First glimpse of EU’s green rules shows fight over climate goal

Bloomberg

The European Union was poised to agree its first criteria for green investments on Wednesday, in a move that could set a benchmark for the world to follow.
The stakes are high: the EU wants to raise up to 250 billion euros ($301 billion) using its first green bonds, and private funding is likely to follow into the approved industries seen helping reach its goal to eliminate emissions. EU lawmakers and the bloc’s governments reached a deal in principle to make the climate neutrality goal legally binding and to reduce 2030 emissions by at least 55% from 1990 levels.
Forming this so-called taxonomy is a political battleground for the bloc, as member states push to protect their own interests, exposing just how tough it is to make economies and markets eco-friendly.
Investors will look to see if natural gas and nuclear power are out yet forestry and bioenergy are in, while companies will face disclosure requirements for their sustainability.
Any weakening of the rules risks harming the EU’s climate leadership credentials, at a time when investors are scrutinising whether feel-good green assets live up to the hype.
“If you want a science-based taxonomy, you need to keep the standard high,” said Maia Godemer, an analyst at BloombergNEF. “But changes as a result of lobbying push it away from that. The goal is to drive investment to where we need to be by 2050. It’s awaited by everyone — China, Singapore and the UK are all building their own taxonomies and looking to the EU as a model.”
A rally in the region’s renewable stocks has faded this year and there are concerns about soft targets set by companies issuing sustainability-linked bonds. The global market for green debt has exploded to over $1 trillion yet there’s a patchwork of rules for spending on projects. Investors will be hoping that the EU framework at least brings clarity and potentially leads to a more joined-up global approach. US President Joe Biden is expected to announce ambitious emission targets before hosting a climate change summit with world leaders.