Net-Zero Alliance Plans to Reject Gas, Nuclear as Green Assets
(Bloomberg) -- The European Union will likely face investor backlash if it includes natural gas and nuclear energy in its green rulebook, known as the EU taxonomy.
The United Nations-convened Net-Zero Asset Owner Alliance, which is part of the wider finance industry’s $130 trillion climate agreement announced last week, wrote in a document that hasn’t been finalized that it would oppose such a decision. Instead, fossil fuels should go into an extension or separate piece of legislation for transition technologies, the group said.
“The Alliance supports a taxonomy that is credible, usable, as well as science- and evidence-based,” according to the document seen by Bloomberg News. The inclusion of gas “would be inconsistent with the high ambition level of the EU taxonomy framework overall.” For nuclear, “it will be of utmost importance to apply strict criteria when assessing” the principle of do-no-significant-harm, “with respect to the other environmental objectives to identify a potential taxonomy alignment,” it said.
The development marks a blow to those EU members who’d hoped the bloc would take a softer stance on gas and nuclear. It also sets the tone for other investors keen to put their net-zero pledges to work, less than a week after international financial institutions representing 40% of total global assets pledged to work toward carbon neutrality by the middle of the century.
The European Commission is under pressure from member states such as France, which want to include nuclear and gas as key planks of their green transition strategies. The debate has intensified in recent months as energy prices soar amid a lack of supply. A decision on the so-called complementary delegated act is expected in the coming weeks.
Environmental groups have criticized the potential inclusion of gas, arguing it would undermine the EU’s ambition of setting the “gold standard” for green investing. It also would result in the bloc failing to meet its goal of cutting emissions by 55% by 2030 from 1990 levels and becoming carbon neutral by mid-century, they said. For nuclear, meanwhile, there are concerns over the environmental impacts of radioactive waste.
The Net-Zero alliance, whose members include Allianz SE and the California Public Employees’ Retirement System, urged the EU Commission, member states and their expert bodies to make sure any decision arrived at is “science and evidence-based,” according to the document.
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