Technology neutral legislation has been a European Commission hallmark over the last half century when exercising its sole right to propose EU directives and regulations. Whether it be agriculture, telecoms, energy, biotechnology or wide range of other sectors the EU executive body has only set forward the legal framework within which innovators and entrepreneurs can operate.
By not proposing winners and losers the Commission’s technology neutral approach has not only allowed it to remain above the political and competitive crossfire among 27 EU member countries but it has bolstered its roles as the bloc’s chief antitrust arbiter and trade negotiator. Of course the approach has also been a pillar in the market economy.
To get an idea what the past half century might have been like if the EU had not abided by a technology neutral legislative approach all you have to do is follow in detail the ongoing “taxonomy” debate about what technologies should qualify for financial market investment under the EU’s pioneering Sustainable Finance rules adopted in 2020.
The law is designed to help the EU reach its 2030 55 percent carbon reduction target and the 2050 net zero goal. It is supposed to prevent investment in multi-billion euro power stations, pipelines and others projects that could become future “stranded assets” on the road to net zero.
Guided by a wide range of academic, environmental, industry and European Commission experts, the first round of the taxonomy criteria – or delegated acts as EU implementing legislation is called – were outlined in April. They left a trail of bitter, ongoing disputes. This is especially the case for forestry.
Countries led by Sweden and Finland, which have been global sustainable development leaders for the past three decades or more, vociferously rejected rules they insist would curtail investment in biogas produced from forestry biomass. Normally consensus driven, the two Nordic countries have made it clear the one-size-fits-all forestry management investment guidelines are an ideological straitjacket based on inexact if not flawed science.
With the Nordic revolt still rumbling, the next round of taxonomy criteria is supposed to cover natural gas, nuclear power and agriculture in guiding the investments of banks, stock brokers, private equity, hedge funds and others. And the top down taxonomy approach in these sectors is proving as much if not more politically divisive.
Nuclear power is the best example of that. If some EU member states as well as all environmental groups have their way, nuclear power would be struck from the list as a sustainable energy even though its carbon footprint is significantly less than fossil fuels such as coal or natural gas. Safety issues and waste are the nuclear opponent’s key concerns.
Of course in France, the EU’s nuclear power champion over the last 50 years and a country that depends on approximately 70 percent of its electricity from aging reactors, the outlook is dramatically different. And anybody paying attention to the French presidential campaign underway has to realize how the idea of banning future investment in nuclear power is political dynamite.
Combined with grass roots resistance to onshore and offshore wind turbines in some parts of the country, is it plausible that France can do a wholesale energy pivot over the next decade while remaining economically competitive and in line with its climate goals? Clearly such a dramatic shift in our politically fragmented, social media driven society would be, among other things, a gift to far-right, anti-EU political groups. And then there is the anarchic, rampaging Gillet Jaune umbrella movement that could easily rear its ugly head.
Overall more than 10 EU countries have made it clear nuclear power is part of their long-term future. Indicative of how nuclear power – for better or worse – is being counted on in the run up to the 2030 and 2050 goals, you only need to look across the French border to Germany, which will phase out all nuclear power in 2022. The new German government, which includes the Green Party, acknowledged at the end of November as part of its coalition agreement that it will be dependent on electricity from French nuclear power stations to help meet its residential and energy-intensive industrial needs in the run up to 2030.
The upcoming taxonomy delegated rules for future natural gas investment are just as controversial. Integral to the natural gas guidelines is a fierce, ongoing “electrons vs. molecules” debate about whether wind and solar energy should dominate future investment – as most environmental groups insist. Or should equal or even higher priority be given to gas, whether it be various forms of hydrogen, biogas or biomethane.
The stakes around the future of gas, which will also be the subject of European Commission legislation on Dec. 14, could not be higher. A key question about hydrogen, whether it be produced via electrolysis powered from wind, solar, biogas, nuclear or biomethane energy, concerns distribution. Will it be technologically and economically feasible to transmit fossil-free gas via legacy infrastructure? Can it be burned in industrial or residential gas boilers or in modified car engines and in ways that reduce the need for expensive replacements or refits that many businesses or citizens can not afford?
Deciding the answers to these difficult questions at this stage is one reason many experts say the taxonomy process is at best a premature exercise. The naysayers also say it contradicts spending billions of euros for innovation and research that seek technological solutions involving co-generation, geothermal, carbon capture, nuclear fusion, digitization, waste bioremediation and others that hold promise for integrated, sustainable energy systems in the transition to net zero carbon emissions.
But tune into the briefings from Greenpeace, Climate Action Network, Friends of the Earth – not to mention Greta – and the planet is on the cliff edge and anything less than a strict regimen of wind and solar combined with energy efficiency and conservation is a waste of money and a recipe for disaster.
Whether the staunch no nuclear, no biogas and all “electron” formula is politically and technology feasible is obviously doubtful for both climate and national security reasons. Concerning the latter, if the EU’s “strategic autonomy” and non-NATO military ambition championed by French President Emmanuel Macron in the face of Trumpian isolationism as well as Putin and Xi power plays are serious the bloc must find ways to reduce its overwhelming foreign energy dependence, especially on Russia. In order to do that the EU certainly needs to hedge its bets and have multiple energy sources at its disposal.
From a climate perspective, the EU only contributes approximately 18 percent of the world’s greenhouse gases. Therefore, the real existential climate question is what will limit worldwide global warming to 1.5 degrees Celsius above pre-industrial levels as agreed in the 2015 Paris climate accord while billions of people in Asia, Africa, South America and elsewhere pursue their dreams of a higher standard of living?
Clearly answering that question will require a multi-disciplined Manhattan Project type determination to find integrated, economically feasible and sustainable technology solutions. But dictating them now via a top-down, ideologically driven process is proving to be a futile exercise in command and control politics and economics.