The European Green Pact sets ambitious goals for the fight against climate change, such as reducing CO2 emissions to achieve climate neutrality by 2050. In this context, last February, the European Union commission reached an agreement to incorporate the gas and nuclear energy in the taxonomy of green under certain conditions. This is a list of activities considered sustainable and for which the European Union seeks to guide private sector investments, preventing business actions from becoming a mere ‘greenwashing’ or a green marketing ploy to increase its benefits.
The agreement reached is not yet in force. Once it is formally adopted, the text will be analyzed by the Council and the European Parliament, which can oppose it by a reinforced qualified majority in the first case (72% of the States representing 65% of the population) or by a simple majority in the second. If there is no opposition, entry into force is scheduled for 1 January 2023.
The European Union’s regulatory framework is complex, but at the political and social level the discussion is not without controversy. With methane emissions at record levels, as energy journalist Jeff Tollefson points out in Nature, its incorporation as green energy generates great rejection.
In addition to the environmental rejection generated by the use of gas, there is also geopolitics. Russia’s invasion of Ukraine only fuels the European Union’s interest in accelerating the transition to cleaner energy. Indeed, on March 1, the High Representative of the Union for Foreign Affairs and Security Policy, Josep Borrell, in his speech to the European Parliament on Russia’s aggression against Ukraine, made reference to Europe’s dependence on the supply of Russian gas.
European dependence on gas from Russia has increased over the last 20 years, although the EU institutions have warned of the need to reduce it. But “from now on, we will put our actions in line with our words,” Borrel said. The decision that is finally adopted could end up influencing the fate of the gas projects currently being discussed in Latin America.
On the other hand, nuclear energy is also under debate. Alarm bells are ringing as much because of toxic waste as it is because of background in other parts of the world. The accident at the Fukushima plant in 2011 is an illustrative example of the risks involved. In fact, Germany’s “nuclear blackout” policy was based on the Fukushima accident and determined that the last nuclear power plant will be operational until December 31 of this year.
This decision generated reactions at the corporate level. Companies such as Sweden’s Vattenfall have initiated investor-state arbitration, as well as proceedings in national courts. In March 2021, Germany agreed to an indemnity of €2.438 billion to end the disputes.
Even if the nuclear projects are limited, in some countries there is a discussion to move forward in the construction of new plants. This is the case of Argentina, which, together with China, decided to start the construction of a fourth nuclear power plant (Atucha 3). Although the project has generated rejection by various sectors of society, it is still ongoing. Ultimately, the decision that the EU finally takes on this issue seems irrelevant to the region.
the B side
The debate over the inconsistencies of the new green taxonomy masks its B side, which is the modernization of the 1994 Treaty on the Carta de la Energía, to which both the EU and most of its members are party. Negotiations are ongoing and the controversy is also on the table. The investor and state dispute settlement mechanism contained in the original treaty formed the legal basis for 135 claims from foreign investors.
According to data from UNCTAD’s Policy Investment Hub, the Energy Charter Treaty is the international agreement based on which the largest number of demands have been registered at a global level. In fact, the registered demands involve investors of the nationality of an EU member state against another member state.
Fight against climate change
In times of struggle against climate change, the path should not be marked by the inclusion of nuclear energy and gas in the green taxonomy or by the investor-state dispute resolution mechanisms of the Energy Charter Treaty. Otherwise, the State ends up questioning whether or not to change a decision, even if this worsens the climate crisis, a situation that is dragging humanity towards its extinction.
The inclusion of gas and nuclear energy does not minimize the risks, but it exacerbates the uncertainty that our societies face at the time of transition.
