EU adopts sustainable finance measures
The European Commission adopted April 21 – the eve of the multi-national Earth Day summit where more ambitious carbon reduction goals were set out – a "comprehensive package of measures to help improve the flow of money towards sustainable activities across the European Union." By channelling money towards sustainable technologies and businesses, the measures "will be instrumental in making Europe climate neutral by 2050," it said.
The package includes the EU Taxonomy Climate Delegated Act (TCDA) which will make clearer which economic activities most contribute to meeting the EU's environmental objectives. With a political agreement on the text, the act will be formally adopted at the end of May.
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It also includes a proposal for a Corporate Sustainability Reporting Directive (CSRD) with the aim of making such reporting more consistent, so that financial firms, investors and the broader public can use comparable and reliable sustainability information.
The TCDA "creates a common language that investors can use when investing in projects and economic activities that have a substantial positive impact on the climate and the environment. It will also introduce disclosure obligations on companies and financial market participants," the EC said.
It introduces the first set of technical screening criteria to define which activities contribute substantially to two environmental objectives: climate change adaptation and climate change mitigation. It includes sectors such as energy, forestry, manufacturing, transport and buildings.
German gas group Zukunft Gas said April 22 that the TCDA risks delays to investment in gas-fired power projects, a vital partner to renewable energy in northwest Europe but omitted from the document.
"Gas-fired power plants are needed in several ways for the energy transition: We are already heading for a large electricity gap. Even with a further expansion of renewables, we will need gas-fired power plants to secure the base load and to protect against dark doldrums when the wind is not blowing and the sun is not shining. The plant manufacturers and power plant operators are also ready to lay the foundation for climate-neutral electricity generation by installing hydrogen-capable turbines. This perspective is not stimulated by the taxonomy either," it said.