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Brussels has tightened EU criteria for what counts as a green investment after its original proposal prompted backlash from campaigners but is still making allowances for fossil fuel-intensive industries such as aviation.
To qualify as green under the EU’s sustainable investment criteria, known as the taxonomy, sustainable aviation fuels will have to make up 15 per cent of a plane’s fuel mix by 2030, according to standards published on Tuesday.
This represents an increase of 5 per cent compared to previous criteria floated in April that were labelled as “unscientific” by NGOs.
Sustainable aviation fuels, made from crops and organic waste, currently make up around 0.05 per cent of aircraft fuel.
But aircraft will also be considered sustainable if they reach certain efficiency criteria even when running on traditional jet fuel.
Shipping, which is likewise considered difficult to decarbonise, will be subject to similar requirements.
Tsvetelina Kuzmanova, senior policy adviser on EU sustainable finance at think-tank E3G, said that the expansion of the taxonomy to aviation and shipping, as well as water management and biodiversity, was a “welcome step” but that it had to be rooted in scientific evidence and some criteria “regrettably continue to be perpetuating business as usual for polluting industries”.
Valdis Dombrovskis, the EU’s trade commissioner, said on Tuesday that sustainable finance was not “only about companies that are already green”. “It is also there to help companies that . . . clearly want to transition towards greener activities.”
Previous taxonomy proposals had been criticised as “too black and white”, he said. Tuesday’s proposals also included guidance that would make it easier for businesses to understand how they could comply, he added.
“This is about some companies that are concerned that they are not yet green enough to qualify for the finance they badly need to become greener,” Dombrovskis said.
Other changes that were made included only allowing plastics made from biowaste to be considered green and setting a threshold for use of chemicals that are considered high risk.
The overall financial and reporting rules are designed to mobilise money towards the green transition, which the commission estimates will require €700bn in additional investment each year if the EU is to meet its goal of reaching net zero emissions by 2050.
But proposals that have already come into force have been criticised from business groups, who argue that they are burdening European industry with an unsustainable amount of red tape.
The commission is also facing several legal challenges from environmental campaigners and from the Austrian and Luxembourgish governments over the inclusion of gas and nuclear in the EU’s taxonomy last year.
Last week, the publication of reporting standards, outlining what elements of their climate and environmental impacts companies should report on, was met with accusations by sustainable finance groups that the EU’s efforts lacked ambition and put its own climate goals at risk.
Mairead McGuinness, the EU’s financial commissioner, defended the standards on Tuesday saying that it was “no easy task” to set rules that guided sustainable finance and that Brussels wanted “buy in from companies”.
“We have also had to rightly adjust where we have had feedback from stakeholders because we want it to be effective,” she said.
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