EU plan to hit world’s busiest green debt market: Sweden

Bloomberg

Sweden is fighting a draft European climate measure that it says could harm its world-beating green bond market.
The European Commission, which wants to steer investors to socially and environmentally sustainable assets, is proposing that only buildings certified as super-energy efficient by national authorities be included in its taxonomy. Being excluded would make financing more expensive.
But national energy requirements differ and since Sweden imposes some of Europe’s toughest, the EU’s framework would ultimately dramatically shrink the pool of Swedish assets that could be funded with green bonds. The Swedish Bankers’ Association says the fallout could leave just 1% of the total eligible, compared with as much as 20% in other countries.
Sweden isn’t alone in opposing the draft definition, but it would be among the hardest hit.
“The requirements for energy classes differ significantly between member states,” Swedish Financial Markets Minister Per Bolund said in an email. “The effect of this is a very heterogeneous classification of buildings and lack of transparency.”
The EU estimates that about a third of the region’s greenhouse gases stem from building construction, use, demolition and renovation. It has proposed defining as sustainable those buildings that get a energy performance certificate A level. EPCs were first introduced in 2002 with the EU’s first Energy Performance of Buildings Directive.
According to Jonathan Volt and Zsolt Toth at the Buildings Performance Institute Europe, the certificates could help drive green investment. But the lack of common criteria for setting levels presents “some challenges,” not least for Nordic countries, they said.
“On average these countries have tougher building regulations and EPC A thresholds, which means that the benchmark for what is being considered ‘sustainable’ or ‘green’ will also become more difficult to reach,” Volt and Toth said.