New natural gas and nuclear energy projects could be classified as “green” investments to help the European Union (EU) reach its net-zero emissions target by 2050, according to a draft proposal by the European Commission (EC) published this month.

Regulations proposed under the EC’s taxonomy draft, part of a set of policy initiatives called the European Green Deal, could attract billions of euros in state and private investments for natural gas and nuclear projects classified as environmentally sustainable. 

However, the draft was met with threats of legal actions against the commission. Since the regulations were first proposed in 2020, the final draft has been delayed several times because of disputes between EU member countries. Despite the lack of agreement, the commission plans to move forward. 

“We need to act now if we are to meet our 2030 and 2050 climate targets,”  EC spokesperson Daniel Ferre told NGI. This is what the European Green Deal is all about…The existing energy mix in Europe today varies from one member state to another. 

“Some parts of Europe are still heavily based on high carbon-emitting coal,” Ferre said. “But even if some solutions might look ‘less green’ they are intended to accelerate the switch from higher- to lower-emitting energy sources.”

Each EU member determines its energy mix. As the continent’s energy market becomes more integrated and interdependent, it may  be needed to achieve net-zero emissions by 2050. Both natural gas and nuclear are needed for the EU to reach net zero ambitions, EU climate policy chief Frans Timmerman said last month.

Gas and power prices have soared on the continent in part as domestic fossil fuel production has declined. There also have been more baseload power facilities shuttered in favor of renewable energy. As energy demand has rebounded from the pandemic, there has also been fierce competition for energy supplies.

EU member countries remain divided in their support for nuclear and natural gas assets. Austria, Denmark, Germany, Luxembourg, Portugal and Spain oppose nuclear power. The group said nuclear is expensive, has too many issues around radioactive waste and takes too long to build. 

Germany plans to close its remaining three nuclear plants by the end of 2022 and phase out coal by 2030. While Germany depends on gas as it replaces nuclear and coal, it expects to reach its 2045 climate neutrality target.  

For natural gas projects to qualify as a green investment under the EU proposal, new gas-fired power plants cannot emit more than 270 grams of carbon dioxide (CO2) equivalent/kWh. Construction of facilities would have to be granted by the end of 2030 and include plans to switch to renewables or low-carbon gases by the end of 2035.

[Want today’s Henry Hub, Houston Ship Channel and Chicago Citygate prices? Check out NGI’s daily natural gas price snapshot now.]

The Nuclear Divide

The University of Edinburgh’s Stuart Hazeldine, professor of carbon capture and storage, told NGI that nuclear should be considered as part of the low carbon mix. “There is no doubt that nuclear energy is very low carbon, although the plant building and the fuel purification are sources of CO2 emissions.”

Nuclear waste still remains an unsolved problem, Hazeldine said. “Radioactive waste disposal can and should be technically solvable. It’s more a science and engineering perception and communication problem, as long as regulations remain stringent.” 

All new nuclear power plants to be built under the EU’s proposed regulations must be classified as green or sustainable to receive construction permits by 2045. Financing, water resources and a safe site to dispose of radioactive waste would have to meet new criteria.

The commission expects to publish a final text by the end of January for review over the next six months.