Make carbon reduction the guiding principle
The European Commission's plan to label natural gas and nuclear energy 'green' in order to make it easier to finance these energy sources, is currently the subject of much debate. What seems to get lost in all the consternation is that in order to receive this ‘sustainable label’, very strict conditions must be met. When one considers the impact of this label on the reduction of carbon emissions, the plan becomes more understandable. In that context, the European Commission proposal does fit in the transition towards a carbon neutral energy mix by 2050.
Why is such an EU taxonomy important?
To reach the actual goal of limiting global temperature increase, many steps are needed.Investing in carbon neutral solutions and reducing emissions from fossil fuels is crucial. At the same time, keeping the energy system reliable and keeping energy bills as affordable as possible are factors which must also be taken into account. We know that the expansion of solar and wind power across Europe is being fully targeted. However, we see that in some places the infrastructure will have to be greatly expanded to accommodate this more flexible way of generating energy. Finally, it is a fact that solar and wind energy are not always sufficiently available to meet the (still increasing) demand for electricity. Other alternatives play a role here. Think of demand-side management, energy storage and back-up energy sources.
The current energy mix in Europe differs greatly from country to country. In Poland, forexample, the economy runs mainly on coal, in France on nuclear energy, in Germany on a mix of coal and renewable energy and in the Netherlands mainly on natural gas. The fact that the energy mix differs so much from country to country makes it difficult to coordinate an unambiguous EU policy. In 2021, the European Commission agreed to sharpen the ambition with regards to CO2 emissions. With its 'Fit-for-55' plan, the CO2 reduction to be achieved by 2030 (compared to 1990) has been increased to 55%. To achieve this, greenhouse gas emissions must be reduced quickly and drastically. But even after that, there will still be a challenge – perhaps even a bigger one.
"Natural gas will play the role of transition fuel mainly in the next decade. Nuclear power will grow again after 2035".
In order to move from the current - mostly fossil-based - energy mix to a carbon-neutralmix, natural gas and nuclear energy play important roles in the transition, in addition to well-known sustainable energy sources such as solar and wind energy. Nuclear energy is known to be virtually CO2-free. With natural gas, we know that emissions from current gas plants are on average half of that from coal fired power plants. According to both the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA), both energy sources will grow in percentage terms. Natural gas will play the role of a transition fuel mainly in the next decade. Nuclear power will grow especially after 2035. The EU taxonomy directs and mobilises private investment in activities needed to achieve climate neutrality in the next 30 years. Because both energy sources are so important to accelerate the reduction of greenhouse gas emissions, the European Commission (EC) has proposed in a compromise among member states to give both a label confirming their role in the energy transition. With this affirmation, the EC hopes to facilitate the financing of certain gas and nuclear activities. This decision has been widely criticised, also by investors, as they do not consider nuclear energy and natural gas to be environmentally friendly.
Strict conditions only
However, strict conditions apply to meet the requirements of the EU taxonomy, and thusto qualify for more favourable financing conditions. For nuclear power, the building permit must be applied for before 2045. In addition, a nuclear power plant must meet the most modern requirements and there must be a good and safe plan for dealing with the nuclear waste.
A gas-fired power station should be built only to replace coal-fired power stations. The gas plant should be suitable for the combustion of 'low carbon' gas, such as hydrogen for example. And there is a maximum emission of 270 grams CO2/KWh, or a maximum of 550 kg CO2 per year. After 2030 this maximum will be 100 grams CO2/KWh. According to a study by the European Economic Commission of the United Nations (UNECE), the average emissions of a gas plant currently lie between 403 and 513 grams of CO2/KWh. If the CO2 emissions can be (partially) captured and stored (Carbon Capture and Storage = CCS), then the emissions drop to a range of 92-221 grams CO2/KWh. This shows that natural gas can only be included in the EU taxonomy, if CO2 emissions are captured and stored.
Steer not towards green and sustainable, but towards carbon reduction
The EU taxonomy does not only speak of green and/or sustainable. According to the EC website, the EU taxonomy is a "robust, science-based transparency tool for companies and investors. It creates a common language that investors can use when investing in projects and economic activities that have a significant positive impact on the climate and the environment". In this light, the explanation of natural gas as a transition fuel in some countries is appropriate. By replacing coal with natural gas, CO2 emissions will be drastically reduced. And because of the strict conditions, that reduction will be much more than the current 50%. Nuclear energy already had the advantage that it emits virtually no greenhouse gases, and can therefore play an important role in the stable generation of electricity (or hydrogen).
The common argument that natural gas and nuclear power should not play a role in the EUtaxonomy, is that they are not green or sustainable. This brings me back to where I started: 'To reach the actual goal of limiting the global temperature rise, many steps are needed: investing in carbon-neutral solutions and reducing emissions from fossil fuels'. The goal is not to invest in green or renewable energy, but to reduce carbon emissions. Of course, green investments do play a major role. The sooner steps can be taken, the less CO2 will be released into the atmosphere. In the first place, this does indeed require a full commitment to renewable energy sources such as solar and wind energy. And in addition, if the reduction of CO2 emissions can be accelerated further by simultaneously (temporarily) adding other CO2-neutral sources (nuclear energy) or by significantly reducing emissions (replacing coal with natural gas), then those steps must be taken as well. That is, if you consider combating climate change more important than just focusing on whether an activity is ecologically sound.