What is the taxonomy of sustainable investments and what does the row over nuclear and gas mean between now and 2030?

9 January, 2022

Nord Stream 2 in its German onshore part. The change in the energy matrix already underway will accelerate as part of the economic consequences of the war.
Nord Stream 2 in its German onshore part. The change in the energy matrix already underway will accelerate as part of the economic consequences of the war.

After a year of intense inter-country political battles and between industrial lobbyists and environmentalists, leaked documents from the European Commission now reveal that the proposed “taxonomy of sustainable investments” will include gas and nuclear power as “green energies”. At once Germany, Austria and Spain take a stand against nuclear power – while dodging the gas issue – while France and the 10 countries of the “nuclear bloc” rejoice. What is the real battle underneath all this? What is at stake and how will the outcome affect workers all over Europe?

Table of Contents

What is the taxonomy of sustainable inverstments?

Ursula von der Leyen, Timmermans and three commissioners - Kadri Simson, Paolo Gentiloni and Adina-Ioana Valean - present the "Fit for 55" package in Brussels under the slogan "Delivering the European Green Deal". The taxonomy of sustainable investments is a fundamental pillar to kick-start the flow of capital that they intend to accelerate with Fit for 55.
Ursula von der Leyen, Timmermans and three commissioners – Kadri Simson, Paolo Gentiloni and Adina-Ioana Valean – present the “Fit for 55” package in Brussels under the slogan “Delivering the European Green Deal”. The taxonomy of sustainable investments is a fundamental pillar to kick-start the flow of capital that they intend to accelerate with Fit for 55.

The sustainable investment taxonomy is a classification of uses of capital. The EU has been engaged in an intense battle for almost two years to determine which uses of capital will be considered “sustainable”, which “transitional” and which will be considered harmful for the Green Deal.

The aim of approving a taxonomy of sustainable investments is, obviously, to give “incentives” to the capitals to be mobilized within the “Green Deal” in order to ensure their profitability.

The EU hopes to mobilize 2.6 trillion euros (2,600,000,000,000 euros) between now and 2030 within the Green Deal framework and the banks want to know which capital applications, which companies and technologies will be considered sustainable and for how long in order to develop “green portfolios and funds” with which to mobilize the bulk of private capital towards a guaranteed profitability.

This is not about any impact on climate change from the way banks place capital, this is about which uses of capital are going to have guaranteed returns from state regulation and subsidies under the label of the “Green Deal”.

In fact, last March a regulation was already approved that obliges banks to have transparency rules on what they put into their “green funds” in preparation for the taxonomy of sustainable investments to be approved.

Lest we get confused about the nature of these regulations and taxonomies: the already approved guidelines do not include things that are basic to the climate impact of an investment such as whether they encourage or rely on deforesting rainforests or European forests. This is not about any climate change impact of how banks place capital, this is about what uses of capital are going to have returns guaranteed by state regulation and subsidies under the label of the “Green Deal”.

Why did gas sneak into the taxonomy of sustainable investments?

Ecologistas en Acción’s campaign against the inclusion of gas in the EU taxonomy of sustainable investments.

Last March began the final phase of discussion of the European Commission’s taxonomy of sustainable investments. The first proposal, leaked to the news site Contexte, already classified gas plants that generate power plus heating or cooling as a sustainable investment contrary to the recommendations of the Commission’s Technical Expert Group.

Shortly afterwards, in an open letter to the European Commission, Gas Attack in Taxonomy, 225 scientists, green funds and NGOs explained that considering gas as green within the taxonomy of sustainable investments disregards the significant environmental effects of methane, “whose impact on climate change is up to 84 times greater than that of CO2 within 20 years.”

They argued that if only 3% of the gas leaks out, it can cause more warming than CO2. Furthermore, they claimed, many European gas companies do not adequately measure methane emissions in their supply chain and are not taking advantage of the opportunities available to reduce these emissions.

Sánchez’s obsession with promoting “a common gas market” in Europe reflects the interest of a few energy companies that have an oversized infrastructure – which they make us pay for in our bills – and whose main goal is for France to “open the doors” of its gas pipelines to them so that they can sell Algerian gas to the large European industrial hubs.

Moreover, in countries such as Spain, gas was already particularly expensive because of the constraints of rendering over-sized regasification plants profitable (little more than 22% of their capacity is used) since France is blocking their outlet to the North.

Therefore, the obsession for Spanish imperialism in the debate on the taxonomy of sustainable investments was to link it to the creation of a “commongas market” in which the peninsula would effectively join the rest of the continent and the Spanish gas companies could sell Algerian natural gas in significant volumes to the large central European industrial hubs.

I would like that, just as France has set very clear objectives in favor of nuclear energy and Germany has set in motion its agreements to have a gas pipeline connected to Russia, we in Spain should set our own objectives. In this sense, it is important to emphasize that North Africa is a gas producer. It needs social stability. Spain has an opportunity with our regasification plants. We can help the entire European continent.

Josu Jon Imaz, April 2021

But Spain was neither the only nor even the most powerful of the states aiming at making gas a “transition energy”.

To begin with, German industry is quite aware of its need for natural gas to maintain its competitiveness in the export market. And it needs gas in abundance and cheap, of course. Hence the whole endless battle around Nord Stream 2… and the fact that Russia has had the opportunity to speculate on its own supply by making it look as if the Green Deal depends on its cooperation.

The German “green” promise is to replace Russian natural gas with hydrogen produced from renewables by 2045. But the reality is that, despite billions in subsidies released by the EU to the delight of companies like Spain’s Enagas, hydrogen transport is unfeasible using existing pipelines. So what Russia is proposing to Germany is to start a middle way by investing in natural gas to hydrogen conversion plants (steam reforming units) powered by the gas itself once it arrives in Germany.

In addition, Eastern European countries had threatened to block any taxonomy of renewable investments that did not include gas. The Green Deal had already forced them to phase out coal – which they produce themselves.

Why is nuclear power the bone of contention in the new taxonomy of sustainable investments?

Macron visiting Areva. France has made the inclusion of nuclear in the taxonomy of sustainable investments, one of its main bones of contention in the EU.
Macron visiting Areva. France has made the inclusion of nuclear in the taxonomy of sustainable investments, one of its main bones of contention in the EU.

The move to a massive and accelerated use of non-polluting energies means for the Eastern countries reconverting their entire industry and raising prices very quickly above what they thought would be affordable for their population, especially because of its impact on heating for residential buildings. Gas appeared as a transitional solution while they developed a more cost-effective alternative, less dependent on Russia and more capable of attracting capital than renewables: nuclear energy.

The position of the Baltic countries is guided by similar considerations. Today, their electricity grid is still dependent on Russia. They plan to become electrically “independent” in 2025. But an energy grid is not so easily replaced or changed when the main goal is to create a reservoir of profitability for over-accumulated capital. That is why they have been betting over 15 years on creating an industry for the installation and export of small-sized nuclear power plants. Should the investments in them be finally considered “sustainable”, business would be assured.

And of course, as the battering ram of the nuclear lobby there is France. For France, nuclear power is crucial.

For France, developing its nuclear industry is crucial from a military, political and commercial point of view. It is the way to gain hegemony in Europe, to increase exports rapidly and to avoid the social response to the gas price spikes brought about by the Green Deal.

Militarily crucial because it allows it to maintain its nuclear arsenal and assert it in the intra-European imperialist game.

Crucial at the time of the Green Deal, because it allows it to be safe from energy speculation and to arrange the transfer of income from labor to capital, which is the whole Green Deal, smoothly – or so Macron is peddling at least.

And above all it is fundamental for its imperialist project because it allows it to sell, directly from the Presidency, Areva nuclear power plants throughout the East and “cheap” nuclear electricity to Spain and other neighboring countries, including Germany every time gas hits a peak.

This is why France has organized a “pro-nuclear bloc” of 10 countries for the definition of the new taxonomy of sustainable investments that was presented last October with an opinion article in the European press. The same group of countries that has been decisive in the inclusion of nuclear in the current draft taxonomy of sustainable investments.

¿What will the final taxonomy of sustainable investments look like?

Trillo nuclear power plant. In Spain, the government has decided to extend the life of nuclear power plants beyond their life cycle, at least until 2050, but has no plans to build new ones, so the inclusion of nuclear in the taxonomy of sustainable investments as green or transitional energy would have no relevant effects in Spain.
Trillo nuclear power plant. In Spain, the government has decided to extend the life of nuclear power plants beyond their life cycle, at least until 2050, but has no plans to build new ones, so the inclusion of nuclear in the taxonomy of sustainable investments as green or transitional energy would have no relevant effects in Spain.

France needs to hurry. The experience of the Czech Republic, Slovakia and Hungary with the leap to French nuclear power has been disastrous: delays, cost increases…. In Poland there are already doubts as to whether Areva is the best supplier. And countries like Romania are already turning to the USA to buy new plants.

France cannot afford to lose the current momentum, at least until it closes sales. But on January 1, it began its rotating EU presidency. It will do all it can to accelerate and consolidate the approval of this taxonomy of sustainable investments.

In Germany, the coalition government teaches the green doctrine on the one hand and the liberal doctrine on the other. This allows it to have bargaining chips with France with the anti-nuclear discourse of the Greens on the one hand, while on the other hand securing cheap gas for its industries with the pragmatic discourse of the Minister of Economy.

The Spanish government, meanwhile, has shown a principled position… but an empty one. Spain has no relevant nuclear sector. The government has decided to extend the life of the existing aging plants until at least 2050, but not even the electricity companies are proposing to build new ones.

And with regard to gas, the minister herself has been clear: it is a question of terminology, not of substance, she wants to make it clear that “these are not green or sustainable energies” and hopes that the taxonomy of sustainable investments will reflect this “regardless of whether investments can continue to be made in one or the other”.

What does this mean? That the classification of gas as a “transitional energy” in the sustainable investment taxonomy with a series of deadlines is already good for it… especially if it comes with some compensation such as new funds for green hydrogen or weightings in joint gas purchases.

We could go country by country, but the result would be very similar. The Green Deal is strategic for all European capital. Its primary goal is not the climate or the safety of people, it is to recover the profitability of capital on the basis of a massive transfer of income from labor to capital dressed up as technological change. That is why they are not going to make any relevant “industrial sacrifice”.

The deadlines and the sources of energy are and will continue to be subordinated, like everything else, to the profitability of the great German and French industrial investments, on their soil and in the East, and from there on, each national capital will find its place with its particularities. And this will involve, at least by 2030, gas and nuclear power. Whether they are called “green energies” or “transitional energies” in the taxonomy of sustainable investments.

nos

Follow our updates and international news on Telegram's Communia channel
.