"The European Parliament is wrong to include gas and nuclear as green energy, as they are clearly not"

• Marcos Eguiguren, director of the International Chair in Sustainable Finance at the UPF Barcelona School of Management, analyses the European Parliament's decision on the taxonomy that indicates to investors which activities can be classified as sustainable or contribute to reducing greenhouse gas emissions. 

The European Parliament has approved, at the request of the European Commission, to include natural gas and nuclear energy as green energies in the taxonomy that signals to investors which activities can be qualified as sustainable or contribute to reducing greenhouse gas emissions. 

The director of the International Chair in Sustainable Finance at the UPF Barcelona School of Management and Triodos Bank and Associate Provost for Strategic Projects at UPF-BSM, Marcos Eguiguren, has expressed his "perplexity and disagreement" with the Chamber's decision, as he has indicated on several occasions. Eguiguren's view, moreover, is in line with that of the Global Alliance for Banking on Values (GABV) in recent publications. 

"The purpose of sustainable finance is for institutions to implement a financial intent that seeks to have a positive impact on society" 

According to Eguiguren, the very way of tackling the taxonomy "generates doubts", as there is talk of "changing what we understand by sustainable finance to ticking the boxes, when its purpose is for institutions to implement a financial culture or intent that seeks to have a positive impact on society". "This objective can hardly be achieved through taxonomy alone", he added.  

The impact of the geopolitical situation on the decision

For the director of the UPF-BSM International Chair in Sustainable Finance, the European Parliament's decision "is wrong because the taxonomy is perverted by incorporating as green energy two sources that clearly are not". In the case of natural gas, because "although they certainly generate fewer greenhouse gas emissions, we are talking about an energy source that generates them", he said. In the case of nuclear energy, because "although it does not emit greenhouse gases, it does generate a significant volume of radioactive waste that is extremely dangerous for the planet, the recycling and solution to which is a long way from being found", he said. Therefore, Eguiguren believes that "they cannot be classified as green energies stricto sensu". 

In the words of its director, the chair "can understand that, given the geopolitcal situation, there is a certain urgency to maintain certain doses of energy generation via nuclear or gas, but we should not make it official that these energies fall into the category of green". In this sense, Eguiguren indicated that "it would be much better" to have defined a different transitional regulation, with many limitations and restrictions, "to maintain this type of technology for a short time without it being incorporated into the green taxonomy". 

"Given the geopolitical situation, it is understandable that there is a rush to maintain certain doses of energy generation, but we should not officialise gas and nuclear in the category of green"

As Eguiguren explained last February, the EU executive's proposal backs the request of countries such as France and Germany, which even before the Russian invasion of Ukraine had already called for explicit recognition of nuclear energy as a source free of CO2 emissions and the inclusion of gas as a necessary source for the transition to a system based on renewables, respectively. 

Criticism from experts and climate groups

Although the energy crisis and the war in Eastern Europe have served as catalysts for the vote, the European Parliament's decision has also been strongly criticised by climate groups such as Greenpeace and the European Climate Foundation as a departure from what sustainable finance should entail. 

In this regard, Eguiguren added that, as International Chair in Sustainable Finance, "we think it is a very bad idea for both technologies to form part of the green taxonomy". "The real change in the business model of finance is not going to come by way of taxonomies, but by two main ways", he added, and continued: "First, by incorporating the systemic risk associated with climate change into the way in which institutions analyse and grant their risks. Second, by way of purpose. That is to say, that financial institutions, in their mission, vision and values, incorporate a clear purpose of economic and social transformation".