Wednesday, October 5, 2022

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Calling for a revised EU Taxonomy that accelerates investments in sustainable solutions

Associations representing the European energy industry, which includes Gas Infrastructure Europe, Bioenergy Europe, Eurogas, EU Turbines are calling for a revised EU Taxonomy that helps accelerate investments in sustainable solutions to achieve a competitive climate neutral economy.

The signatories are requiring to address three main principles in the proposal of the Commission. The future Taxonomy should help implement adopted EU climate and energy legislation. Furthermore, its criteria and thresholds must be impact assessed prior to their application and it should guarantee a transitional, evidence-based and pragmatic approach.

“We are strongly concerned about the European Commission’s draft Taxonomy Delegated Regulation proposal which, unless changed, will prevent investors from making fully informed decisions on their investments, undermine affordable financing and jeopardise energy supply security at an acceptable cost, which is key to maintain jobs in Europe and avoid carbon leakage,” reads the paper.

All institutions highlighted the necessity of a predictable policy framework, which can result in a successful economic and industrial transition to ensure long-term sustainability. All actors of the financial market and governments and businesses as well must face the same thresholds, standards and targets, otherwise, it will cause disrupted markets, distorted competition, moreover a burdensome and costly implementation.

Another keyword is coherence, mainly in connection with investments classifications, for example at the European Investment Bank’s Energy Lending Policy.

According to the signatories the Commission proposal departs from existing EU legislation and undermines investment predictability, which may prevent the investments that will enable a sustainable transition to climate neutrality.

Another expectation is that the future Taxonomy’s criteria and thresholds must be impact assessed prior to their application. The actual proposal contains inconsistencies, technical and methodological flaws, which are do not give the opportunity to businesses and investors to make fully informed investment decisions.

The joint paper asks for a properly developed technical screening criteria, scrutiny by the co-legislators and stakeholders and a proper stakeholder involvement to avoid unintended consequences for the sectors in which EU Taxonomy will apply.

And at last but not at least, the Taxonomy’s approach must be transitional, evidence-based and pragmatic. The Member States of the EU have varying investment capabilities and needs, which are originates from different starting levels. That is why the Taxonomy must leave sufficient flexibility to consider today’s technological development, existing infrastructure and current energy mixes while offering development pathways for low-carbon and renewable energy sources and technologies. 

“Economic sectors and Member States must be empowered through adequate screening criteria, including for transitional activities, to embark on progressive and achievable transition pathways, in line with EU climate and energy goals,” continues the joint paper. “Above all, no one should be left behind as outlined in the European Green Deal.”

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