EU taxonomy of sustainable economic activities and its relevance for the Romanian energy sector

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.

Latest Publications