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European Commission Formally Proposes Complementary Delegated Act of EU Taxonomy Regulation Covering Certain Gas and Nuclear Activities for Legislation


On February 2, 2022, the European Commission (the “EC”) formally submitted the proposed final text of the amendment to the EU Taxonomy Regulation (adopted in 2020) and the Delegated Acts of the EU Taxonomy Regulation (adopted in June 2021), which include nuclear and natural gas activities in the list of sustainable economic activities, for a legislative process by the European Parliament and the Council. 

The Delegated Acts provide the technical evaluation criteria intended to classify certain activities in forestry, manufacturing, energy, water supply, sewage and waste management, transportation, construction, IT and technology development sectors as sustainable economic activities.

The proposed amendment adds power generation by certain gas and nuclear activities in Section 4 (“Energy”) of the Delegated Acts by setting forth roadmaps for natural gas and nuclear activities to be recognized as sustainable economic activities defined under the EU Taxonomy Regulation and the Delegated Acts if they can meet certain conditions over a prescribed period for the purpose of achieving the target carbon reduction by 2030 and carbon neutrality by 2050.  The details of the amendment are as follows:

1.   Nuclear Power

  • New Nuclear Power Plants: The amended Delegated Acts will apply to the construction and operation of any new nuclear power facilities for which a construction permit was issued up to year 2045.
    -  Best-available technology and accident-tolerant fuel, which have been certified and approved by the national safety regulator, will be fully applied from the year 2025.

  • Renovation of Existing Nuclear Power Plants: The amended Delegated Acts will apply to renovated facilities to extend the operation of service up to the year 2040.

  • Common Criteria
    -  Nuclear power plants must satisfy the various nuclear power safety-related standards of the EU and must have sufficient funds for radioactive waste management and dismantling of the plant at the time of project approval.
    -  Nuclear power plants must currently possess facilities to treat “very low,” “low,” and “intermediate” levels of radioactive waste.
    -  Nuclear power plants must document detailed plans for constructing a facility to treat high level radioactive waste by the year 2050.
    -  Nuclear power plants must obtain a nuclear facility operator to verify the safety of the nuclear power plant site and submit a plan to prevent potential natural disasters.
    -  Member states must dispose of nuclear waste only within their borders, unless otherwise agreed upon with other member states.

2.   Natural Gas

  • The amended Delegated Acts will apply to both existing and new natural gas-powered plants.

  • The greenhouse gas emissions from power generation by fossil gas fuel during the plant lifecycle must be only up to 100g CO2e/kWh and such emission levels must be verified by an independent third party.

  • For facilities with construction permits obtained by December 31, 2030, (1) direct greenhouse gas emissions must be less than 270g CO2e/kWh of power output or must be less than 550g CO2e/kWh, which is the average over 20 years, per annum, (2) greenhouse gas emissions must be reduced by at least 55% over the course of the lifecycle, (3) total power output must remain constant, (4) alternative power and/or heat/cooling must not be generated from renewable energy source, (5) the constructed power plant must replace existing high-emitting heating/cooling and power generation activities, separate heating/cooling power generation activities, and power generation activities that use solid or liquid fossil fuels; (6) the facilities must be designed and constructed to use renewable and/or low-carbon gas fuels, and conversion to full use of renewable and/or low-carbon gas fuels must occur by December 31, 2035, and (7) coal power generation must lead to phased closure.

  • The construction of new facilities and the renovation of existing facilities must be validated by an independent third party, who will be required to validate the level of direct greenhouse gas emissions, assess whether the annual greenhouse gas emissions of the relevant activities comply with average thresholds over a 20-year period, and evaluate whether the activities are credibly on track regarding compliance.

  • Additionally, measuring equipment for monitoring physical emissions such as methane leakage must be installed during construction, and leakage detection and repair programs must be adopted.  During operation, the physical measurement of emissions volumes must be reported and any leakage must be removed.

Many member states have shown support to the proposed amendment of the Delegated Acts.  In particular, France has recently announced its plans to build new nuclear power plants.  However, five member states, including Germany and Austria, are strongly opposed to the inclusion of nuclear power in the Delegated Acts and have clarified their plans to file a claim with the Court of Justice of the European Union if the amendment were to pass.  Therefore, negotiations between the member states during the legislative process will be a key factor.

In the meantime, it is worth noting that the EU Taxonomy Regulation is legally binding as a criteria for corporate disclosure, but serves only as a voluntary guideline when applied to companies’ attraction of and search for investments.

In December 2021, the Korean Ministry of Environment has also issued the “K-Taxonomy Guideline,” which was prepared over the course of two years, to promote green finance and advance into a carbon-neutral society.  The K-Taxonomy classifies a total of 69 economic activities into the “Green Segment” and the “Transition Segment”, for the achievement of the 6 Major Environmental Goals: (1) greenhouse gas reduction, (2) climate change acclimation, (3) sustainable water conservation, (4) resource circulation, (5) pollution prevention and management, and (6) biodiversity conservation.

The K-Taxonomy Guideline differs from the EU Taxonomy Regulation in that it includes natural gas but does not include nuclear power in the “Transition Segment.”  However, nuclear power-related activities that were classified as sustainable economic activities in the proposed amendment to the Delegated Acts of the EU Taxonomy Regulation are subject to strict conditions such as specific plans to secure facilities to treat the high-level radioactive waste and safety guarantees.  This has led to controversies among EU member states regarding the feasibility of constructing nuclear power plants in the face of such strict compliance standards.

Therefore, in addition to the inclusion of nuclear power-related activities in the proposed amendment to the Delegated Acts of the EU Taxonomy Regulation, discussions among the member states on the detailed provisions of the proposed amendment should be closely monitored and considered in future discussions on the K-Taxonomy.