We have looked in previous Newsletters at “Taxonomy – Financing a sustainable European Economy”.
We are returning to the topic because – as could have been predicted – it provokes considerable discussion. The EU’s Taxonomy is a tool to help investors, businesses, creators and promoters of projects to establish an economy based on low carbon emissions, resilient and efficient in resource use.
The European Union is making important political choices to address the climate crisis: taking steps towards a net-zero greenhouse gas (GHG) commitment by 2050; and a more realistic target for 2030. The final opportunities to achieve our shared climate goals are fast approaching, and many in the market still underestimate the scale and pace of the transition that is needed. The Taxonomy is the instrument to realise these objectives and it defines what is “green”. It does not say that everything else is bad for the environment, or that it has to be shut out of the transition to a more sustainable economy. In fact, the Taxonomy says the opposite, showing the pathway for economic transition in an inclusive way. In other words, the Taxonomy gives us guidance and confidence in what we need to do.
Now, the industrial sector believes the EC proposal departs from EU legislation in a way that creates uncertainty for immediate and short-term investments.
They are therefore trying to extend the transition period … as if nature can wait for industries, especially polluting ones, to act, and as if the problem of pollution came into being on the date when the taxonomy was approved …
The EU Taxonomy may also be a problem for governments, which designed and already submitted their National Energy and Climate Plans for the 2020-2030 period and may now find it difficult to finance the projected investments. The EU Taxonomy proposal is expected to be adopted in the coming weeks. This leaves time to ensure the proposed emissions thresholds will not leave industry stuck in the middle of the energy transition.
Despite the importance and the necessity of such an instrument, we are nevertheless not at the end of the debate and its definition. A revision is due in March. However, if we want to make progress compared to the inaction of past decades, the taxonomy may be the “key” to force the most resistant to move for a future that is not so much eco-sustainable, but rather eco-compatible.