The EU Taxonomy will be an important tool for achieving the EUs ambitious goals of climate neutrality by 2050 and a 55-percent GHG reduction by 2030. The taxonomy sets out to classify what activities should be defined as sustainable, to avoid “greenwashing”–saying that an activity is more sustainable than it really is. Furthermore, the Taxonomy will help direct capital flows from investors to approved sustainable activities, instead of unsustainable activities.

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The Taxonomy regulation is a positive initiative by the Commission to drive the energy transition forward. However, it is vital that the Taxonomy respect the Rule of law and does not discriminate among renewable technologies. In other words, remain technology neutral.

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However, the Commission’s first draft of the Delegated Act include several flaws regarding respecting both the Rule of law and technology-neutrality. This must be corrected. For instance, hydropower is one of the largest renewable energy sources in Europe and remains the only renewable source with the ability to store large amounts of energy. In other words, hydropower has unique features important for the green energy transition. Despite its importance, hydropower is treated harsher than other renewables sources in the Commission’s Delegated Act. We believe that all renewable energy sources will be important to reaching the ambitious aim of climate neutrality by 2050. Therefore, the Taxonomy should not try to pick the winners of the future by discriminating one source over another but adopt a technology-neutral approach to encourage a ramp-up of all renewable sources.

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Another important aspect is the Rule of law. All legislation needs to adhere to existing EU Treaties and secondary law to be legal. This is the foundation of a democratic society. However, the draft of the Delegated Act showed signs of divergence from existing EU legislation and thus fail to respect the Rule of law. In the case of hydropower, the criteria in the Delegated Act went beyond that of the Water Frame Directive (WFD) – the directive that regulates hydropower. In addition, the Commission has acted beyond its mandate given in the Taxonomy Regulation.

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It is even more disappointing that Commissioner McGuinness publicly supported that the Taxonomy extends beyond what is legal. In a speech on the 25^th of January, she stated:

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“The Taxonomy goes further in some cases than existing legislation and policy because it is necessary to do so”. (read full statement here)

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In addition to these two points, there are several additional elements about the Commission Taxonomy process which raise concern. For instance, the process has been far from transparent. Furthermore, the distribution of the chosen experts for the Commission’s Technical Expert Group (TEG) has been questionable at the very least.

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Nonetheless, the Taxonomy is without a shadow of a doubt, an important tool. However, the classification scheme must follow the Rule of law. Additionally, it must remain technology-neutral and retain a holistic view of the transition of the energy system. Only by respecting these principles would the Taxonomy – with legitimacy – help us in the direction of the sustainable future we all want.

Kristian D. Larsen, Adviser at Brussels Office, Energy Norway

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Birgitte Jourdan-Andersen, Head of Brussels Office/Lawyer, Energy Norway