EU’s sustainable finance taxonomy to brand gas and nuclear plants as ‘green’
- July 7, 2022
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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EU’s sustainable finance taxonomy to brand gas and nuclear plants as ‘green’
Subject: Environment
Section: Climate Change
Context:
EU has recently agreed to label investments in some gas and nuclear power plants as environment-friendly.
What is EU taxonomy?
- It is a classification system, establishing a list of environmentally sustainable economic activities.
- It could play an important role helping the EU scale up sustainable investment and implement the European green deal
- The EU taxonomy would provide companies, investors and policymakers with appropriate definitions for which economic activities can be considered environmentally sustainable.
- In this way, it should create security for investors, protect private investors from green washing, help companies to become more climate-friendly, mitigate market fragmentation and help shift investments where they are most needed.
The Taxonomy Regulation establishes six environmental objectives:
- Climate change mitigation
- Climate change adaptation
- The sustainable use and protection of water and marine resources
- The transition to a circular economy
- Pollution prevention and control
- The protection and restoration of biodiversity and ecosystems
What makes a “green” investment?
The rules classify three types of green investments
- Those that substantially contribute to green goals, for example, wind power farms.
- Those that enable other green activities, for example, facilities that can store renewable electricity or hydrogen
- Transitional activities that cannot be made fully sustainable, but which have emissions below industry average and do not lock in polluting assets or crowd out greener alternatives
Green washing
- It is his practice of making unwarranted or overblown claims of sustainability or environmental friendliness in an attempt to gain market share.
Background:
EU Greed Deal:
- To raise the EU’s ambition on reducing greenhouse gas emissions to at least 55% below 1990 levels by 2030.
- To achieve climate neutrality in the EU by 2050.
India’s Climate target:
- India will get its non-fossil energy capacity to 500 gigawatt (GW) by 2030
- India will meet 50 per cent of its energy requirements from renewable energy by 2030
- India will reduce the total projected carbon emissions by one billion tonnes from now onwards till 2030
- By 2030, India will reduce the carbon intensity of its economy by less than 45 per cent
- So, by the year 2070, India will achieve the target of Net Zero