Prof. Dr. Kerstin Lopatta
Scientists warn of ‘disconnect’ between EU climate goals and finance rulesExperts say commission is at risk of jeopardising pledge to reduce emissions to net zero by 2050
8. Dezember 2020
Mehreen Khan in Brussels 07.12.2020
Investors are focusing on Brussels’ sustainable finance rules as the EU tries to provide science-driven definitions on what constitutes a ‘green’ or ‘brown’ investment.
Brussels has been urged to stick to climate science when drawing up rules on sustainable finance after experts warned that the European Commission was at risk of jeopardising the EU’s pledge to reduce emissions to net zero by 2050.
A group of 123 scientists from 27 countries has signed an open letter expressing “deep concern” at a draft commission proposal on sustainable finance rules that omits a reference to companies needing to reduce carbon emissions to net zero by 2050 — an important goal of the EU’s climate law.
“The current situation results in a disconnect between the definitions that will guide the implementation of the European Green Deal and the EU’s ultimate climate objective of becoming a net zero greenhouse gas economy by 2050” says the letter, which is addressed to the commission president Ursula von der Leyen, green commissioner Frans Timmermans and financial services commissioner Mairead McGuinness.
Brussels’ so-called taxonomy on sustainable finance has been hailed by the EU as the world’s first classification system for markets and investors on what counts as green investment. Last month the commission published a lengthy draft text setting out the thresholds for green economic activity, based on research from a group of independent experts including climate scientists.
Many of those experts have now expressed concern that their recommendations that green energy generation be defined as activity that produces 100 grammes of CO2 per kilowatt hour, reduced in increments every five years to zero, is not present in the draft.
The experts say the omission of a declining trajectory to 2050 means the taxonomy risks not being compliant with international goals to reduce global warming under the Paris climate agreement. The letter calls for an “urgent correction in the draft regulation”.
“The EU Taxonomy for sustainable economic activities and its definitions of Greenness must be aligned with the EU’s long-term strategic goals, and by extension with the Paris Agreement”, says the letter.
Brussels’ sustainable finance rules are being watched by investors as the EU is aiming to provide science-driven definitions on what constitutes a “green” or “brown” investment. The taxonomy will oblige a certain number of large EU-listed companies to disclose their activities based on the thresholds.
The exercise is also highly politically sensitive for EU countries, some of which have significant nuclear and gas energy sectors and do not want a system that penalises investment in such “low-carbon” power generation.
Environmental groups have argued that nuclear and gas should not be considered in the green category. As it stands, the draft rules do not mention nuclear power because Brussels has said it is carrying out a separate review on how to classify the technology under the taxonomy.
Rather than including the reference to declining emissions every five years, the draft text says the commission will reserve the power to amend the green thresholds “in line with scientific and technological developments” every three years.
The pressure from experts such as climate scientists comes as the draft enters a period of public consultation that is due to conclude on December 18.
Based on the level and nature of the feedback, the commission can revise the draft before having the text adopted by MEPs and EU governments some time in 2021. The definitions are due to come into force from 2022.
@mehreenkhn
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Please find Andreas Hoepner's and Joeri Rogelj's letter on behalf of the 123 scientists here.