Is Germany blocking nuclear because of gas?

This article was originally posted in the Financial Times.

Europe’s taxonomy for sustainable activities is meant to make sustainable investment easier, providing the financing sector with an easy go-to place for defining activities that both significantly aid us with environmental goals, such as mitigating climate change, and which do no significant harm to other sustainability criteria. It was commissioned by the European Commission in July 2018 when it established a Technical Expert Group (TEG) to aid Europe’s decarbonisation transition. The group’s first report on sustainable activities came out just a year later on June 18, 2019 and featured a mixed analysis of nuclear. While the report said nuclear does have the climate credentials, it also stressed the need for empirical evidence on its sustainability over the fuel cycle – namely with regard to the storage of nuclear waste.

The bad news is it now looks like the entire taxonomy could be in jeopardy of not becoming law.

In September, Germany joined Austria and Luxembourg in opposing Finland’s proposal to make the Taxonomy a technology neutral document that would also include nuclear as a sustainable activity – for which there is ample evidence. The matter then moved to be discussed in the “Trilog” (the European Council, European Commission and European Parliament).

But arguments over nuclear energy’s sustainability might just be a cover to bury a project that has become inconvenient for certain countries. In Brussels there is increasingly talk that the true reason for the taxonomy stumbling is much deeper and murkier.

For a long time Germany’s energy mix has shifted away from nuclear and tried to cut dependence on coal. In early 2019, a government-appointed commission drafted a roadmap to close down German coal-fired power plants by 2038, and since then, the government has worked on a law to make that happen. Even if that law fails, it is likely that the increasing price of emissions rights in the EU’s Emissions Trading System will make coal power very uneconomical by that date either way.

Against that backdrop, however, even with a heroic push for more renewables, it is likely that Germany’s dependence on natural gas will have to increase significantly in the short term. This is problematic for the taxonomy. Even though natural gas was once considered a step in the right direction and much cleaner than oil or coal-fired alternatives, when it came to the taxonomy it was in relative terms deemed too emitting – both directly and because of leakage issues – to be compatible with a carbon neutral Europe by 2050. It was thus excluded.

The costs of the natural gas omission are likely to be particularly burdensome for German power utilities and heavy industries, which have invested significantly in natural gas and the feasibility of bringing in liquefied natural gas over the last decade. The fallout is also likely to hit Germany’s energy security by making emissions reductions harder and more expensive to achieve in the future, all relative to other European countries and industries.

In that light many in Germany now have an interest in seeing the taxonomy fail altogether to avoid the knock to their natural gas interests. In nuclear, they may have found the perfect scapegoat to make that happen.

As it stands, many countries already oppose a nuclear-omitting taxonomy because the controversial power source, which dominates in areas like France, forms an essential part of their climate mitigation toolkit. By insisting nuclear should not be included in the taxonomy, however – and joining up forces with other anti-nuclear countries such as Austria and Luxembourg – Germany might steer us into a situation where the Trilog will never be able to find an acceptable compromise. This could lead to delays and the eventual burying of the taxonomy, perhaps come Germany’s EU presidency in the second half of 2020.

If this was the case, then Germany’s move would be protectionist to the extreme. By refusing to include nuclear in the taxonomy, Germany is trivialising and undermining other countries’ domestic energy and climate policies and in so doing jeopardising the entire world’s ability to meet the Paris Agreement’s target of keeping global temperatures from rising beyond two degrees.

The sole reason for not supporting nuclear would be to bury the taxonomy, which has become an industrial inconvenience for Germany – even though the taxonomy was intended to encourage more clean investments in the first place. If that is the case, all of Europe – and its climate – will suffer, just so that Germany doesn’t have to face the consequences of its poorly designed energy policy alone.

 


 

Image: © Bloomberg

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Posted by Rauli Partanen

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