EU taxonomy: 'roadblock' or enabler of the green technologies?

16 March 2022

"There is plenty of focus in the taxo...

"There is plenty of focus in the taxonomy on the final applications, but there's not nearly enough focus today on the enabling technologies that will make it all happen", said Orgalim Director-General Malte Lohan in his keynote address to the nearly 300 attendees of yesterday's virtual Intergroup event on the EU taxonomy; and it was the resounding message from the industrialists present. 

Organised by the European Parliament Intergroup on 'Sustainable, Long-term Investments & Competitive European Industry', hosted by one of its co-chairs, Maria da Graça Carvalho (PT/EPP), the event took a very timely look at how the taxonomy is working for Europe's technology industries. "Sustainable finance is at the heart of the union's agenda, and the Green Deal achievements will depend very much on a successful implementation of the rules dedicated to the investments in the different sectors", as Ms Carvalho emphasised.

The Commission will shortly start work on the second delegated act addressing the environmental objectives of circular economy, pollution, water and biodiversity as well as a further complementary text to the first, climate delegated act already issued. Marcel Haag, Director for Horizontal Policies at European Commission DG FISMA, stressed that "the main objective of the Sustainable Finance framework of the European Union is to channel private financial flows into relevant economic activities".

 

The promise of enabling technologies 

Industrialists present agreed on the potential value of the taxonomy and emphasised the huge opportunity European industry has to lead the world in delivering and applying the technologies that make the green transformation possible. A study by Orgalim member VDMA and BCG has estimated that industrial automation equipment and solutions can prevent more than 80% of greenhouse gas emissions from the industry.

However, warned Karl Haeusgen, Chairman of the Supervisory Board, HAWE Hydraulik SE and President of VDMA, "the taxonomy, from our perspective, is a roadblock at this point in time". 

In the first place, many enabling technologies – from industrial automation solutions that enable industrial decarbonisation to digital technologies like digital twins – have been left out altogether so far. "The fact that these technologies are not considered is generating significant disruption for our stakeholders", said Olivier Le Floc'h, VP Carbon Neutrality, Legrand. Secondly, certain of the requirements on companies to participate in the economy are proving unworkable and "so demanding that they are impossible to comply with", added Mr Le Floc'h.

"Unless we get this right, Europe will be handing on a silver platter to other major economies, the future growth and prosperity, stemming from the green economy", stressed Malte Lohan

  There is plenty of focus in the taxonomy on the final applications, but there's not nearly enough focus today on the enabling technologies that will make it all happen. 

Malte Lohan

Getting it right

Looking forward, moderator Andreas Brunsgaard, Orgalim representative in the European Commission Platform on Sustainable Finance, and Senior Adviser at the Confederation of Danish Industry, pointed out on behalf of industry that there is clearly a need for further guidance.

Chiara Martinelli, Director of Climate Action Network (CAN) Europe marked that "for the taxonomy to be functional, it needs to put the lens both of the investors and the lens of all of us that want to reach societal transformation," adding that "emissions-intensive activities cannot be labelled as green".

Concluding for the Commission, Mr Haag assured that "we will see how we can address a whole range of issues, including also the role of enabling technologies" in the upcoming delegated act and added that "we will make sure that that the market participants, both from the real economy and from the financial side can actually use the tools that we are providing, and can use them in a way that avoids unnecessary red tape and bureaucratic burden".

If you missed the event or would like to replay it, you can find the full recording below or here.

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