EU plans to label gas and nuclear projects as 'green'

By restricting the label to truly climate-friendly projects, the system aims to make those investments more attractive to private capital

Europe plans to label nuclear power plant investments as green if the project has a plan, funds and a site to safely dispose of radioactive waste. Reuters

The EU has drawn up plans to label some natural gas and nuclear energy projects as "green" investments after a year-long battle between governments over which investments are truly climate-friendly.

The European Commission is expected to propose rules in January deciding whether gas and nuclear projects will be included in the EU's "sustainable finance taxonomy".

This is a list of economic activities and the environmental criteria they must meet to be labelled as green investments.

By restricting the "green" label to truly climate-friendly projects, the system aims to make those investments more attractive to private capital, and stop "greenwashing", where companies or investors overstate their eco-friendly credentials.

Brussels has also made moves to apply the system to some EU funding, meaning the rules could decide which projects are eligible for certain public finance.

A draft of the commission's proposal would label nuclear power plant investments as green if the project has a plan, funds and a site to safely dispose of radioactive waste, according to a Reuters report. To be deemed green, new nuclear plants must receive construction permits before 2045.

Investments in natural gas power plants would also be deemed green if they produce emissions below 270g of carbon dioxide equivalent per kilowatt hour (kWh), replace a more polluting fossil fuel plant and receive a construction permit by December 31, 2030.

Gas and nuclear power generation would be labelled green on the grounds that they are "transitional" activities – defined as those that are not fully sustainable, but which have emissions below industry average and do not lock in polluting assets.

"Taking account of scientific advice and current technological progress, as well as varying transition challenges across member states, the commission considers there is a role for natural gas and nuclear as a means to facilitate the transition towards a predominantly renewable-based future," the commission said.

Consultations on a draft began on Friday. To help states with varying energy backgrounds to transition, "under certain conditions, solutions can make sense that do not look exactly 'green' at first glance", an official with the commission said.

However, natural gas and nuclear will be subject to strict conditions, the official said.

EU countries and a panel of experts will scrutinise the draft proposal, which could change before it is due to be published later in January. Once published, it could be vetoed by a majority of EU countries or the European Parliament.

The policy has been mired in lobbying from governments for more than a year and EU countries disagree on which fuels are truly sustainable.

Natural gas emits roughly half the carbon dioxide emissions of coal when burnt in power plants but gas infrastructure is also associated with leaks of methane, a potent planet-warming gas.

The EU's advisers had recommended that gas plants not be labelled as green investments unless they met a lower 100g carbon dioxide equivalent kWh emissions limit, based on the deep emissions cuts scientists say are needed to avoid disastrous climate change.

Nuclear power produces very low carbon dioxide emissions but the commission sought expert advice this year on whether the fuel should be deemed green, given the potential environmental impact of radioactive waste disposal.

Some environmental campaigners criticised the leaked proposal on Saturday. WWF Austria said in a tweet that labelling gas and nuclear as green would lead to "investments of billions in climate-damaging industries".

Austria opposes nuclear power, alongside countries such as Germany and Luxembourg. EU states including the Czech Republic, Finland and France, which generates about 70 per cent of its power from the fuel, consider nuclear as crucial to phasing out carbon dioxide-emitting coal fuel power.