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FINANCING A GREEN ENERGY TRANSITION: A PUZZLE WITH MANY MISSING PIECES

Date

21 Apr 2021

Sections

Sustainable Dev.

The Taxonomy Delegated Act adopted today has the intention to direct investments towards climate-friendly solutions, yet its patchy scope risks delaying urgent investments in a cost-effective decarbonisation of the entire economy. Large segments of the energy sector are excluded at this stage. Follow-up work on the Taxonomy file should take a comprehensive and timely approach towards all solutions that will help addressing climate change and rolling out a pathway to carbon neutrality by 2050 which strengthens industrial competitiveness and citizen empowerment.

The European Union (EU) Taxonomy Climate Delegated Act published today acknowledges the key role of cogeneration in maximising the efficiency of thermal renewable sources. Yet it leaves out criteria to ensure the sustainability of gas projects, an area with an important decarbonisation potential. Many European regions, cities and industries committed to decarbonisation count on the phase-out of carbon-intensive coal and oil, the swift adoption of efficient solutions and a gradual uptake of renewable and decarbonised gases. Such future-proof investments in heat decarbonisation, system efficiency and system stability will be key to complement building renovation, end-use electrification and the scale-up of variable renewable power, thereby significantly contributing to both climate mitigation and adaptation1.

Commenting on the Taxonomy Delegated Act publication, Hans Korteweg, COGEN Europe Managing Director, said: “The Delegated Act adopted today inconsistently recognises some emission reducing solutions, while leaving key energy carriers out for later legislation without a clear timeline. This approach risks extending the life of polluting assets, which need urgent modernisation. It will reduce investors’ confidence and slow down our decarbonisation efforts. Further work on the Taxonomy file is needed to provide financial entities with a predictable roadmap for decarbonising the entire economy, rather than handing them a blurry puzzle with many missing pieces.”

Hans Korteweg continues: “Current and upcoming Taxonomy legislation should broadly address the whole energy system in transformation, including criteria to define the long-term role of renewable, decarbonised and low-carbon gases and the transitional role of natural gas. To this end, high-efficiency cogeneration should be fully recognised as a sustainability criterion to maximise the use of all low-carbon and increasingly renewable energy sources, contributing to emission reductions and system stability. A comprehensive approach to taxonomy is urgently needed to ensure the overhaul of the entire economy on the path to decarbonisation.”

Moving forward, COGEN Europe is committed to provide evidence-based inputs to support EU level efforts to delivering a comprehensive, ambitious and predictable framework for sustainable finance, which prioritises high-efficiency cogeneration as a key sustainability criterion for all thermal heat and power generation.

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