In this report, EPG analyzes the EU Taxonomy, a classification tool for sustainable economic activities, and its impact on Romania’s energy sector.
The EU Taxonomy was meant to become the ultimate manual for financial institution to label their products as “sustainable”. Its basic idea was simple: to provide information for private investors through a classification system that labels economic activities as “sustainable” only if they are confirmed to have a positive contribution to environmental objectives by an expert group.
However, the Taxonomy has become a highly politicised process, which ultimately undermines both its credibility and its usefulness as a classification tool. The Complementary Delegated Act (CDA) for labelling natural gas and nuclear energy activities as sustainable was the direct result of lobbying efforts and political pressures, which contributed to the flawed understanding that the Taxonomy will decide what technologies are strategically important and will be allowed to be funded in the immediate future.
For Romania, the Taxonomy represents an opportunity to attract large volumes of capital from investors interested in sustainable and future-proof projects.
However, the CDA that will be voted upon by the European Parliament this week risks jeopardising the credibility of this entire classification system and may bring reputational damage to EU climate leadership, with little benefit to Romania and its planned investments.
The focus should return to the initial objective of creating a list and criteria for environmentally sustainable economic activities, while acknowledging that other, less sustainable, but strategically important activities will continue to be developed and funded regardless.