If the EU Taxonomy Regulation genuinely wants to deliver on its good intentions of scaling up sustainable investments and accelerating the climate transition, it sorely needs actionable criteria based on good science and existing metrics.

If the EU Taxonomy Regulation genuinely wants to deliver on its good intentions of scaling up sustainable investments and accelerating the climate transition, it sorely needs actionable criteria based on good science and existing metrics.

The direction of the taxonomy road was clear at first, “a European tool for greening the economy”. Although not mandating investments into those meeting its criteria, it would support top performers on sustainability and rate the degree of sustainability for each sector, business, and product.

The road becomes somewhat clearer?

November’s publication (and well-reported leak) of the long-awaited Draft Delegated act on Taxonomy meant the road became somewhat clearer. The intention to integrate Taxonomy into other areas such as State Aid and the Recovery and Resilience Facility. Criteria unfortunately distanced from existing metrics and sustainability requirements. Numerous sectors including bioenergy at risk of unnecessary punitive labelling of perfectly sustainable economic activities.

The Draft Delegated act labels the Bioenergy Sector as a transitional activity, meaning investments in the installation, maintenance or repair of our technologies would not be eligible under the sustainable finance. RD&I would also be excluded. We would also have bioenergy-related activities being scrutinised by the Commission every three years.

Transitional activity? This is the same sector where sustainable bioenergy must comply with all the REDII criteria. The same sector where bioenergy use has more than doubled since 2000, accounting for almost 60% of total EU renewable energy consumption in 2019 and described in the European Commission’s own Biodiversity Strategy 2030 as “a win-win solution for energy generation”.

Looking to the future, it is also the same sector where Sustainable bioenergy will remain Europe’s largest renewable in 2030 based on the forecasts in EU member states’ Integrated National Energy and Climate Plans.

Good intentions meet contradictory thinking

Let’s have a closer look at this ‘transitional activity’ label. The Commission describe a transitional activity in article 10(2) of the Taxonomy Regulation as one for which “there is no technologically or economically feasible low-carbon alternative”.

Yet, sustainable bioenergy is compliant with the requirements set by REDII and is therefore by definition a renewable energy source not different from others, matching the description of article 10(1)(a) of  the Taxonomy regulation: “generating, transmitting, storing, distributing or using renewable energy in line with Directive (EU) 2018/2001, including through using innovative technology with a potential for significant future savings or through necessary reinforcement or extension of the grid;”

Equally, Sustainable transport biofuels are the largest contributors to “clean or climate neutral mobility” according to article 10(1)(b) of the Taxonomy RegulationIn fact, the European Commission’s own relevant 2030 Climate Target Plan Communication states that by 2030, renewables in the transport sector need to increase to around 24% through, among other means, “further development and deployment advanced biofuels”.

The bioenergy sector is one of the largest investors in R&D amongst Europe’s renewables players, with biofuels attracting the third largest level of private R&D investment in the EU and with EU Member states investments in bioenergy R&D higher than in any other global competitors.  Companies are actively investing in research and development to help Europe keep global leadership in deploying advanced bioenergy solutions, with such solutions also featured in the same European Commission Communication as well as the most recent IEA ad IPCC  2050 decarbonisation scenarios.

In its current form, the Taxonomy Draft Delegated Regulation not only unnecessarily penalizes deployment of the EU’s largest renewable, but also goes against EU Industrial Strategy’s stated goal on enhancing strategic autonomy.  The Bioenergy value chain employs over 700.000 people in Europe, with over 50.000 business units in the EU leading the way in global technology manufacturing.

So, sustainable bioenergy and sustainable transport biofuels really don’t fit the Commission’s own description of a transitional activity, do they?

In fact, sustainable Bioenergy is anything but a transitional activity, instead being a renewable solution and so an inherently “low-carbon alternative” and a necessary tool for the decarbonisation of the EU economy rather than a temporary solution.

How can we redirect the road?

The European Commission needs to seize the opportunity presented by the upcoming public consultation to redirect the Draft Delegated act on Taxonomy back on to the right road.

This is going to require the upcoming consultation to be a real listening exercise from the EU side, taking on board the genuine concerns of sectors like Bioenergy and their related value chains to avoid unnecessary and punitive labelling of willing and sustainable industry partners in helping achieve Europe’s world-leading climate ambition.

Primarily, this means accepting that taxonomy requirements should be based on existing, already fit for-purpose metrics, and modifying the criteria in Annexes I and II of the Draft Delegated act accordingly.

For the Bioenergy sector and its value chain, this means modifying the annexes in the following areas:

  • Recognising sustainable bioenergy as an activity contributing substantially to climate change mitigation
  • Further streamlining with the existing REDII Sustainability Criteria for production of heat/cool from bioenergy, cogeneration of heat/cool and power from bioenergy, and electricity generation from bioenergy
  • Installation, maintenance, and repair of bioenergy installations form a fundamental part of the bioenergy value chain and therefore have to be eligible.
  • Recognising research, development and innovation in the Bioenergy sector as essential to delivering on climate neutrality

As we look ever-forward towards the carbon-neutral Europe of 2050, we simply can’t allow our Green finance taxonomy to end up as a road to hell that’s paved with good intentions.

Let’s get back on track with its originally intended aim of enabling the scaling up of sustainable investments and acceleration of the climate transition that Europe so urgently needs via actionable criteria based on existing metrics and good science.

The Bioenergy sector is a fundamental part of this future and a willing partner in helping make it happen.

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