From:
To:
EC PRESIDENT VDL;
(CAB-VON DER LEYEN);
(CAB-VON DER
LEYEN);
(CAB-VON DER LEYEN);
(CAB-VON DER
LEYEN)
Cc:
(BEUC);
GAUER Celine (SG-RECOVER); WATSON John (SG);
ARBAULT Francois (DEFIS)
Subject:
Letter to the Commission on the EU Taxonomy Delegated Act and our membership in the EU Platform on
Sustainable Finance
Date:
mercredi 31 mars 2021 13:08:38
Dear President von der Leyen,
We write to inform you that a group of scientists and experts, who have been appointed to
the EU Platform on Sustainable Finance, are writing to express the deep concern that they,
and the organisations they represent, feel about the contents of the climate Taxonomy
Delegated Act which was recently leaked, and the process through which it was
unacceptably weakened compared to the November version.
Please find our letter enclosed.
We believe the new draft's provisions are in breach of the Taxonomy Regulation in several
instances. In particular, criteria for forestry, bioenergy, and fossil gas are in clear
contradiction to climate science.
These criteria would openly discredit the European Green Deal.
Therefore, we call for the removal of fossil gas from the Taxonomy. We also urge the
Commission to remove forestry and bioenergy from the current Delegated Act, as
done with agriculture, to give more time to find credible climate criteria that allow
the Taxonomy to take its rightful place as a science-based guide for sustainable
investments.
We recommend that the Commission works with a progressive majority in the European
Parliament that supports climate science: this appears to offer the only realistic pathway to
approving a credible Taxonomy. The current approach of the Commission is highly risky,
as we believe it will face a 'coalition of the unlikely' in Parliament that will reject the Act.
Should politics and lobbying prevail over science, it is our responsibility to inform
you that we would be forced to reconsider our contribution to the Platform.
Please also find enclosed preliminary technical analysis to substantiate our concerns.
Yours sincerely,
On behalf of the letter's signatories:
, BEUC
, BirdLife Europe and Central
Asia
Manager, ECOS
, Transport & Environment,
, WWF European
Policy Office
Operational Risk, Banking & Finance, Smurfit
Graduate Business School, University College Dublin [Member in Personal Capacity]
Queen's University Belfast and
Academic-in-Residence, Agent Green The Club of Rome and Advisory Board Member,
ClimateKIC
| WWF European Policy Office | 123 rue du Commerce,1000
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@wwf.eu
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Ref. Ares(2021)2235719 - 31/03/2021
31st March 2021
Dear President von der Leyen,
Dear Executive Vice-Presidents Timmermans and Dombrovskis,
Dear Commissioner McGuinness,
We, a group of scientists and environmental and consumer experts appointed to the EU
Commission’s Platform on Sustainable Finance, are writing to express the deep concern that we
and the organisations we represent feel about the contents of the draft climate Taxonomy
Delegated Act which was leaked last week, and the process through which it was significantly
and unacceptably weakened compared to the November version.
We believe the new draft’s provisions are in breach of the Taxonomy Regulation in
several instances, particularly the definition of transitional activities in Article 10.2 and the
requirement in Article 19 that technical criteria be ‘based on conclusive scientific evidence’.
In particular, criteria for forestry, bioenergy, and fossil gas are in clear contradiction to
climate science. These criteria are not simply weak: they are counter-productive and label as
“sustainable” activities that may cause significant harm to the climate and the environment. If
the leaked text for these sectors were adopted, the Taxonomy would become a greenwashing
tool instead of being the gold standard in the fight
against greenwashing that it was promised to
be. Its rol out would be even more harmful to investors than the current situation, as they would
reasonably expect the taxonomy to have set high standards of sustainability. It would also
penalise sectors which are making real efforts to align with the Paris Agreement.
At a broader
level it would openly discredit the European Green Deal, leading to significant reputational
damage for the EU.
The process to create the climate Taxonomy lasted for three years. It involved experts from
many industries, financial institutions, civil society and academia working in the Technical Expert
Group to develop technical screening criteria in line with science. This hard work has been
dismissed in a last-minute, opaque, politicised process. This politicised process is already
hampering progress within the Platform’s work on developing technical screening criteria for the
remaining four objectives. We are concerned that the time and effort we invest - pro-bono - in
developing science-based criteria could be undone by lobbying behind the scenes without the
same due attention, debate and evidence required in the Platform.
Hence, as demanded by 226 scientists, financial institutions and civil society groups,
fossil gas
must be removed from the EU science-based Taxonomy.
Similarly, the current criteria
that classify forestry and bioenergy as “significantly contributing to climate mitigation”
have no scientific basis. While the leaked draft shows widespread and unjustified watering
down of criteria, several of which had already been weakened compared to the TEG
recommendations, these three sectors represent a red line that would fatal y and openly
undermine the entire taxonomy’s credibility.
We therefore urge the Commission to remove
forestry and bioenergy from the current Delegated Act, as done with agriculture, to give
more time to the discussion on land-based sectors in order to find adequate, credible
climate criteria that allow the Taxonomy to take its rightful place as a science-based
guide for sustainable investments.
The new draft puts us in an extremely difficult position: this politicised process, and the
overriding of the experts’ work, questions the very purpose of the Platform and the value of our
work in it, creating reputational risks for us and the organisations we represent.
Should politics
and lobbying prevail over science, it is our responsibility to inform you that we would be
forced to reconsider our contribution to the Platform.
Yours sincerely,
BEUC
BirdLife Europe and Central Asia
ECOS
Director of Sustainable Finance
WWF European Policy
Office
Operational Risk, Banking & Finance, Smurfit
Queen's University Belfast and
Academic-in-Residence, Agent Green
, The Club of Rome and Advisory Board Member,
ClimateKIC
Ref. Ares(2021)2235719 - 31/03/2021
Joint CSO Analysis and Recommendations
Leaked Delegated Act on Climate Mitigation and Adaptation
Taxonomy
March 2021
TABLE OF CONTENTS
Introduction
I. SCORECARD: MARCH LEAK vs DECEMBER DRAFT Page 6
II. NEW: ANALYSIS OF MARCH LEAK
1. Agriculture and forestry
2. Environmental protection and restoration activities
3. Manufacturing
4. Energy
6. Transport
7. Construction and real estate activities
INTRODUCTION
This is a document that reflects the collective analysis of a large network of NGOs and think tanks working
on the EU taxonomy. The main objective of this document is to update civil society’s analysis of the
Taxonomy Delegated Act on the basis of the ‘March leak’.
On the basis of this analysis, we issue recommendations to improve the leaked DA.
This is not a statement of position by the organisations and experts who have contributed. It does
not commit organisations or experts to the views expressed by others. Experts will comment on the sections
they have analysed but should not be understood to be endorsing comments made in other sections. Some
experts have provided contact information for the section they analysed and are pleased to be contacted
for further discussion of their area.
I.
SCORECARD OF ACTIVITIES ANALYSED IN THE DRAFT DA
Green - good criteria
Orange - criteria need improvement
Red - criteria problematic, require significant changes (or exclusion from taxonomy)
November
1. AGRICULTURE AND FORESTRY
March 2021
2020
1.1. Growing of non-perennial crops
Removed
1.2. Growing of perennial crops
Removed
1.3. Livestock production
Removed
1.4. Afforestation
1.5. Rehabilitation and restoration of forests
1.6. Reforestation
1.7. Improved forest management
1.8. Conservation forestry
2. ENVIRONMENTAL PROTECTION AND RESTORATION ACTIVITIES
2.1. Restoration of wetlands
New
3. MANUFACTURING
3.2. Manufacture of equipment for the production of hydrogen
3.4. Manufacture of energy efficiency equipment for buildings
Not assessed
3.5. Manufacture of other low carbon technologies
Not assessed
3.6. Manufacture of cement
Not assessed
3.7. Manufacture of aluminium
Not assessed
3.8. Manufacture of iron and steel
Not assessed
3.9. Manufacture of hydrogen
3.13. Manufacture of organic basic chemicals
Not assessed
3.14. Manufacture of anhydrous ammonia
Not assessed
3.16. Manufacture of plastics in primary form
4. ENERGY
4.26.
(New) Replacement of existing combined heat/cool and
power facilities using solid or liquid fossil fuels or replacement of
existing separate heat facilities using solid or liquid fossil fuels or
Not included
replacement of existing separate power facilities using solid or
liquid fossil fuels with high-efficiency combined heat/cool and
power facilities using gaseous and liquid fuels
4.27
(New) Replacement of heating/cooling facilities using solid or
liquid fossil fuels by heating/cooling facilities using gaseous and
Not included
liquid fuels in efficient district heating and cooling
4.3. Electricity generation from wind power
Not assessed
4.4. Electricity generation from ocean energy technologies
Not assessed
4.5. Electricity generation from hydropower
4.7. Electricity generation from gaseous and liquid fuels
4.8. Electricity generation from bioenergy
4.9. Transmission and distribution of electricity
Not assessed
4.13. Manufacture of biogas and biofuels for use in transport
Not assessed
4.16. Installation of electric heat pumps
Not assessed
4.20. Cogeneration of heat/cool and power from bioenergy
4.24. Production of heat/cool from bioenergy
6. TRANSPORT
6.1. Passenger interurban rail transport
Not assessed
6.2. Freight rail transport
Not assessed
6.3. Urban, suburban and road passenger transport
6.4. Operation of personal mobility devices
New
Not assessed
6.5. Transport by motorbikes, passenger cars and light commercial
Not assessed
vehicles
6.6. Freight transport services by road
Not assessed
6.7. Inland passenger water transport
Not assessed
6.8. Inland freight water transport
Not assessed
6.9. Retrofitting of inland water passenger and freight transport
New
Not assessed
6.10. Sea and coastal freight water transport
New
Not assessed
6.11. Sea and coastal passenger water transport
Not assessed
6.13. Infrastructure for personal mobility
Not assessed
6.14. Infrastructure for rail transport
Not assessed
6.15. Infrastructure enabling low-carbon road transport
Not assessed
7. CONSTRUCTION AND REAL ESTATE ACTIVITIES
7.2. Renovation of existing buildings
7.3. Installation, maintenance and repair of energy efficiency
Not assessed
equipment
8. INFORMATION AND COMMUNICATION
8.1. Data processing, hosting and related activities
Not assessed
8.2. Data-driven solutions for GHG emissions reductions
Not assessed
9. PROFESSIONAL, SCIENTIFIC AND TECHNICAL ACTIVITIES
9.1. Research, development and innovation
New
Not assessed
00. ADDITIONAL ANALYSIS
Separate
Separate
Nuclear
Process
Process
Clarification of whether an activity is 'transitional' or not (new)
New
Not assessed
Cross-cutting Do no significant Harm criteria for Biodiversity
Not assessed
Ensuring that adaptation criteria is not used as loophole
Not assessed
GHG emissions accounting methodologies
Not assessed
II. MARCH LEAK - ANALYSIS ACTIVITY BY ACTIVITY
I. ANALYSIS ACTIVITY BY ACTIVITY
1. AGRICULTURE (Removed from March leak) AND FORESTRY
Growing of non-perennial crops Removed from March leak
Growing of perennial crops
Removed from March leak
Livestock production
Removed from March leak
General remarks on Forestry activities in the March leak
The section on the forest activities (1.1 Afforestation, 1.2 Rehabilitation and restoration of forests, 1.3
Reforestation, 1.4 Forest Management), compiles a list of criteria that describe normal, existing forestry
practices - business as usual - as sustainable. These sections
could be climate-friendly, but only if the
activities identified are innovative, that is when they are restricted to and defined as truly future-orientated
measures.
We recommend that forestry criteria are postponed in the taxonomy until the debate is mature, just
as was done for agriculture. We make recommendations to improve the forestry section in the Taxonomy:
these recommendations serve to highlight the significant problems in the March leak, which must be
addressed in a separate discussion that is not linked to the Taxonomy.
Carbon stock: The carbon stock must be increased in all forest units (not only on average). Sustainability
with regard to carbon stock means using less than the annual growth – for climate change mitigation this is
relevant and applicable at every forest unit. On a reliable scientific basis, the measures chosen in the EU-
Taxonomy should reduce carbon releases with positive impact on biodiversity. Instead, the draft of the EU
taxonomy allows for all negative forest management issues to be continued.
Clear-cuts: Clear-cuts must be forbidden as the carbon release from soils is not acceptable.
Standards referenced: “Forest Europe” is the only forestry-related approach/concept that is recommended
and cited in the revised text: 18 times. The “Forest Europe” approach stands for criteria that reflect normal
forestry and are forest industry-friendly. European-wide nature conservation is not substantially mentioned
in the text. FSC is not mentioned, Natura2000 is mentioned just once in the context of wind energy, despite
its being the most important EU tool for maintaining forest ecosystems.
Repeated reference to national law to define sustainability: The text refers repeatedly to national laws,
existing forest management approaches and plans. For example, “
The sustainability of the forest
management systems, as documented in the plan referred to in point 1.1, is ensured by choosing the most
ambitious through one of the following approaches: (a) the forest management matches the applicable
national definition of sustainable forest management; (b) the forest management matches the Forest
Europe definition of sustainable forest management, and the Pan-European Operational Level Guidelines
for Sustainable Forest Management;”. This choice does not lead to any more sustainable contributions in
forestry and allows all practices that release carbon at scale from forests (by clear-cutting, soil preparation
and water drainage).
Weak or non-existent audit: The description of the audit implies a non-effective control with all the
weaknesses we see in the implementation of the EUTR and PEFC. The description makes it appear that
no control is envisaged.
Holdings under 25 ha: The March leak has inserted a condition removing requirements for any climate
benefit analysis for holdings under 25 ha. This creates extensive opportunities for greenwashing.
Fertilisers: The March leak has established that the use of fertilisers is now permitted. Furthermore, the
destruction of soil structure is now permitted. This is extremely harmful.
Forest control plans: The March leak has removed the requirement for compliance with forest plan
controls. This allows unverified claims to be made.
Do No Harm on biomass supply: The March leak has, in some chapters, introduced a ‘Do No Significant
Harm’ criterion for circular economy which could prevent the restoration of more natural forest if it means
reducing supply of biomass.
The criterion reads as follows:
The silvicultural change induced by the activity on the area covered by the activity
is not likely to result in a significant reduction of sustainable supply of primary forest biomass suitable for the
manufacturing of wood-based products with long-term circularity potential. This criterion can be demonstrated
through the climate benefits analysis.
Additionality and Permanence: The March leak has entirely removed requirements for additionality and
permanence. With the condition that the area remains classified as “forest” under national law, it would be
possible to clear cut to an extent that removes all trees in the area. Even in situations where the forest will
never grow back, all that is required is for it to be still classified as forest land, without it needing to have
trees on it.
Forestry is in the wrong section: Forestry should be moved to “Environmental Protection and Restoration
activities (chapter 2). Forest management and protection has to be released from the agricultural approach
– forests have to be considered as an important part of our environment that needs protection and
restoration.
We recommend postponing forestry criteria to permit further analysis and a mature discussion to
develop, just as the Commission has done for agriculture. This can be done in the EU Forestry
Strategy and in the Platform, which is currently examining land-based sectors extensively.
1.1. Afforestation
Have criteria improved/worsened/significantly worsened compared to December? Are criteria now good,
needing improvement, or bad?
Criteria have been worsened.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Criteria may be in breach of Article 19 requirement that criteria be ‘based on conclusive evidence’.
Technical assessment - what are the key problems?
Under 25 ha there is no requirement for a climate benefit analysis.
Afforestation measures that release carbon such as soil preparation are not excluded.
Areas that are drained and now suitable for tree growth do not fulfill the definition of a sustainable
afforestation and should be excluded.
Final y, safeguards are much too weak. The section on “Guarantee of performance” is written in a way that
the conventional transformation of forests towards more “forest-agricultural approaches” is possible.
The proposed criteria on audit risk resulting in no audit or control.
Recommendation to Member States and Commission.
Postpone forestry criteria as a whole from the Delegated Act to give more time to the discussion, like the
European Commission did for the agricultural sector: the issue is complex and controversial and the
Platform is working on the sector to shape environmental, non-climate, criteria.
The proposed changes in the March leak, as well as those already made in the November 2020 Delegated
Act, will lead to more carbon release from the forest sector.
The current draft is extremely dangerous for our climate and biodiversity. For the forest sector, in particular,
the danger is that all activities wil continue as they currently are, moving the Taxonomy’s approach from
forward-looking to ‘business as usual’. Carbon stock volumes wil be reduced and carbon release from
wood use will increase.
Afforestation must be restricted to natural regeneration. Non-native tree-species as well as GMOs
should be excluded completely.
Afforestation must be restricted to clearly degraded areas.
Areas that are drained and now suitable for tree growth do not fulfill the definition of a sustainable
afforestation and should be excluded.
Contact details
birdlife.org
@wwf.de
1.2. Rehabilitation and restoration of forests
Have criteria improved/worsened/significantly worsened compared to December?
Criteria have worsened.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Criteria may be in breach of Article 19 requirement that criteria be ‘based on conclusive evidence’.
Technical assessment - what are the key problems?
The safeguards introduced are much too weak.
The section on “Guarantee of performance” is written in a way that the conventional transformation of
forests towards more “forest-agricultural approaches” is possible.
The proposed audit is no audit or control.
Recommendation to Member States and Commission.
Remove forestry as a whole from the Delegated Act to give more time to the discussion, like the EC did for
the agricultural sector: the issue is complex and controversial; and the Platform is working on the sector to
shape environmental non-climate criteria.
The proposed changes in the March leak, as well as those proposed in the November draft, will lead to
more carbon release from the forest sector.
Forest restoration and rehabilitation must be restricted to clearly degraded areas.
Contact details
@birdlife.org
@wwf.de
1.3. Reforestation
Have criteria improved/worsened/significantly worsened compared to December?
Criteria have been worsened.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Criteria may be in breach of Article 19 requirement that criteria be ‘based on conclusive evidence’.
Technical assessment - what are the key problems?
The description of the audit implies a non-effective control with all the weaknesses we see in the
implementation of the EUTR and PEFC. The description makes it appear that no control is envisaged.
In order to reduce costs, audits can be performed together with any forest certification, climate certification,
or other audit. This is extremely weak.
Recommendation to Member States and Commission.
Postpone forestry as a whole from the Delegated Act to give more time to the discussion, like the EC did
for the agricultural sector: the issue is complex and controversial; and the Platform is working on the sector
to shape environmental non-climate criteria.
It is better to remove the EU-Taxonomy’s forestry criteria because the current draft is too dangerous for
climate and biodiversity.
For the forest sector, the danger is that everything will continue as it is. The
carbon stock volumes will be reduced and the carbon release by wood use will increase.
The section on reforestation should without question be postponed.
Contact details
@birdlife.org
1.4. Forest Management
Have criteria improved/worsened/significantly worsened compared to December?
Criteria have been worsened.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Criteria may be in breach of Article 19 requirement that criteria be ‘based on conclusive evidence’.
Technical assessment - what are the key problems?
The word “Improved” was deleted in the title. It is clear that there is no ambition to promote more
sustainable forestry in the EU taxonomy any longer.
Calculation of Greenhouse Gas benefits of forest management are now done not against current carbon
stock but against a “business as usual” scenario. This provides a clear loophole for greenwashing: under
the assumption that all the forest will be logged completely, any logging that is actually undertaken and
which does not log the entire forest will be better and hence may be classified as green.
Climate benefits are calculated over the next 100 years or
more if the “forest cycle” is longer. This sort of
time frame is completely irrelevant for the achievement of any EU climate targets. Under this criterion, it
would be possible to have a net source of emissions until 2050 and beyond and still be classified as
contributing to climate mitigation.
Forest holdings under 25 ha are not required to perform a climate benefit analysis but can simply claim they
are sustainable.
Recommendation to Member States and Commission.
Remove forestry as a whole from the Delegated Act to give more time to the discussion, like the EC did for
the agricultural sector: the issue is complex and controversial; and the Platform is working on the sector to
shape environmental non-climate criteria.
It is better to remove the EU-Taxonomy’s forestry criteria because the current draft is too dangerous for
climate and biodiversity.
For the forest sector, the danger is that everything will continue as it is. The
carbon stock volumes will be reduced and the carbon release by wood use will increase.
The sections on forest management must be without question postponed.
Contact details
@birdlife.org
@wwf.de
1.5. Conservation forestry
Have criteria improved/worsened/significantly worsened compared to December?
Criteria have been substantially worsened.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Criteria may be in breach of Article 19 requirement that criteria be ‘based on conclusive evidence’.
Technical assessment - what are the key problems?
A substantial worsening has occurred. Logging is added to “conservation forestry”.
Recommendation to Member States and Commission
Remove forestry as a whole from the Delegated Act to give more time to the discussion, like the EC did for
the agricultural sector: the issue is complex and controversial; and the Platform is working on the sector to
shape environmental non-climate criteria.
Contact details
@birdlife.org
@wwf.de
2. ENVIRONMENTAL PROTECTION AND RESTORATION ACTIVITIES
Recommendation: Forest issues should be moved to this section to separate forest management
from agriculture issues.
2.1. Restoration of wetlands
Have criteria improved/worsened/significantly worsened compared to December?
Criteria have worsened significantly.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Technical assessment
There are three weakenings:
-
The climate benefit analysis needs to demonstrate that the net balance of GHG emissions and
removals generated by the activity over a period of 30 years is lower than a baseline - while it was
20 years in the previous draft. More generally this approach is problematic as it compares
emissions reduction with the business-as-usual practices that would have occurred in the absence
of the activity: for example this means that if the business-as-usual practices were large-scale
extraction of peat in a peatland, then a new activity extracting only half of the peat will be deemed
“green” wetland restoration - while in fact it is only a slower destruction of the peatland, not
necessarily contributing in any way to the
restoration of the peatland (peat extraction is not
forbidden and should only be “minimised”).
-
Holdings under 25ha are not required to perform a climate benefit analysis.
-
The activity of wetland restoration is now allowed to use fertilisers (DNSH criteria).
Recommendation to Member States and Commission
Reinstate the initial criteria from the December draft.
Contact details
@wwf.eu
3. MANUFACTURING
3.2. Manufacture of equipment for the production of hydrogen
Have criteria improved/worsened/significantly worsened compared to December?
Worsened.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Under Assessment.
Technical assessment - what are the key problems?
In the November DA, the wording was:
‘The economic activity manufactures
hydrogen electrolysis technologies’
Now, the new wording is:
The economic activity manufactures equipment for
the production of hydrogen compliant with the
Technical Screening Criteria set out in Section 3.10 of this Annex and equipment for the use of
hydrogen.
This creates two loopholes:
1. The new threshold makes it easier for hydrogen produced from natural gas to be taxonomy aligned.
The issue is that the same equipment can be used to produce hydrogen complying with the new
threshold or to produce the dirtiest hydrogen on the market.
2. This activity also mentions equipment for the use of hydrogen,which once again, can very well be
used with carbon intensive hydrogen produced from fossil fuels. With the current wording, adding
“equipment for the use of hydrogen” it must also be made clear that there is a requirement that the
equipment is in fact used for hydrogen, and not that simple compatibility with hydrogen would be
sufficient even if the equipment is in fact used for undefined low-carbon gases.
The previous wording ensured that only equipment for the manufacturing of hydrogen through electrolysis
was considered an enabling activity - which is the technology allowing the uptake of renewable hydrogen.
Recommendation to Member States and Commission.
Go back to the wording of the November draft DA
Contact details
@ecostandard.org
3.9. Manufacture of hydrogen
Have criteria improved/worsened/significantly worsened compared to December?
Worsened.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Under Assessment.
Technical assessment - what are the key problems?
The November DA (former activity 3.9) set the threshold at 80% reduction compared to the fossil fuel
benchmark, which is 94gCO2e/MJ (RED2). The threshold was therefore 18,8 gCO2/MJ = 2.256
tCO2eq/tH2 = 0.67gCO2/kWh.
The leaked DA (now activity 3.10) sets the new threshold at 70% reduction compared to the fossil fuel
benchmark for hydrogen-based synthetic fuels and 73.4% reduction for hydrogen.
On activity 3.9, the draft was amended to exactly match the demands from the hydrogen lobby
(https://www.euractiv.com/section/energy-environment/news/eu-taxonomy-shutting-the-door-to-grid-
powered-hydrogen-critics-say/). It makes it easier for hydrogen from natural gas + CCS to be eligible. Grid
powered hydrogen in countries where the grid is relatively decarbonised (e.g. France, thanks to the heavy
reliance on nuclear energy) is now taxonomy eligible.
This is one step further away from what NGOs called for as we asked for renewable hydrogen ONLY to be
taxonomy eligible.
With the added “synthetic fuels” to the Taxonomy, it must be specified the CO2 source for the production
of synthetic hydrocarbons. The source influences the climate impact of synthetic fuels but as they can be
avoided in conventional LCAs it needs to be specified.
Recommendation to Member States and Commission.
At best - amend wording to request that only renewable hydrogen is eligible.
At least - go back to the November draft.
Contact details
@ecostandard.org
3.16. Manufacture of plastics in primary form
Have criteria improved/worsened/significantly worsened compared to December?
Improved
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Under Assessment.
Technical assessment - what are the key problems?
The carbon intensity threshold for the use of chemical recycling was tightened in the leak. Also the activity
now clearly establishes a hierarchy between mechanical and chemical recycling.
Recommendation to Member States and Commission.
Stick to new draft or go back to TEG recommendations
Contact details
@ecostandard.org
4. ENERGY
4.5. Electricity generation from hydropower
Have criteria improved/worsened/significantly worsened compared to December?
They worsened.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Under Assessment.
Technical assessment
Main point: The revised DA fails to reintegrate the TEG recommendation that “construction of small
hydropower (<10MW) should be avoided.” Instead, the revised DA adds a technical screening criteria
stating that "
The electricity generation facility is a run-of-river plant and does not have an artificial reservoir".
However, most run-of-river plants are small plants, which produce negligible quantities of electricity, and
therefore do not make a substantial contribution to the climate mitigation objective. In addition, those small
run-of-river plants often have a larger ecological footprint per megawatt of power produced than that of
large hydropower plants. This is not fixing the problem.
Other comments:
● The revised DA lowered the DNSH criteria for new hydropower plants. It deleted the
specifications previously indicated for the items that a cost-benefit analysis should include, in
particular linked to the marginal quantity of energy generated; the impacts on water status or
potential upstream and downstream; the impacts on biodiversity, in particular on Protected
Areas, and the benefits of ecosystem services.
● The revised DA also lowered the DNSH criteria for hydropower plants in operation, saying that
mitigation measures should apply "where relevant and depending on the ecosystems naturally
present in the affected water bodies".
● The revised DA has failed to reintroduce the TEG recommendation to reduce the emission cap
every 5 years in line with a net-zero CO2e in 2050 trajectory; instead, the cap is maintained at
100gCO2e/kWh, which is far higher than median values reported by the IPCC (24
gCO2e/kWh) or International Hydropower Association (18.5 gCO2e/kWh).
Recommendation to Member States and Commission
We recommend:
●
Replacing the new criteria saying that "The electricity generation facility is a run-of-river
plant and does not have an artificial reservoir" with a criteria excluding hydropower facilities
of a capacity <10MW under the substantial contribution.
● Reintegrate the previous DNSH criteria for new hydropower plants specifying that that a cost-
benefit analysis should include an assessment of the marginal quantity of energy generated; the
impacts on water status or potential upstream and downstream; the impacts on biodiversity, in
particular on Protected Areas, and the benefits of ecosystem services.
Contact details
@wwf.eu
4.7. Electricity generation from gaseous and liquid fuels
Have criteria improved/worsened/significantly worsened compared to December?
Criteria remain the same, nominally. However, significant loopholes have been created.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Criteria in loophole are inconsistent with Article 10.2 and Article 19.
Technical assessment - what are the key problems?
The 100 g emissions threshold for power is maintained. However, a significant loophole has been created.
Recommendation to Member States and Commission.
Remove activities 4.26 and 4.27.
Contact details
@wwf.eu
4.8. Electricity generation from bioenergy
Have criteria improved/worsened/significantly worsened compared to December?
Criteria remain bad.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
The criteria are in breach of article 19, which outlines that criteria must be based on ‘conclusive scientific
evidence’.
Technical assessment - what are the key problems?
The criteria contravene article 19 of the Taxonomy regulation, which requires that criteria be devised on the
basis of ‘conclusive scientific evidence’. The classification of bioenergy as a ‘transitional’ activity has been
removed, despite extensive scientific evidence concerning its high emissions.
Furthermore, the March leak has not changed the provision that all forest biomass - wood sourced directly
from forests - may be burned as feedstocks and that almost any activity that is aligned with the flawed
Renewable Energy Directive is counted as sustainable, including the use of dedicated cropland.
This is completely unscientific. It contradicts all recent authoritative scientific research and the
Commission’s own impact assessment on bioenergy, which stated that the idea that forest biomass can
mitigate climate change is extremely problematic and acknowledged that demand for forest biomass is
hindering EU forests’ ability to act as a carbon sink.
Recommendation to Member States and Commission.
Remove bioenergy as a whole from the Delegated Act to give more time to the discussion, like the EC did
for the agricultural sector: the issue is complex and controversial and the process to elaborate the
Renewable Energy Directive III will commence in 2021 - creating the risk that the taxonomy criteria, which
are currently based on RED-II, could be rapidly overtaken by existing EU legislation.
Contact details
@wwf.eu
4.20. Cogeneration of heat/cool and power from bioenergy
Have criteria improved/worsened/significantly worsened compared to December?
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
The criteria contravene article 19 of the Taxonomy regulation, which requires that criteria be devised on the
basis of ‘conclusive scientific evidence’. The classification of bioenergy as a ‘transitional’ activity has been
removed, despite extensive scientific evidence concerning its high emissions.
Furthermore, the March leak has not changed the provision that all forest biomass - wood sourced directly
from forests - may be burned as feedstocks and that almost any activity that is aligned with the flawed
Renewable Energy Directive is counted as sustainable, including the use of dedicated cropland.
This is completely unscientific. It contradicts all recent authoritative scientific research and the
Commission’s own impact assessment on bioenergy, which stated that the idea that forest biomass can
mitigate climate change is extremely problematic and acknowledged that demand for forest biomass is
hindering EU forests’ ability to act as a carbon sink.
Recommendation to Member States and Commission.
Remove bioenergy as a whole from the Delegated Act to give more time to the discussion, like the EC did
for the agricultural sector: the issue is complex and controversial and the process to elaborate the
Renewable Energy Directive III will commence in 2021 - creating the risk that the taxonomy criteria, which
are currently based on RED-II, could be rapidly overtaken by existing EU legislation.
Contact details
@wwf.eu
4.24. Production of heat/cool from bioenergy
Have criteria improved/worsened/significantly worsened compared to December?
Criteria have worsened.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
The criteria contravene article 19 of the Taxonomy regulation, which requires that criteria be devised on the
basis of ‘conclusive scientific evidence’. The classification of bioenergy as a ‘transitional’ activity has been
removed, despite extensive scientific evidence concerning its high emissions.
Furthermore, the March leak has not changed the provision that all forest biomass - wood sourced directly
from forests - may be burned as feedstocks and that almost any activity that is aligned with the flawed
Renewable Energy Directive is counted as sustainable, including the use of dedicated cropland.
This is completely unscientific. It contradicts all recent authoritative scientific research and the
Commission’s own impact assessment on bioenergy, which stated that the idea that forest biomass can
mitigate climate change is extremely problematic and acknowledged that demand for forest biomass is
hindering EU forests’ ability to act as a carbon sink.
Recommendation to Member States and Commission.
Remove bioenergy as a whole from the Delegated Act to give more time to the discussion, like the EC did
for the agricultural sector: the issue is complex and controversial and the process to elaborate the
Renewable Energy Directive III will commence in 2021 - creating the risk that the taxonomy criteria, which
are currently based on RED-II, could be rapidly overtaken by existing EU legislation.
Contact details
@wwf.eu
4.26. Replacement of existing combined heat/cool and power facilities using solid or liquid fossil
fuels or replacement of existing separate heat facilities using solid or liquid fossil fuels or
replacement of existing separate power facilities using solid or liquid fossil fuels with high-
efficiency combined heat/cool and power facilities using gaseous and liquid fuels
See detailed analysis on page 24.
4.27. Replacement of heating/cooling facilities using solid or liquid fossil fuels by heating/cooling
facilities using gaseous and liquid fuels in efficient district heating and cooling
See detailed analysis on page 24.
6. TRANSPORT
6.3. Urban, suburban and road passenger transport
Have criteria improved/worsened/significantly worsened compared to December?
Criteria have worsened.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
The leak is
not consistent with the regulation itself : new point "
Where an economic activity in this category
does not fulfil the substantial contribution criterion specified in points (a), the activity is a transitional activity
(...) provided it complies with the remaining technical screening criteria set out in this Section", which means
a given activity can be transitional or own performance depending on how many SC criteria it meets.
However, Article 10 on transitional activities makes explicit they cannot coexist with ‘own performance’
activities.
Technical assessment - what are the key problems?
Gas-powered buses are considered sustainable.
Vehicles required to meet the latest Euro standard.
Recommendation to Member States and Commission.
Return to November draft recommendations.
Contact details
@transportenvironment.org
7. CONSTRUCTION AND REAL ESTATE ACTIVITIES 7.2. Renovation of existing buildings
Have criteria improved/worsened/significantly worsened compared to December?
They are the same, and risk the delivery of the EU’s aspirations for the Renovation Wave and to not
decarbonise the existing buildings as fast as is required to be “fit for 55”.
Are these criteria consistent with the taxonomy regulation - particularly Art. 10.2 on transition and Art. 19
on requirements for criteria?
Under Assessment.
Technical assessment - what are the key problems?
SC for mitigation for existing renovations are either:
1) As set in the applicable national and regional building regulations for ‘major renovation’ implementing
Directive 2010/31/EU. The energy performance of the building or the renovated part upgraded meets cost-
optimal minimum energy performance requirements in accordance with the respective directive.
OR 2) A 30 % improvement results from an actual reduction in primary energy demand (where the
reductions in net primary energy demand through renewable energy sources are not taken into account),
and can be achieved through a succession of measures within a maximum of three years. The initial primary
energy demand and the estimated improvement is based on a detailed building survey, an energy audit
conducted by an accredited independent expert or any other transparent and proportionate method, and
validated through an Energy Performance Certificate.
Recommendation to Member States and Commission.
The overal principle of “green being better than regulatory minima” is overstepped. A minimum PER of
30% should be a requirement of all SC AND, in the case of a major renovation, the applicable national and
regional building regulations for ‘major renovation’ implementing Directive 2010/31/EU as amended in 2020
to align with new EU climate ambitions.
Contact details
@climatestrategy.es
Early analysis:
Ten major flaws of the gas cogeneration/heating loophole in
the Commission’s leaked proposal
1. Summary of the ten major flaws
1. The first criterion is automatically met, hence useless
There is far more coal power closing (35 GW at least) than gas CHP planned (8.3 GW): up to 100% of
gas combined heat and power (CHP) plants built until 2025 could be eligible to be labelled as green, and
there will be room for labelling much more. The leaked proposal therefore creates an
incentive to build
even more gas CHP plants than already planned, while failing to close any more coal plants. This
criterion is not only ineffective - it is harming the environment. Including power-only coal plants in the
proposal is the most outrageous part of the proposal.
2. The second criterion is useless given the existence of the fourth criteria
Any gas plant operating below 270g CO2/kWh, which substitutes a coal or oil plant, will
automatically emit
50% fewer GHG per kWh of energy. The second criterion is redundant.
3. The third criterion is either useless or a blank cheque to power companies
By focusing only on the “low carbon gaseous or liquid fuels-readiness” equipment, the proposal makes no
requirement on the company to actually use it, nor a definition of what so-called low carbon gases and
liquid fuels entail. Assuming that such equipment will be used as expected relies on the highly
speculative, risky, and thus flawed assumption that at some point biogas and/or hydrogen will become
extremely abundant and cheap, so that CHP plants can fully rely on it. “Low carbon gaseous or liquid
fuels-readiness” for power plants is a myth as big as “CCS-readiness” was a few years ago, when it was
used to justify new coal plants and turned into a complete climate failure and major carbon lock in.
4. The fourth criterion is unscientific and unambitious
For gas CHP plants, the Commission has replaced the 100 g threshold for the power sector with the
threshold of 270gCO2/kWh: this is totally inconsistent with other power sources required to meet the
threshold of 100gCO2/kWh in the taxonomy. In addition, the EU’s average carbon intensity for the power
sector reached 226 g CO2/kWh in 2020 and rapidly decreases, while the most efficient gas CHP plants
can only reach 230 g CO2/kWh. This means that over its entire lifespan any new gas CHP plant will
permanently have a higher carbon intensity than the average of the EU power mix, slowing down the
decarbonisation of the sector.
5. The fifth criterion on alternatives is vague and unambitious
The criteria completely lacks details which are critical to ensure its robustness: established good practice
requires that the assessment of power alternatives is done in an independent way, is made public, and
includes at least the following alternatives: (a) a mix of renewable energy sources; (b) demand side
management; (c) energy efficiency; (d) a mix of the previous options.
6. The fifth criterion on just transition regions is risky and not fit for gas incentives
Focusing on ‘just transition regions’ is total y inconsistent with the fossil-free Just Transition Fund, which
was created to accelerate the shift
out of fossil fuels. All Member States are allocated money from the Just
Transition Fund, so it can be expected that there will be ‘just transition regions’ in every Member State.
7. The 2025 phase-in date for gas plants risks increasing the pace of construction of EU gas CHP
plants
The leaked proposal only asks for new gas CHP plants to be
built before 2025, and does not set any closure
date. This is not an adequate “sunset clause”. These plants wil be stranded. The EIB, when negotiating its
Energy Lending Policy in 2019, weakened its initial proposal because of Member States’ concerns by
introducing a
one-year delay to end support for fossil fuel projects. Unlike the EIB, the Commission
proposes to weaken its initial proposal by introducing a
half-a-decade delay. This is completely at odds
with climate science requiring early action.
8. The leaked proposal creates a major carbon lock-in risk
The leaked proposal does not include any criteria on the lifetime of such new gas plants, i.e. when they
would have to be closed to avoid carbon lock-in: this is a missing sunset clause (e.g. 2030-2035). A gas
plant has a typical lifespan of 25 years; however the Commission’s climate analysis finds that the power
sector will need to reach zero emissions way before 2050 (largely around 2035).
9. Fossil gas is far more carbon-intensive than previously thought
Methane matters because its impact on climate change is 84 times greater than CO2 over a twenty-year
timeframe. 40% of EU gas imports come from Russia, the country with the highest contribution to global
methane emissions from oil and gas; and 36% of EU gas imports come from the US as liquefied natural
gas (LNG), an inefficient product that uses a further 25% to fuel the process of liquefaction and
transportation: this extra amount means that the power produced from LNG emits more emissions than
power from coal.
10. The last-minute opaque process is unacceptable
The latest proposal has been published at the very last minute, following intense lobbying from fossil fuel
interests and Member States, negotiations behind closed doors, and is now in the public domain only
because of a leak. This is completely at odds with the long, considered process which until now brought
expertise, assembled feedback, integrated stakeholders views, and proceeded through several iterations.
It makes it obvious that this is a political compromise bowing to the gas industry lobby and at odds with
climate science.
As a result, the leaked proposal could:
● Label
all planned gas cogeneration plants as green, and
favor the development of new gas CHP
plants;
● Create a fossil fuel lock-in for so-called “Just Transition” regions, despite the fact that the Just
Transition Fund aim at helping them exiting their fossil fuel dependency;
● Create a major asset stranding risk;
● Undermine the decarbonization of EU electricity, by allowing for major new infrastructures that
produce electricity well-above climate mitigation threshold and even current EU electricity carbon
intensity.
2. Summary of the leaked proposal
The leaked proposal proposed 2 new activities in the Annex II of the Delegated Act on climate
mitigation:
4.26. Replacement of existing combined heat/cool and power facilities using solid or liquid fossil
fuels or replacement of existing separate heat facilities using solid or liquid fossil fuels or
replacement of existing separate power facilities using solid or liquid fossil fuels with high-
efficiency combined heat/cool and power facilities using gaseous and liquid fuels
-
First criterion (a): Gas-fired CHP plants can be classified as sustainable when they replace one of
the following 3 types of coal-fired or oil-fired plants: CHP plants / heating plants / power plants
-
First criterion (a): Phase-out of existing coal/oil facility and phase-in of new CHP gas installation
by 2025
-
Second criterion (b): Replacement leads to emissions reduction of 50% per kWh of energy
-
Third criterion (c): The new facility is compatible with low-carbon gases
-
Fourth criterion (d): Direct emissions under 270gCO2/kWh
-
Fifth criterion (e): No technological and economical alternatives
-
Fifth criterion (e): Retired facility located in ‘just transition’ regions.
4.27. Replacement of heating/cooling facilities using solid or liquid fossil fuels by heating/cooling
facilities using gaseous and liquid fuels in efficient district heating and cooling
Same criterion except that the replacement should lead to emissions reduction of 40% per kWh (not
50%).
3. Analysis: ten major flaws in the leaked proposal
3.1. The first criterion is automatically met, hence useless
The first criterion of the Commission’s leaked proposal states that a gas cogeneration plant can only be
tagged “green” if it replaces a high-emitting combined heat/cool and power generation facility that has at
least the same capacity.
●
How much coal and oil power capacity could be closed between now and 2025?
Using the Europe Beyond Coal database, we find that as of today
35 Gigawatts (GW) of coal-
fired power plants are already scheduled to close between now and 2025 in the EU (out of
the total 142 GW of operational coal plants in the EU today) and tens of additional GW need to
close by 2025 in a 1.5°C pathway. This figure is only for coal power plants - it does not even
include coal CHP plants, coal heating plants, oil power plants, oil CHP plants and oil heating
plants, all of which are included in the leaked proposal, and which would further increase the
number of GW due to close by the end of 2025.
●
In comparison, how much gas cogeneration is in the making in the EU?
According to Global Energy Monitor,
8.3 GigaWatts (GW) of gas-fired cogeneration plants are
under construction or planned in the EU : this is 4.3 times less than the 35 GW of coal-fired
power plants already scheduled to close between now and 2025.
● As a result,
up to 100% of gas plants with cogeneration built until 2025 could be eligible to
be labelled as green, as there is far more coal power closing than gas CHP opening.
● Even worse, there will be room for labelling much more.
The leaked proposal creates a direct
incentive to build even more gas cogeneration plants than already planned, while failing to
close any more coal plants. This first criterion of the leaked proposal is not only ineffective - it is
harming the environment.
●
Including power-only coal plants in the proposal is the most outrageous part of the
proposal, as there is a huge, obsolete and polluting coal plant fleet in Europe that is
already
closing at increasing speed because most EU coal plants are losing money: according to Carbon
Tracker Initiative analysis, in 2019 four in five EU coal power plants were unprofitable and utilities
lost billions because of coal. Matt Gray, Head of Power & Utilities at Carbon Tracker and co-
author of the report, said: “
EU coal generators are haemorrhaging cash because they cannot
compete with ever-cheaper renewables and gas and this will only get worse. Policymakers and
investors should prepare to phase out coal by 2030 at the latest.”
3.2. The second criterion is useless given the existence of the fourth
criteria
The second criterion in the Commission’s leaked proposal requires that the replacement leads to a
reduction in emissions of at least 50% GHG per kWh of energy, while the fourth criterion requires the
direct GHG emissions of the new facility to below than 270 gCO2e per kWh of energy.
● The second criterion is redundant: as the chart below shows, coal plants emit, at a minimum,
770gCO2/kWh, and oil emits a minimum of 550gCO2/kWh. Therefore,
any gas plant operating
below 270g CO2/kWh, which substitutes a coal or oil plant, will
automatically emit 50% fewer
GHG per kWh of energy. The second criterion is entirely redundant.
● Below is the
carbon intensity of new power sources (gC02/kWh):
Sources:
IEA (2013), CO2 emissions from fossil fuels; ECOFYS (2011), International comparison of fossil power efficiency and
CO2 intensity; IPCC Special Report (2008), Carbon dioxide capture and storage SPM
3.3. The third criterion is either useless or a blank cheque to power
companies The third criterion of the Commission’s leaked proposal requires that the new facility demonstrates
compatibility with co-firing of ‘low carbon gaseous or liquid fuels’.
● There are two options to assess this criterion:
○ (1) Focusing only on the “low carbon gaseous or liquid fuels-readiness” equipment: it is
possible to verify its installation.
But the Commission makes no requirement on the
company to actually use it, nor a definition of what so-called low carbon gases and
liquid fuels entail - while both loopholes would create a clear carbon lock-in risk.
○ (2) The criterion assumes that such equipment, if installed, will be used by the company:
is this a plausible assumption? The requirement for co-firing does not provide a set
percentage requirement and could, in effect, together with the absent definition of low-
carbon gases and liquid fuels, provide a loophole allowing
any gas plant to be compatible
with this criterion.
● Low-carbon gases and liquid fuels, including hydrogen, are currently scarce and expensive,
hence either unavailable or barely available for power and heat generation.
“Low carbon
gaseous or liquid fuels-readiness” for power plants is a myth as big as “CCS-readiness”
was a few years ago, when it was used to justify new coal plants and turned into a
complete climate failure: both ‘CCS-readiness’ and ‘hydrogen-readiness’ are being used to
justify a major carbon lock in.
● This criterion relies on the highly speculative, risky, and thus flawed assumption that at some
point biogas and/or hydrogen will become extremely abundant and cheap, so that CHP plants
can fully rely on it:
o This is dismissed by recent analysis (for example from the International Council on
Clean Transportation) showing that green hydrogen will be scarce and expensive,
hence should be reserved for the highest value added (i.e.
not used for the power
sector but to decarbonise industry and transport, where emissions are harder to
abate).
o To date, the tiny amount of hydrogen produced is 95% ‘grey’ fossil-based hydrogen,
hence irrelevant to decarbonize power generation.
o Biofuels (like bioenergy more widely) are heavily criticized by the latest JRC analysis
as harming climate, biodiversity or both, depending on the assumptions.
●
The ‘CCS-readiness’ argument was developed at EU level a few years ago to, notably, allow
the development of new coal plants. Not a single coal plant will ever be retrofitted with operational
CCS, because its deployment has never been legally mandated and because it is completely
uneconomical: according to Carbon Tracker Initiative analysis, coal plants are already largely
uncompetitive because of decreasing prices of renewables and increasing ETS carbon prices.
This analysis does not even account for the high cost and decreased energy efficiency from
operational CCS. The “CCS-readiness” approach did not boost CCS developments at al in the
power sector, and simply enabled the construction of new high-carbon plants. It caused a major
carbon lock-in which went against all EU climate mitigation objectives.
● Once the gas CHP plant has been built, it will be up to the power utility to decide what source of
energy it uses, given that this criterion creates no obligation whatsoever for the company to use
low carbon gaseous or liquid fuels. It will therefore also be impossible to verify. This is not
consistent with the Taxonomy Regulation, which states that technical screening criteria should
“
be set in a manner that facilitates the verification of their compliance” (Art 19(1)k).
● The third criterion of the leaked proposal is therefore a blank cheque for companies that relies on
flawed, unrealistic assumptions.
3.4. The fourth criterion is unscientific and unambitious
The fourth criterion of the Commission’s leaked proposal requires that the direct GHG emissions of the
new facility are lower than 270 gCO2e per kWh of output energy.
● The science-based criteria set a ‘substantial contribution’ threshold for gas power production of
100 g CO2/kWh. It also set a 270 g ‘Do No Significant Harm’ threshold. The 100g threshold for
substantial contribution must be reinstated.
● For gas CHP plants, the Commission has replaced the 100 g threshold for the power sector with
the threshold of 270gCO2/kWh. Effectively, gas is considered to be environmentally sustainable
simply when it does not harm the environment, which is totally at odds with climate science and
inconsistent with the Taxonomy Regulation. It is totally inconsistent and unscientific to require 270
g CO2/kWh for gas CHP plants and 100 g for any other type of power generation.
● Ember analysis of the EU power market finds that, in 2020, the average carbon intensity of EU
electricity fell to 226 gCO2/kWh. Any new installation whose carbon intensity is above the EU
average will move the EU away from its climate and energy targets, therefore harming any
progress to net zero. This should be the level for the Do No Significant Harm criteria of the
taxonomy for the power sector, not 270 g.
● The EU’s average carbon intensity for the power sector will gradually decrease. It reached 226 g
CO2/kWh in 2020 but will be lower in 2021, while the most efficient gas CHP plants can only
reach 230 g CO2/kWh - barely on a par.
This means that over its entire lifespan any new gas
CHP plant will always have a higher carbon intensity than the average carbon intensity of
the EU power mix.
●
This is blatantly inconsistent with the Art 19(1) of the Taxonomy Regulation that states
that technical screening criteria must “be based on conclusive scientific evidence” and
take into account “
the risk of creating inconsistent incentives for investing sustainably”.
● This is also inconsistent with the Art 19(1) of the Taxonomy Regulation that states that technical
screening criteria must take into account “
the risk of creating inconsistent incentives for investing
sustainably”.
●
It also significantly jeopardizes the long-term relevance of the Taxonomy, as it does not
represent the intended “gold standard”. As the Platform on sustainable finance states in its
Transition Finance report, “
Weaker criteria will not help companies and investors understand
what level of environmental performance is needed to achieve the (climate) targets.”
● Additionally, the new threshold will create confusion for stakeholders, who will no longer be able
to differentiate between activities that contribute to climate mitigation and those that simply do not
harm the environment. The Taxonomy was designed to address greenwashing in financial
markets, where several different categorisation tools, with a varying degree of scientific basis, are
in use. However, the recent, unscientific proposal could create additional uncertainty and
confusion, impeding the shift of capital to sustainable economic activities as opposed to the clear
direction that a science-based classification would provide.
3.5. The fifth criterion on alternatives is vague and unambitious
The fifth criterion of the Commission’s leaked proposal requires that "there are no technological and
economical low-carbon alternatives for the facility".
● The criteria completely lacks details which are critical to ensure its robustness: when conducting
assessments of alternatives, established good practice requires that the assessment of power
alternatives is
done in an independent way (e.g. as part of the project’s Environmental
Impact Assessment), is made public, and includes at least the following alternatives: (a) a
mix of renewable energy sources; (b) demand side management; (c) energy efficiency; (d)
a mix of the previous options.
● For example, a report from Forum Energii in Poland finds that heat pumps have great potential to
replace coal heating in Poland: at household level, the installation of a heat pump in conjunction
with solar photovoltaics can lower annual cost of heating a home by 18%‑ 30% compared to
other heat sources that can be used to replace a coal-fired boiler, thanks to the high efficiency of
heat pumps.
● When assessing the economic feasibility of low-carbon alternatives it must also be assured that
all the negative externalities inflicted on the environment and pathway to net-zero by 2050 by the
new fossil facilities, as well as whether or not fossil fuel subsidies, are fully accounted for.
● Without the specific requirements mentioned above, the criterion completely lacks teeth and will
probably be ineffective.
3.6. The fifth criterion on just transition regions is risky and not fit for
gas incentives
The fifth criterion of the Commission’s leaked proposal focuses the geographical scope on ‘just transition
regions’.
●
This is totally inconsistent with the fossil-free Just Transition Fund, which was created to
accelerate the shift out of fossil fuels. The Just Transition Fund is one of the few in the EU
budget that does not support fossil fuel projects at all, in contrast with the leaked proposal.
● This is a wide scope:
all Member States are allocated money from the Just Transition Fund,
so it can be expected that there will be ‘just transition regions’ in every Member State. Just
Transition Fund regions are NUTS 3 regions that have Territorial Just Transition Plans developed
and approved by the Commission. In Poland for example, the Commission assessed that there
would be three regions, but Poland itself claims there should be six.
● Worse, the final list of ‘just transition regions’ is not finalised yet; it could be the case that a Member
State asks to add a
new ‘just transition region’ for the purpose of tagging a new gas CHP plant as
green in that specific region: there is a serious threat this loophole will be expanded even further.
3.7. The 2025 phase-in date for gas plants risks increasing the pace of
construction of EU gas CHP plants
● The Commission’s proposal only asks for new gas to be built before 2025, and does not set any
closure date.This is not an adequate “sunset clause”, but merely a call to accelerate gas build-up
before 2025 in order to have the plant classified as sustainable. Future policy-makers will have a
difficult choice to make: will they stick to the EU’s climate commitments, and thus turn these gas
plants into stranded assets, or will they keep the plant operational, dismantling any chance of
attaining the EU's climate targets?
● The economic logic is also highly flawed: new gas will rapidly become uncompetitive compared to
renewables, and the investments made while take years to be amortised, causing huge economic
losses.
●
The EIB, when negotiating its Energy Lending Policy in 2019, weakened its initial proposal
because of Member States’ concerns by introducing a one-year delay to end support for
fossil fuel projects. Unlike the EIB, the Commission proposes here to weaken its initial
proposal by introducing a half-a-decade delay. This is completely at odds with climate science
requiring early action.
● Furthermore, the world’s leading Multilateral Development Banks agreed on a methodology in 2011
that does not permit greenfield conventional fossil fuel power generation to be counted as climate
finance. It would be a major blow to the EU’s climate credibility if the EU taxonomy was weaker
than this long-standing global consensus among multilateral banks.'
3.8. The leaked proposal creates a major carbon lock-in risk
● As seen above, the leaked proposal makes clear it focuses on
new gas plants that replace coal or
oil ones. It does not focus on existing gas plants. Classifying new gas plants as “green” would
clearly create an incentive for additional gas-fired generation - the opposite of what is needed to
decarbonize EU power production as soon as possible.
●
As noted, the leaked proposal does not include any criteria on the lifetime of such new gas
plants, i.e. when they would have to be closed to avoid carbon lock-in: this is a missing
sunset clause (e.g. 2030-2035). This creates a major risk of exceeding the scarce carbon
budget available to the EU energy sector until 2050. Indeed, as a gas plant has a typical lifespan
of 25 years: it would remain in operation until 2045-2050 and be called ‘green’, even if its very
operation is wholly inconsistent with the EU’s climate targets. However the Commission’s climate
analysis finds that the power sector will need to reach zero emissions before 2050 as it is a sector
that is relatively much easier to decarbonise than other ones.
● This is inconsistent with the Art 19(1) of the Taxonomy Regulation that states that technical
screening criteria must
“take into account the potential market impact of the transition to a more
sustainable economy, including the risk of certain assets becoming stranded as a result of such
transition.”
3.9. Fossil gas is far more carbon-intensive than previously thought
Greenhouse gas emissions from fossil gas are way higher than previously thought, because of hidden
emissions due to fugitive methane emissions along the full life cycle, as presented in a briefing coordinated
by Climate Bond Initiative:
There are four key points:
● Methane matters because its impact on climate change is 84 times greater than CO2 over a twenty-
year timeframe.
● If gas leaks more than 3% of its methane content, it is worse for the climate than coal.
● Methane emissions attributable to oil and gas production are up to 40% higher than thought.
● The EU imports most of its gas, increasingly in the form of highly inefficient LNG, and always from
sources with high methane footprints. 40% of EU gas imports come from Russia, the country with
the highest contribution to global methane emissions from oil and gas; and 36% of EU gas imports
come from the US as liquefied natural gas (LNG), a product that uses a further 25% to fuel the
process of liquefaction and transportation: this extra amount means that the power produced from
LNG emits more emissions than power from coal.
The Taxonomy Regulation’s Article 19(1) requires a full lifecycle approach. As a result, emissions due to
fugitive methane emissions along the full life cycle must be taken into account.
The Hidden Emissions from Gas-Fired Power
3.10. The last-minute opaque process is unacceptable
● The Technical Expert Group on Sustainable Financeworked for two years to set up
recommendations to the Commission on power generation.
● It gathered 250 experts, including from the industry.
● It organized 2 consultations to gather feedback, based on its interim report and final report.
● In addition, the Commission organized a public consultation in Fall 2020 to gather feedback on its
draft Delegated Acts. 97% of the 47000 respondents supported a science-based taxonomy based
on a Substantial Contribution criteria of 100 g CO2/kWh for the power sector.
● The latest proposal has been published at the very last minute, following intense lobbying from
fossil fuel interests and Member States, negotiations behind closed doors, and is now in the public
domain only because of a leak. This is completely at odds with the long, considered process which
until now brought expertise, assembled feedback, integrated stakeholders views, and proceeded
through several iterations. It makes it obvious that this is a dirty political compromise bowing to the
gas industry lobby.
● This also creates a disastrous precedent for the Commission’s Platform on sustainable finance: will
the Commission trash the final recommendations of the Platform the same way it does it with the
TEG ones? This undermines the trustful relationship that was in the making.