Should natural gas and nuclear power be considered green investments?

By including gas and nuclear in the EU ‘taxonomy of environmentally sustainable economic activities’, some argue that the EU is undermining the very goal the classification system aims to achieve – preventing greenwashing and supporting the EU’s pursuit of net-zero by 2050 by directing billions towards clean energy projects. 

A divided Europe

The debate has effectively become a proxy fight among European leaders for the future of energy in the bloc. France led a coalition last year that included coal-dependent nations like Poland, Hungary and Romania to get nuclear energy and natural gas classified as sustainable investments. These countries want to attract more investment for nuclear power as they move away from fossil fuels.

Germany, on the other hand, together with Luxembourg, Portugal, Spain and Denmark have expressed concerns about a buildup of nuclear power plants on European soil, and the radioactive waste they produce. Austria even declared that they will sue the European Commissions if the proposed plans go ahead.

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"What is happening on the European stage is national policy in which climate protection plays only a secondary role."

Tim Schumacher, Partner & Founder, World Fund

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Building a bridge or digging a tunnel?

Companies and experts also have differing opinions on the matter. Some deem natural gas and nuclear power as transitional green energy sources to be used to brige countries’ move away from coal and carbon-emitting power towards clean energy sources. 

In the proposed plans, for example, new nuclear plants would be considered a sustainable investment through to 2045 and would have to undergo safety upgrades during their lifetime to ensure the “highest achievable safety standards”. In addition, countries must safely dispose of radioactive waste. Exactly how this would be achieved remains unclear.

Others believe that gas-fired power plants could be considered sustainable only if they are later suitable for the future hydrogen market. However, some argue that natural gas already has an image problem stemming from its misleading name, and labelling it as a green investment would only exacerbate this illusion. 

In addition, the decision could have significant flow-on effects in other parts of the world. For example, if Europe starts calling an investment in gas green, then what is preventing nations in other regions from ramping up their gas efforts as well?

Founder and Partner of World Fund, Tim Schumacher, says, “my essential fear is that the EU taxonomy as a whole will suffer great damage in terms of its credibility. This is already happening and has the potential to soften the entire Green Deal to such an extent that the defined emission reduction targets will not be achieved. What is happening on the European stage is national policy in which climate protection plays only a secondary role.”

Should gas and nuclear be labelled as green?

We conducted an online survey to gauge the reactions of professionals in the energy industry. Of 160 people, 65% attested that neither gas nor nuclear should be considered a green investment. 28% believe that only nuclear power should be considered green, while 1% and 6% believe that only gas or both should be considered green, respectively. 

Within these categories, however, people have certain specifications. Dirk-Jan Middlekoop, Head of Sales and Expansion at Sympower, voted that only nuclear should be considered green but specified that “only existing nuclear should be seen as green, not new.”

"In view of the climate crisis, we do not have that time. We can only reach the climate goals if we invest heavily in renewables today."

Christian Chudoba, CEO, Lumenaza

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Taking a long-term view

Christian Chudoba, CEO of Lumenaza, voted that neither should be considered green as he thinks it would send completely the wrong signal. “Nuclear waste radiates for tens of thousands of years, and the risk of serious accidents during operation remains unsolved. Meanwhile gas causes CO2 emissions when burned and releases the extremely climate-damaging gas methane during extraction. While gas is likely indispensable as a bridging technology, it can only be an interim solution. In the long term, our energy system must be 100% renewable.”

Christian added, “building new nuclear power plants ties up enormous amounts of capital over 10-20 years until completion, which would be better used for truly green investments, such as PV, wind and storage, which would also deliver faster results. In view of the climate crisis, we do not have that time. We can only reach the climate goals if we invest heavily in renewables today.”

Brussels said that advisers have until 21 January to provide feedback on the proposals before a decision is made. The key consideration here must be the effects this would have on the prioritization of energy sources in Europe. 

Co-Founder and Managing Director of gridX, David Balensiefen, says, “investing time and money on energy sources that will only emit more greenhouse gases or harmful waste seems like a step away from our climate goals. When used with the right technology, renewable energy is already at the stage where it can easily be scaled, and if leveraged properly now, countries will benefit from the long-term savings and environmental benefits sooner rather than later.”