% thanks to higher renewables generation and coal-to-
regions.
gas switching, bringing about a substantial contribution to Europe's
decarbonisation efforts.
Disclosure
26-27
It is of utmost importance that the Taxonomy is operational and
easy-to-use by those for whom disclosure is required.
3
Topic/section
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Comment
Rationale
Supporting documents
Financial metrics
28
% of turnover and capex/opex of taxonomy eligible activities is
Rationale (calculation): The calculation of these metrics requires
likely to take time to set it up
tagging (and maintenance of the tagging over time) of companies’
economic activities against the taxonomy. This is a highly complex task
which represents a significant practical constraint for many companies.
The fact that the Taxonomy remains a “live” list of activities that will
continue to change is particularly challenging. To accurately capture
financial transactions and records in line with the tagging would require
a complex business/system solution (which does not exist yet in the
market) on top of companies’ core financial transaction processing and
reporting systems. These challenges should be carefully weighed in
terms of implementation timeline.
Rationale (comparability): Turnover may be meaningful for certain sectors
but not for other sectors. Similarly, certain sectors are inherently more
capital intensive than others (e.g. manufacturer vs retailer). Further, some
companies are multi-sectorals, but others are not. These differences
render these metrics inherently unrepresentative and incomparable
across the different economic players therefore undermining their
utility as decision-useful criteria for the investment community.
Due diligence
32
EU legislation on due diligence could have adverse economic
The state’s duty to protect and fulfill human rights includes the duty to
implications and may also deter broader stakeholder
enforce legislation.
engagements done as part of businesses voluntarily adhering
With globalisation, the management of supply chains has become very
to the UN Guiding Principles on Business and Human Rights
complex and involves a broad range of suppliers and sub-contractors,
(UNGPs).
comprising multiple tiers with hundreds or thousands of locations
and individuals. While offering expanded sourcing opportunities for
companies, it also brings challenges in identifying and managing
possible adverse environmental or social impacts caused at different
stages of the supply chain.
In order to manage these risks, companies generally refer to
international guidelines like the OECD Guidelines for Multinational
Enterprises or the UN Guiding Principles on Business and Human
Rights (UNGPs). These texts set out clear recommendations as to how
businesses are expected to address possible negative impacts of their
activities through the supply chain.
The concept of due diligence is highly complex and requires the
collaboration of many stakeholders, within but also outside companies:
suppliers, sub-contractors, clients, investors, States, local authorities
and communities, NGOs, consumers:
a) Companies alone cannot be expected to solve all the problems
arising from failing states or weakly governed states in which
protective laws, guaranteeing human rights or the protection of
the environment, are either inexistent or not applied.
b) It would be unfair to hold only European companies liable for
damages occurring through global supply chains when it is
impossible to fully control every single part of the chain and many
other actors in third countries are involved.
4
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Comment
Rationale
Supporting documents
Brown taxonomy
51
The principle of technology neutrality should be the basis of the
We recognise the EU Taxonomy Regulation contains a review clause
HERE
EU Taxonomy.
to assess activities with negative impact. However, the EU Taxonomy
should adopt an inclusive approach that considers that all different
technologies/activities and sectors can contribute to the energy
transition and can be part of the solution.
This inclusive approach is showcased in the Canadian Report of the
Expert Panel on sustainable finance “Mobilizing Finance for Sustainable
Growth”. The document outlines opportunities to develop and scale up
market structures and financial products that would have particular
impact in facilitating Canada’s transition and adaptation. For example
how governments at every level should support the oil & gas industry to
transition to deliver low-emission solutions. As our industry underpins
the whole economy while providing solutions to mitigate climate
change, it is very important to include our sector in the EU Taxonomy.
b) Technical Annex (
here)
Topic/section
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Comment
Rationale
Supporting documents
Screening criteria climate change mitigation
Manufacture of Iron and
176-179
We note a reference to a specific form of hydrogen on page 177
We propose to recognise all forms of clean hydrogen in the
The future of Hydrogen, IEA, June
Steel
(subsection: Rationale):
hydrogen steelmaking in shaft furnaces
manufacturing of products as these thresholds are further developed.
2019
using H2 produced via water electrolysis (e.g. using renewable
SINTEF:
electricity sources).
a) The pre-study Executive
Summary
We propose to replace the aforementioned text with:
hydrogen steelmaking in shaft furnaces using clean H2 produced via
b) The full pre-study report can be
water electrolysis (e.g. using renewable electricity sources).
acces
sed here
IEAGHG Techno-Economic
Evaluation of SMR Based
Standalone Hydrogen Plant with
CCS Zero Emission Platform (2017):
Commercial Scale Feasibility of
Clean Hydrogen
here
See relevant studies performed by
Navigant (Gas for Climat
e) here
Poyry (Fully decarbonising Europe’s
energy system by 2050) report on
dec
arbonisation here
Frontier economics (the future
value of gas infrastructure in a
climate-neutral Eur
ope) here
5
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Rationale
Supporting documents
CCS and CCU (section
157
We agree CCS is a key technology to reach the EU carbon
The IEA, IPCC Report and EC Pathways show that CCS is essential
The IEA, IPCC Report, European
on manufacturing)
neutrality objective by 2050.
to meet the targets set by the Paris Agreement and the EU. CCS will
Commission “Clean Planet for All”
It is important that there is the ability for CCU to qualify, if the
be a necessary part of the decarbonisation of industry, representing
Zero Emissions Platform (2017):
emission mitigation benefit can be demonstrated. There is a
one of the most cost-effective way to reduce post-combustion and
Climate solutions for EU industry –
need to define what “substantial mitigation” means so that any
process-related emissions. Gas-fired power plants (and CHP plants)
Interaction between electrification,
demonstrations of this can be performed on a fair basis.
with CCS can help ensure grid resilience as renewable generation
CO2 use and CO2 stor
age here
grows, supporting decarbonised energy system flexibility. Techniques
to capture CO2 released by industrial processes can be converted into
IOGP (2019): The Potential for CCS
valuable applications (e.g. construction materials, raw materials for
and CCU in Europe – Report to
the chemical industry, etc.). This way CCU can contribute to a circular
the thirty second meeting of the
economy subject to a lifecycle analysis and clear carbon accounting
European Gas Regulatory Forum
rules.
5-6 June 2019 here
Article 33 of CCS Directive (EU
Directive 2009/31/EC) states
that it must be economically and
technically possible to retrofit all
new combustion plants for CO2
capture.
Hydrogen
180-182
We support the classification of manufacturing of hydrogen as an
Hydrogen from natural gas with CCS has the potential to provide
The future of Hydrogen, IEA, June
manufacturing
environmentally sustainable activity.
significant volumes of near zero-carbon energy to the EU. With
2019
We also request that all forms of clean hydrogen are recognised
technical adaptation, hydrogen can be transported in existing EU gas
SINTEF:
in the manufacturing of products as these thresholds are further
infrastructure, thereby using current gas infrastructure in a cost-
a) The pre-study Executiv
e Summary
developed.
effective way and avoiding the need to duplicate transmission. For this
reason, we also encourage the Commission to incorporate a section on
b) The full pre-study report can be
For the clarification purposes, we propose to combine two metrics transportation of hydrogen.
acces
sed here
(Electricity use for hydrogen produced by electrolysis is at or
lower than 58 MWh/t Hydrogen) and (Average carbon intensity of
IEAGHG Techno-Economic
the electricity produced that is used for hydrogen manufacturing
Evaluation of SMR Based
is at or below 100 gCO2e/kWh) in the following way:
Standalone Hydrogen Plant with
CCS
“Electricity use for hydrogen produced by electrolysis is at or
lower than 58 MWh/t Hydrogen and Average carbon intensity of
Zero Emission Platform (2017):
the electricity produced that is used for hydrogen manufacturing
Commercial Scale Feasibility of
is at or below 100 gCO2e/kWh (Taxonomy threshold for electricity
Clean Hydrogen
here
production, subject to periodical update)”
Our understanding is that the last threshold (100 gCO2e/kWh) is
See relevant studies performed by
intended for electrolysis only.
Navigant (Gas for Climat
e) here
We also encourage the Commission to add a section on
Poyry (Fully decarbonising Europe’s
transportation of hydrogen to link to the manufacture of
energy system by 2050) report on
hydrogen and storage of hydrogen.
dec
arbonisation here
Frontier economics (the future
value of gas infrastructure in a
climate-neutral Eur
ope) here
6
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Supporting documents
Electricity, gas, steam,
205-211
The threshold level should be technology-neutral and based
We believe a lifecycle requirement should be technology neutral.
Our slides on natural gas
and air conditioning
on GHG emission reductions to be achieved and not technology
In order to ensure an operational taxonomy, it is important that any
supply
types. It should allow all energy types that meet the threshold to
lifecycle methodology has a clearly defined scope and is aligned with EU
be accepted.
policies both in terms of design and time of introduction.
Technical screening criteria should reflect a gradual approach
Regarding methane emissions measurement, the EC is currently
and efficiently incentivise transitional efforts. Setting thresholds
developing an EU strategy to regulate and reduce methane emissions.
and ceilings too low at the beginning could de facto exclude
The Taxonomy must be aligned with EU regulation and should look into
relevant activities regardless of both their potential contribution
harmonising standards rather than developing diverging ones. This will
to the transition and their ability to improve their own
facilitate implementation and comparison of activities across various
environmental performance, running the risk of unintentionally
policy frameworks.
creating a niche market. Therefore, the threshold level should be
technology-neutral and based on GHG emission reductions on
life-cycle analysis to be achieved, and not on technology. In our
view, the single threshold proposed by the TEG is not appropriate
for the transitional activities. We, therefore, encourage the
Commission to determine a methodology for establishing
dedicated thresholds for these activities. For example, the
transitional activity threshold should be aligned with existing
legislation such as the Electricity Regulation. Such an alignment
will ensure a trajectory for meeting the targets and ensure
inclusion of activities that contribute to emission reduction
including retrofitting of existing processes. The threshold can
be reduced with time but should not be set too low too early
as otherwise suitable technology, that can contribute to the
transition or could be retrofitted, will be excluded already at this
stage.
Furthermore, future taxonomy should take into account EU
regulations on methane emissions.
Waste to Energy -
209
“The TEG has not included WtE, but recommends bringing this
Not all residual waste can be reused or recycled (as acknowledged by
EC Communication (2017)34 on
Electricity, gas, steam,
matter for further discussion and consideration to the Platform
the EC in its Communication COM(2017)34 on ‘the role of waste-to-
The role of waste-to-energy in the
and air conditioning
on Sustainable Finance, in light of the changes in the political
energy in the circular economy.
circular economy
supply
agreement text”
The final text of the EU Taxonomy Regulation agreed by the European
Taxonomy Regulation 2018/0178
However, following the Taxonomy Regulation, waste incineration
Parliament and Council stipulates that the incineration of waste is not
(COD) –
Final Compromise Text
of non-recyclable hazardous waste with energy recovery should
considered an eligible activity, with the exception of the incineration of
be considered a sustainable activity offering a substantial
non-recyclable hazardous waste, Article 12(d).
contribution to climate mitigation.
The technical screening criteria need to reflect this exception that
was added by the co-legislators to the European Commission’s initial
proposal.
7
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Rationale
Supporting documents
Production of Electricity
231-233
The threshold level should be technology-neutral and be based
We understand that if power generation has CCS (geological storage)
Our slides on natural gas
from Gas
on GHG emission to be achieved and not technology types. It
facilities, it is eligible under taxonomy. We welcome this approach.
should allow all energy types that meet the threshold to be
We also support the fact that if the power generation is from H2 fired
accepted.
power plant, the H2 must come from any clean hydrogen (produced
Technical screening criteria should reflect a gradual approach
from reforming natural gas, pyrolysis or electrolysers).
and efficiently incentivise transitional efforts. Setting thresholds
and ceilings too low at the beginning could de facto exclude
relevant activities regardless of both their potential contribution
to the transition and their ability to improve their own
environmental performance, running the risk of unintentionally
creating a niche market. Therefore, the threshold level should be
technology-neutral and based on GHG emission reductions on
life-cycle analysis to be achieved, and not on technology. In our
view, the single threshold proposed by the TEG is not appropriate
for the transitional activities. We, therefore, encourage the
Commission to determine a methodology for establishing
dedicated thresholds for these activities. For example, the
transitional activity threshold should be aligned with existing
legislation such as the Electricity Regulation. Such an alignment
will ensure a trajectory for meeting the targets and ensure
inclusion of activities that contribute to emission reduction
including retrofitting of existing processes. The threshold can
be reduced with time but should not be set too low too early
as otherwise suitable technology, that can contribute to the
transition or could be retrofitted, will be excluded already at this
stage.
Production of Electricity
234 - 237
Propose to merge Section 4.7 – Production of Electricity from Gas The TEG proposal does not make it clear whether biomethane is
from Bioenergy
(not exclusive to natural gas), with Section 4.8 – Production of
included under the “biogas” category, and whether “biogas” should
(biomass, biogas,
Electricity from Bioenergy (Biomass, Biogas and Biofuels)
be considered as ‘other natural gas’ under section 4.7 Production of
biofuel)
Electricity from Gas.
The TEG proposal leaves ambiguity between these categories
and proposes different thresholds for them. Product blends such
as biomethane and natural gas, which provide decarbonisation
opportunities, are potentially excluded depending on which criteria
apply (4.7 or 4.8)
Storage of Hydrogen
247-248
We support this section.
8
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Rationale
Supporting documents
Manufacture of
249-251
TEG’s restrictions are not aligned with the EU existing
Under RED II, any biofuel meeting the sustainability criteria is eligible,
biomass, biogas or
legislation: all types of biofuels meeting the carbon intensity
not only biofuels made from feedstock listed in Annex IX, Part A. TEG’s
biofuel
and sustainability criteria will be needed to help decarbonize
criteria would remarkably narrow the raw material base for replacing
transport sector to 2030 and be further needed in the long term
conventional fuels.
for aviation, marine and heavy duty.
Therefore, we are calling on the Commission to ensure alignment
between different pieces of EU legislation. Otherwise, we are
limiting the impact of RED and making it more difficult to finance the
investments required.
Retrofit of Gas
252-254
The boundaries of the activity should be extended to cover
The existing gas transmission and distribution networks support the
Transmission and
the construction and operation of networks for gaseous fuels,
integration of renewable energy both in electric form and gaseous
Distribution Networks
mirroring the provisions for electricity transmission and
form (biomethane, hydrogen, synthetic methane) into the energy
distribution lines.
system. They also support significant GHG emissions reductions
from fuel switching or merit order optimisation in industry, power
generation, heating, and transport. The transition from natural gas to
renewable and decarbonized gas relies on the possibility to connect
production units to the grid and final customers. Renewable gas can
be carbon neutral and even negative as outlined in Annex VI of REDII.
Gas transmission and distribution are regulated businesses falling in
the scope of the Directive 2009/73/EC that has introduced rules aimed
at creating not only a competitive secured but also environmentally
sustainable market, in line in particular with the EU climate objectives.
The foreseen gas market reform currently prepared by the Commission
should define its contribution to the 2030 energy and climate objectives
and make them future-proof so they can bring their full contribution
to reach climate neutrality in 2050. The TEN-E regulation and the EU
support to the Projects of Common Interest (PCI) has fostered a high
level of security of supply and integration of the European energy
market. Only a few major PCI projects still need to be implemented.
In the context of the energy transition, the pressing need to ensure
optimal use of existing gas infrastructure (to avoid the risk of stranded
assets and technological lock-in) implies thorough Cost Benefits
analysis taking all externalities into account before making any decision
on a major gas project such as an interconnection between member
states. Moving forward the next revision of the TEN-E regulation
should support the projects facilitating the integration of renewable
and low-carbon gases (including hydrogen). Setting as a priority the
decarbonisation of existing gas networks would contribute to the EU
energy transition objectives in a smart and cost-efficient way. This
would also ensure that upcoming investments are futureproofed, when
it comes to environmental impacts in particular.
9
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Rationale
Supporting documents
District Heating /
255-257
Metric and thresholds state: “Construction and operation of
The EED defines efficient district heating and cooling as a “district
H21 North England website
Cooling Distribution
pipelines and associated infrastructure for distributing heating
heating or cooling system using at least 50% renewable energy, 50%
and cooling is eligible, if the system meets the definition of
waste heat, 75% cogenerated heat or 50% of a combination of such
efficient district heat/cool systems in the EU Energy Efficiency
energy and heat”.
Directive”
Operating such infrastructure with e.g. 100 % blue hydrogen (ref. e.g.
However, this threshold would effectively exclude some sources
H21 North of England) would then not be eligible – despite being able to
that could deliver heating and cooling with far lower GHG
deliver H&C with a far lower carbon footprint than the definitions above.
emissions.
This is probably not the intention and it seems not to be consistent with
the other principles and framework of the TEG report.
Cogeneration of Heat/
266-268
Technical screening criteria should reflect a gradual approach
We understand that if power generation has CCS (geological storage)
Cool and Power from
and efficiently incentivise transitional efforts. Setting thresholds
facilities, it is eligible under taxonomy. We welcome this approach.
Gas
and ceilings too low at the beginning could de facto exclude
We also support the fact that if the power generation is from H2 fired
relevant activities regardless of both their potential contribution
power plant, the H2 must come from a blue H2 source, or green H2.
to the transition and their ability to improve their own
environmental performance, running the risk of unintentionally
creating a niche market. Therefore, the threshold level should be
technology-neutral and based on GHG emission reductions on
life-cycle analysis to be achieved, and not on technology. In our
view, the single threshold proposed by the TEG is not appropriate
for the transitional activities. We, therefore, encourage the
Commission to determine a methodology for establishing
dedicated thresholds for these activities. For example, the
transitional activity threshold should be aligned with existing
legislation such as the Electricity Regulation. Such an alignment
will ensure a trajectory for meeting the targets and ensure
inclusion of activities that contribute to emission reduction
including retrofitting of existing processes. The threshold can
be reduced with time but should not be set too low too early
as otherwise suitable technology, that can contribute to the
transition or could be retrofitted, will be excluded already at this
stage.
10
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Rationale
Supporting documents
Production of Heat/Cool
278-280
Technical screening criteria should reflect a gradual approach
We understand that if power generation has CCS (geological storage)
from Gas Combustion
and efficiently incentivise transitional efforts. Setting thresholds
facilities, it is eligible under taxonomy. We welcome this approach.
and ceilings too low at the beginning could de facto exclude
We also support the fact that if the power generation is from H2 fired
relevant activities regardless of both their potential contribution
power plant, the H2 must come from a blue H2 source, or green H2.
to the transition and their ability to improve their own
environmental performance, running the risk of unintentionally
creating a niche market. Therefore, the threshold level should be
technology-neutral and based on GHG emission reductions on
life-cycle analysis to be achieved, and not on technology. In our
view, the single threshold proposed by the TEG is not appropriate
for the transitional activities. We, therefore, encourage the
Commission to determine a methodology for establishing
dedicated thresholds for these activities. For example, the
transitional activity threshold should be aligned with existing
legislation such as the Electricity Regulation. Such an alignment
will ensure a trajectory for meeting the targets and ensure
inclusion of activities that contribute to emission reduction
including retrofitting of existing processes. The threshold can
be reduced with time but should not be set too low too early
as otherwise suitable technology, that can contribute to the
transition or could be retrofitted, will be excluded already at this
stage.
CCS (section on water,
289-291
We agree CCS is a key technology to reach the EU carbon
We understand that if power generation has CCS (geological storage)
sewerage, waste,
neutrality objective by 2050.
facilities, it is eligible under taxonomy. We welcome this approach.
remediation)
We also support the fact that if the power generation is from H2 fired
power plant, the H2 must come from a blue H2 source, or green H2.
Direct Air Capture of
311-312
We support this section.
CCS is critical to achieving negative emissions when applied to
CO2
bioenergy, which is viewed by the IPCC as crucial to achieving the 1.5 °C
objective under the Paris Agreement.
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Capture of
313-315
We support this section. CCS with power generation is key.
The ISO/CD 27919-2 refers to integration in a power station and should
Anthropogenic
Delivery of CO2 transportation and storage networks is key to
be removed where it is not relevant. Capturing of CO2 is relevant for a
Emissions
meet the emissions reduction targets.
number of activities and is not limited to power stations. There is not an
However, an ISO standard linked to carbon capture for power
ISO standard for carbon capture in general.
generation is proposed as metric for several activities for which it
The addition to this last TEG report of “ISO/TR 27912 - Carbon dioxide
is not relevant: ISO/CD 27919-2 - Carbon dioxide capture – Part 2: capture – Carbon dioxide capture systems, technologies and processes”
Evaluation procedure to assure and maintain stable performance
is an improvement and a better standard for carbon capture, but should
of past-combustion CO2 capture plant.
replace the ISO/CD 27919-2 and not add to it.
We agree with the observation that the efficiency of power
We would like to draw the Commission’s attention to the fact that
generation plants and capture plants is increasing and will
there is ongoing work by equipment manufacturers, universities and
continue to be a focus of many suppliers.
others, with aim of improving both power plant efficiencies and capture
plant efficiencies. Put together, be it via the Allam cycle or combined
cycle technology, this work is chipping away at the energy efficiency
challenge. Therefore, it is suggested that the TEG note that enhanced
efficiencies in power generation with carbon capture facilities are being
delivered through various lines of technology development, and are
not limited to the work of a single supplier/technology developer. The
energy intensity of carbon capture is being reduced.
Transport of CO2
316-318
We support this section, in particular that all modes of CO2
Under the TEG proposal, it could be understood that only transport
transportation are recognised, and we request that any
modalities which lead directly to an eligible permanent sequestration
combination of transportation modes is eligible as long as they
site are eligible. The threshold needs to include for instance ship-
meet the leakage requirements and arrive at a permanent
to-ship or ship-to-well, as future options which are currently being
sequestration site.
developed in Europe.
As drafted, there is ambiguity under Metric and Threshold
The 0.5% CO2 leakage rate threshold for the transport of CO2 by ship
section:
might pose a challenge to enabling large scale shipping of CO2. The
“Transport modalities that contribute to the transport of CO2
performance threshold might mean that there is a need for more
to eligible permanent sequestration sites are eligible, only if the
complex ship-bourne systems to be developed and deployed, which
asset operates below the leakage/tonne of CO2 threshold.”
might result in a possible delay or limitation to the deployment of large
scale shipping of CO2 from industrial clusters as part of the CCS chain
We also propose to remove the following statement under
to reduce emissions in Europe. This area is being investigated and a
“metric & threshold”:
Assets or activities that enable carbon
better understanding is anticipated later in 2020. We would welcome the
capture and use (CCU) will deem all the connected elements of an
opportunity to share findings with the Platform when available.
existing transport network ineligible.
We believe the Commission should include the role of CCU into the
delegated acts to be published by the end of 2020.
Not including CCU now may, through limiting/stopping access to
financing, slow down technical development of CCU which could provide
valuable means to meet the net zero target. Perhaps more importantly,
it may also prevent the development of the rest of the associated CO2
transport and storage network which may send most of the CO2 to
geological storage.
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Permanent
319-320
We support this section. We support the reference to ISO 27914:2017.
It is important that the periodical review is performed, and the revision
GCCSI’s
Global Status of CCS
Sequestration of
However, we believe the following statement under DNSH
of the ISO 27914 that is applicable is updated so that learning from
report
Captured CO2
assessment should be modified:
storage activities is accounted for in this.
• the long-term lack of geological containment of the reservoirs,
CO2 storage in saline aquifers is a mature technology which is in
central issues regarding the monitoring and the interrelation of
operation worldwide at >5 large-scale CCS projects
carbon with physical, chemical and geological conditions in the
CCS is a proven technology. There are 19 large-scale CCS facilities in
reservoir is still a debated argument (change for → discussed
operation globally.
however the safety of CO2 storage may be assured with the
implementation of specific rules and requirements.
(similar language exists in the section on climate change
adaptation, therefore, similar change should be made )
Transport
321-358
Transport of low carbon and blended fuels should be eligible,
The transition to zero-emission mobility will take time and during the
Several studies showing that there
especially if meeting the criteria mentioned in the report.
transition, the use of blends will be critical to delivering the GHG
are different pathways / solutions
The threshold level should be technology-neutral and be based
reduction ambitions. Therefore, freight rail transport that transports
to decarbonize maritime transport
on GHG emission to be achieved and not technology types. It
blends of fossil and sustainable fuels should be eligible. The TEG
DNV-GL (2018). Energy Transition
should allow all energy types that meet the threshold to be
report’s restriction to narrow sustainable raw materials only to those
Outlook report. Main Report.
accepted. The threshold can be reduced with time but should not
listed in Part A of Annex IX (in RED II), would differ significantly from the
www.Dnvgl.com
be set too low too early or suitable technology that can contribute
sustainability definitions in the RED II. Under RED II, any biofuel meeting DNV-GL (2018). Energy Transition
to the transition will be excluded.
the sustainability criteria are sustainable, not only biofuels made from
feedstock listed in Annex IX, Part A. Moreover, when compared with the
Outlook report. MARITIME —
Establishing only thresholds on tank-to-wheel (tailpipe) values is
RED II, the criteria would remarkably narrow the raw material base for
FORECAST TO 2050.
inappropriate as it does not take into account the GHG emissions
replacing conventional fuels. This cannot be considered acceptable,
www.Dnvgl.com
associated with the production of the fuel or the vehicles and so
especially when taking into account the need for rapid and significant
https://www.lr.org/en/insights/
it will give an inaccurate picture of the true GHG performance
emission reductions in the transport sector (including aviation and
global-marine-trends-2030/
of each drive train (energy and vehicle) Therefore, tailpipe
maritime). All sustainably produced raw materials as allowed by RED II,
zero-emission-vessels-transition-
values should at least be replaced by an LCA/WTW metric. The
incl. waste and residue materials are therefore needed.
pathways/
thresholds to be used should be consistent with those defined in
the Clean Vehicle Directive as this already sets out the definition
The Communication ‘Clean Planet for All’ shows that within the NZE
According to the IEA WEO 2019 and
of a clean vehicle for LDV and HDV.
scenarios, biofuels and synthetic fuels (liquid and gas) will be needed
the Commission’s ‘Clean Planet
in those sectors that will continue to need high-density energy. Until
for All’, liquid fuels will still be
Section 6.3 Public transport: Through the introduction of a
there is sufficient volume to use 100% drop-in biofuels and synfuels
needed in 2050, at least for the
uniform threshold (50gCO2/km), a number of investments
there will be a continued need to use these as blends. Therefore, the
sectors where there are currently
delivering emission reductions in public transport will be
Taxonomy definitions should not preclude infrastructure dedicated
no alternatives. According to the
excluded.
to the transport and use of blends. In the context of the transitional
IPCC Special Report on the impacts
Section 6.5 Passenger cars and commercial vehicles: We should
activities, the following ones should be taken into account:
of global warming of 1.5°C, titled
keep consistency across the legislation. If not then FCEV and
• Natural gas and Europe’s natural gas infrastructure play a decisive
‘Mitigation Pathways Compatible
BEVs should also only qualify when their production emissions
role in climate mitigation. Europe can only benefit from natural gas
with 1.5°C in the Context of
are below a certain threshold as some battery technology is more
if it has a functioning, safe and efficient gas infrastructure. To reach
Sustainable Development’ - in
carbon intensive than others.
the European Union’s climate targets gas technologies, including the
the 1.5 scenarios, fossil share
infrastructure, must be considered as sustainable technologies. It is
of primary energy in 2050 is
widely agreed upon that in Europe the most efficient way to reduce
approximate ~33%. (Chapter 2,
CO2 emissions significantly is to replace coal with gas. When natural
page 133).
gas replaces coal, 15 percent of total GHG emissions can be saved
throughout Europe – in the electricity sector even 40 percent. This
positive contribution must be taken into account accordingly.
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• Furthermore, natural gas together with its infrastructure is central to gas in
mobility applications. Compressed natural gas (CNG) can contribute to a low
carbon economy, as it is currently the most cost-effective way to significantly
reduce road traffic emissions. Gas-powered vehicles save 20 to 30 percent
CO2 compared to diesel or petrol and emit hardly any fine particles. Also,
using LNG as fuel for trucks and ships can lower GHG emissions notably as
well. The current climate targets can be reached only if natural gas
and its infrastructure are fully utilized and understood as sustainable.
Eligible infrastructure should include biofuels, PtX synthetic fuels
(produced from blue H2 and CO2) plants as these can produce very low
carbon fuels that will be needed both in the transition as blends and
eventually as final fuels in hard to decarbonize sectors such as aviation,
marine, and heavy-duty road transport. It is not clear what is meant by
excluding Infrastructure that is predominantly dedicated to the transport of
fossil fuels (more than 50%). Many alternative fuelling locations could likely
be co-located on retail sites and it is possible the proposed exclusion could
preclude the development of these alternative fuel locations on retail sites.
The threshold can be reduced with time but should not be set too low too early
or suitable technology that can contribute to the transition will be excluded.
This is particularly true for heavy-duty transport where battery-electric
and hydrogen driven trains are still at a development stage and costly. In
the short to medium term, biofuels and biogas represent a cost-effective
pathway to decarbonization of heavy-duty transport and therefore should be
supported. Efficient ICE and gas vehicles that can use these fuels should also
be supported. Freight transport dedicated to the transport of blended fuels
should not be excluded as it will also contribute to the overall GHG emission
reduction from freight transport. If it is excluded, then the transport of
blended fuels could continue using higher emission freight transport.
The Taxonomy should not exclude barges that use blends during the transition
to the use of 100% advanced biofuels or RFNBOs, as these vessels will be
able to use the 100% advanced biofuels and RFNBO when they are available in
sufficient quantities. As the average age of a barge is 20-30 years, this would
allow investment in new barges now and this will have the added benefit
of better efficiency and air quality benefits immediately. The production of
biomass, biogas, and biofuels should not be reduced to only Annex IX A of the
2018 /2001. The TEG report considers eligible only the production of advanced
biofuels as per Art 2.34, RTFNBOs per Art. 2 (36) and certified low-ILUC risk
biofuels, in line with the requirements of RED II. The approach in the TEG
report would differ significantly from the sustainability definitions in the RED
II. Under RED II, any biofuel meeting the sustainability criteria are eligible,
not only biofuels made from feedstock listed in Annex IX, Part A. Moreover,
when compared with the RED II, the criteria would remarkably narrow the
raw material base for replacing conventional fuels. This cannot be considered
acceptable, especially when taking into account the need for rapid emission
reductions in the transport sector (including aviation and maritime). All raw
materials as allowed by RED II, incl. waste and residue and recycled materials
are therefore needed and recycle carbon fuels (RCF) should also be included.
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Information and
359-367
We support the TEG’s recommendation for the Commission to
Further to the examples listed, for transport, significant opportunities to
communications
work on the criteria to support more software investments that
improve emissions can be enabled by software innovations. We suggest
will digitally enable GHG reduction.
to include further examples to illustrate this point:
Smart charging/vehicle-to-grid, telematics to inform better driving,
locational services to enable autonomous/shared vehicles and more
on-demand last mile solutions.
Even in the Sector on Forestry projects, issues relating to long term
monitoring requirements over a vast geography can be enabled by
digital solutions.
Forestry
40-102
We support and are encouraged by the inclusion of forestry as
a sector given the significant potential such projects have to
contribute to EU’s NZE ambitions, as outlined in the IPCC report.
For all categories of Forestry Projects, we agree that
Additionality and Permanence will be important criteria to ensure
environmental integrity of such projects. One comment on the
baseline:
Criterion 2: Verified GHG Baseline (Additionality) for all categories
of Forestry (e.g. pg.45) – it would be useful to create a list
of approved verification bodies and standards that meet the
required criteria to be made available to investors on public
domain.
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