Guest article by Dr. Rudolf Rechsteiner, EWG network member and President of the Ethos Foundation

EU taxonomy – It’s all about public funds

Much has been written about the EU Commission’s misguided decision to retroactively include nuclear energy and natural gas in the sustainability taxonomy. On the surface, it’s about private investments and greenwashing. But the nuclear lobbyists are interested in something else.

Rarely has the EU Commission disgraced itself as much as it did now with its plan to enrich the originally good EU taxonomy for “green investments” with gas and nuclear power plants. The responsible EU Financial Market Commissioner Mairead McGuin-ness defended herself, saying it was all about “transitional technologies”, and adding by the way: “coal kills!” – as if coal-fired power plants were still planned in the EU. The authoritative Platform for sustainability finance criticized the decision very sharply and pointed out that the old coal-fired power plants in Europe will cease to operate anyways as thanks to stricter CO2 emission-trading they can no longer be operated economically. In addition, the platform criticized the lack of trustworthy verification processes for the alleged sustainability of fossil gas and nuclear power plants. The annex of the EU Commission contradicts the Do No Significant Harm requirement, which is the basis of the taxonomy.

Lobbyism and power games

The highly controversial EU decision reveals that even the highest executive body in Brussels is by no means immune to power games, heavy-handed lobbying and disinformation.

 The original criteria of the taxonomy were consistent:

– Climate protection and adaptation to climate change.

– Sustainable use and protection of water and marine resources.

– Transition to a circular economy.

– Pollution prevention and control.

– Protection and restoration of biodiversity and ecosystems.

The word of power from Brussels undermines the taxonomy and indirectly harms all green-oriented financial products. Those who are running sustainable funds will have to explain themselves from now on. For many providers, it may be popular to clearly distance themselves from the annex from Brussels, for good reasons.

The history of commercial nuclear energy records five serious reactor accidents with core meltdowns: Three Mile Island (1979), Chernobyl (1986), Fukushima 1 to 3 (2011). The consequential costs cannot yet be quantified conclusively.

The disposal of highly radioactive waste poses puzzles. A reliable proof for the next 100’000 years cannot be provided. The Sustainability Platform points out that the costs for the disposal of existing nuclear power plants are already insufficiently covered (Response to the Complementary Delegated Act).

Globally, no insurance company can be found that offers liability insurance against severe nuclear accidents. Recent new nuclear power plants in Europe are experiencing exorbitant cost and construction time overruns, making them – and their owners – very unpopular on the stock market. The glossy annex won’t change that.

Gas-fired power plants can only be named “green” if they are fed with gas from renewable sources. Instead of hydrogen and e-fuels, there exist other cheaper flexibilities on the electricity market. Thermal storage or contractual load shedding by large consumers that can align with cheap, fluctuating renewables.

The day-ahead markets on the German electricity exchange recorded 298 annual hours with negative prices (2020). The trend towards “cheap sunshine hours” in the electricity market is enabling new business models for flexible energy-intensive industries that operate without fossil gas-fired power plants.

Large-scale batteries and the further development of intra-European electricity trading are also cheaper and suitable for providing the necessary back-up for solar and wind power with already existing water storage systems. In the USA as well as in Australia, batteries with the capacity of coal-fired power plants are replacing new gas-fired power plants. Germany has slept through this trend, hence the greenwashing of natural gas. As with the fairy tale of the “clean diesel,” there is a huge need to catch up. With technology-neutral incentives and a de-blocking of grid expansion, new fossil gas-fired power plants would be unnecessary.

Money for the “nuclear renaissance”

Alleged transitional technologies being built now will remain in operation for decades. Building new capacity with inflexible base load will lead to renewable energy curtailment, much to the detriment of the desired transformation.

The intent behind the absurd “Annex” is not to attract private investment. The question with nuclear power was, and still is, how to get to new governmental subsidies in a supposedly competitive electricity market. The EU’s “Green Deal” includes a budget of over 1000 billion euros, based on revenues from CO2 certificates and unclaimed Covid credits.

Lazard, a New York-based investment bank, provides annual cost comparisons for electricity from new power plants. New nuclear power plants have become risky and effectively unaffordable for private investors. Wind and solar power are now four times cheaper. The pro-nuclear EU member states want to see the “nuclear renaissance” paid for by Brussels, by subsidies from the “Green Deal”. For this reason, the obsolete risk technologies need a green coat. Hence the new taxonomy. Private investors who are serious about responsible investment will be left out in the cold.