Green money for green projects

In order to achieve the global climate targets agreed in Paris, the EU’s climate targets and the UN’s sustainable development goals, additional private investment in environmentally-friendly projects and activities of around EUR 180 billion a year is needed Within the framework of the Sustainable Finance Taxonomy Regulation, the European Commission has tasked a group of experts to define environmentally sustainable criteria for investments. The aim here is to reduce greenhouse gas emissions (including those from energy production technologies) to zero by 2050. Consequently, the European Investment Bank would also like to make its lending policy more sustainable. Wien Energie has played a key role at the national and European level in work to design a sustainable financial framework for the energy sector.

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Background information

The Commission’s draft Taxonomy Regulation, an EU-wide classification system, is intended to provide criteria on the basis which decisions are made as to whether investments in the energy and climate fields are environmentally sustainable. At the end of July 2019, a group of 40 high-level experts submitted a report in which technical evaluation criteria for electricity and heat generation as well as storage technologies were defined. The European Investment Bank has also announced that it will revise its lending criteria to make them more sustainable.

In accordance with the European Commission’s proposal for a Taxonomy Regulation, power generation activities of certain new plants in the energy sector as well as investments in the associated transmission and distribution networks with an emission limit of 100g CO2/kWh, which is to be steadily reduced to 0g CO2/kWh by 2050, are considered sustainable. This also applies to gas network upgrades with aimed at feeding in hydrogen and to technologies such as those used to capture and store CO2 (CCS). The entire life cycle from production to decommissioning of the plant must be taken into account when determining these values, with electricity generation using photovoltaics and wind power being excluded here.

As regards producing heating from cogeneration plants, a limit of 30g CO2/kWh was also defined, and which must also be reduced to zero by 2050. Nuclear power is generally excluded from the possibility of receiving funding under the taxonomy because of its considerable impact on the environment.

In the position already adopted by the EU Parliament, the European Commission’s legislative proposal has been expanded to include three further activities that are generally considered to be “not sustainable”:

  • Electricity produced using solid fossil fuels
  • Activities that lead to carbon-intensive lock-in effects
  • Activities that lead to an increased volume of waste.

On 14 November 2019, the European Investment Bank (EIB) passed a resolution on a revised lending policy. Under its revised lending criteria, the focus of lending should shift to investment projects in the areas of energy efficiency, renewables and grid infrastructure. Among other plans, the EIB aims to mobilise EUR 1 trillion and make itself a “climate bank”. The EIB also resolved:

  • From 2022, to end financing for infrastructure projects in the natural gas sector.
  • 50% of all financing will be dedicated to climate action and environmental sustainability projects. In the case of 10 beneficiary Member States covered by the Modernisation Fund, the EIB can finance up to 75% of eligible project costs.
  • The activities of the EIB will be coordinated with the Paris Agreement by the end of 2020.
  • To define an emissions limit of 250g CO2 per kWhe of electricity generated for all commercial activities, whereby this does not foresee a step-by-step reduction of limits in the period to 2050 as defined by the Taxonomy Regulation. This limit replaces the previous standard of 550g CO2/kWhe.
  • Furthermore, to enable both investments in thermal waste incineration plants as well as research and in the security of atomic power plants.

Our demands

It is important to ensure that there is transparency and uniformity when it comes to sustainable investment. Wien Energie was extensively involved in the consultation on the expert report for the technical evaluation criteria and on the lending criteria of the European Investment Bank. Wien Energie is of the opinion that there is still a need for changes to be made, especially in the areas of cogeneration and thermal waste recycling.

Highly efficient cogeneration plants safeguard security of supply with an 86 percent degree of utilisation both for heating and electricity. They also represent the most environmentally-friendly solution here according to a comprehensive evaluation performed within the framework of the European Energy Efficiency Directive 2018/2002). As such. investments in highly efficient cogeneration plants should be duly considered within the scope of the Taxonomy Regulation. The defined emission limit of 100g CO2/kWh is not realistic for cogeneration plants. However, since this highly efficient technology can be gradually converted to green gas, it will be possible to comply with the limits in the medium term. With this in mind, the regulations in place should not prevent investments from being made in cogeneration plants.

Thermal waste recycling has been defined by the draft Taxonomy Regulation as doing harm to the environment, a claim which is clearly refuted by the waste incineration plants operated by Wien Energie, as these save 650,000 tonnes of CO2 every year. As such, investments in energy-efficient thermal plants are both sustainable and necessary, and must be taken into account accordingly in the forthcoming discussions held with the EU institutions.

Even in the case of sustainable power generation activities such as hydropower, it is not realistic emissions to be gradually reduced to 0g CO2/kWh over the entire lifecycle analysis. Wien Energie is therefore working for hydropower as well as electricity generation using wind and photovoltaics to be excluded a lifecycle analysis within the framework of the Taxonomy Regulation. Moreover, the option of exploiting open spaces in two different ways as the same time, namely by means of agriphotovoltaics, should be included as a positive evaluation criteria.

Barbara Schmidt

“Restructuring our energy system requires substantial levels of investment. By creating balanced incentives for green projects, we can help foster this development without further burdening public funds and customers. However, this requires clear and stable rules, low barriers to entry and a regulatory framework that enables rapid implementation.

Barbara Schmidt, Secretary General of the Association of Austrian Electricity Companies (Oesterreichs Energie)

Further information

Your contact person

Yolande Kyoni
Yolande Kyoni

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