The importance of the EU taxonomy : the example of electricity storage

Abstract

The legislative results of the Commission’s Sustainable Finance Initiative will play an increasingly important role on investment decisions in the energy sector. The Taxonomy Regulation, adopted last June, provides that investment funds and large EU companies must disclose information on their activities by reference to the EU Taxonomy. It also requires that any national or EU-level labels relating to sustainable investing or any other sustainability-related requirements imposed on investors must be designed by reference to the EU Taxonomy. In substance, this means that ‘green funding’ will have to finance predominantly, if not exclusively, the commercial activities that are ‘taxonomy compliant’. This will have an increasingly significant influence on the attractiveness of energy investments in future. There is a need for coherence in the use of all instruments designed for achieving Green Deal objectives, and the EU Taxonomy is therefore an important such instrument. The existence of adequate and affordable electricity storage will play an important role in the EU’s ability to meet its renewable energy objectives. In this respect, for example, the Commission’s draft Taxonomy Delegated Act takes a different approach to pumped hydrostorage than the recommendations of the Technical Expert Group on Taxonomy, essentially including one form of pumped hydro-storage while excluding another. This is difficult to understand, given the importance of this product for the Green Deal, and merits careful attention and to ensure that a fully reasoned, justified and coherent position results in the finally adopted version.