The Foundation Ethos is concerned about a decision that could go against the very original purpose of the taxonomy, which is to direct investments towards activities that have a favorable impact on the environment.
On 31 December 2021, the European Commission proposed to include natural gas and nuclear energy in the European taxonomy, thus making it possible to consider investments in some of these activities as “sustainable”. Although the final version of the proposal still has to be submitted by the end of January to take into account the feedback from government representatives and experts, Ethos is concerned about a decision that is against the original purpose of taxonomy. Introduced in 2020, its objective is to encourage and direct investments towards activities that have a positive impact on the environment.
For the Ethos Foundation, including power plants that run on natural gas and nuclear power plants in the European taxonomy would amount to a considerable dilution of the positive effects initially targeted. This could lead to the misuse of public funds, subsidies, and private investments to the detriment of the development of renewable energies. The energy transition would thus be delayed, and climate protection would suffer. Moreover, it would give the false impression that a clean and low-CO2 energy supply could not be achieved without resorting to natural gas and nuclear.
For the Ethos Foundation, nuclear power and natural gas cannot be considered as sources of sustainable energy or as transitional activities. Nuclear power produces highly radioactive waste and requires considerable investment, both in the construction and dismantling phase. In addition, in the event of an accident it represents a major risk for public health and can have significant effects on the other environmental objectives of the European taxonomy. It can therefore not be considered as being in conformity with the “Do no significant harm” principle currently included in the taxonomy. Natural gas is a non-renewable fossil energy source that also produces greenhouse gases.
Furthermore, as recently pointed out by the International Energy Agency, the demand for natural gas will have to decrease by 55% by 2050 if we intend to achieve the net zero CO2 emissions objective. It would therefore not make any sense to continue investing in natural gas.
Conversely, by keeping natural gas and nuclear out of the taxonomy as initially planned, the European Commission would help direct investments towards sustainable and renewable energies. Thanks to energy efficiency and these renewable energies, climate protection could be implemented faster, more efficiently and at lower cost.
Solar, wind and hydropower, including storage – battery and hydrogen technologies – are cheaper than building new nuclear and gas-fired power plants and are technologically mature. If the European Commission were to decide to include natural gas and nuclear in the taxonomy, it would only be conceding to political and economic forces that have neglected, delayed and even actively fought against the expansion of renewables for decades.
Whatever the decision of the European Commission, the Ethos Foundation will continue to exclude from its investments companies which generate more than 5% of their turnover in the nuclear and gas sectors of non- conventional, in accordance with its eight principles for socially responsible investment.