Lawmakers are concerned about increased complexity, the need for specific adjustments regarding key energy sources like nuclear and gas, as well as digital support. The Commission, striving to allay the fears, insisted on Tuesday that its latest tweaks to the taxonomy regulation will do all the right things.
Critics led the chorus when the European Parliament’s economic (ECON) and environment (ENVI) committees sat jointly on 5 May to quiz the European Commission about its overhaul of the EU Taxonomy Regulation. MEP Janusz Lewandowski (EPP/POL) fired first: “Taxonomy is still too difficult to evidence.” He warned that ordinary borrowers and small firms could never marshal the paperwork that banks now seek.
Astrid Cousin of DG FISMA, the Commission’s director for sustainable finance, parried. “A framework that is overly complex or cumbersome risk deterring any investment rather than mobilising it,” she said, insisting that the fresh tweaks would do the opposite.
Standards at stake
Ms Cousin reminded deputies that the taxonomy has already channelled more than €1tn of corporate spending into green projects during the past five years. Yet she accepted that the rule-book must change with technology and politics. “What I’m presenting today, is not a step back for ambition, it’s a step forward in delivering it,” she said. The latest drafts amend the “substantial-contribution” thresholds for 200 of the 242 listed activities and rewrite every “do no significant harm” clause.
Mr Lewandowski doubted the claim. “It might not be easily accessible,” he persisted, pointing to stricter airtightness rules for homes that will draw far more households into the net.
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Not all objections came from the right. Social-democrats and Greens worried that simplification could mask deregulation, letting laggards slip through looser gaps.
Much of the clash hinged on who must comply. Ms Cousin tried to allay fears: “One important element to have in mind is that the taxonomy does not apply to household nor to SMEs.” Mandatory reporting, she stressed, bites only on very large companies. Banks may still brand a home-renovation loan “taxonomy-aligned”, but the owner need not wade through the regulation’s annexes. That, she argued, keeps green money cheap without burying citizens in red tape.
Even so, deputies fretted about cross-references that proliferate with every new piece of EU law. MEP Jutta Paulus (Greens-EFA/DEU) complained that the draft “introduces more complexity due to the numerous cross-references to other legislation” and then shrugged off the burden as simplification. “So I don’t see the point in calling this simplification.” She demanded digital tools that let firms click once to see every overlapping rule.
Nuclear re-ignites
The Commission says a revamped “taxonomy compass” will offer exactly that. It is also thinning the horizontal DNSH tests — letting companies rely on existing permits rather than bespoke studies. Ms Cousin promised that the final delegated acts, due in June, will tell users “possible ways of demonstrating compliance, including using permits and alternative available documentation”.
One important element to have in mind is that the taxonomy does not apply to household nor to SMEs. — Astrid Cousin of DG FISMA
Energy policy lit fiercer sparks. MEP Alexandr Vondra (ECR/CZE) called the current text unscientific. “The EU taxonomy is one of the most powerful tools we have to direct the capital towards a cleaner future,” he declared, before charging that only ideology keeps nuclear power off a par with wind and solar. “Nuclear provides a dispatchable always-on baseload power that wind and solar cannot.” Without equal billing, he argued, the taxonomy “blocks us from doing exactly that”.
Points of disagreement abounded. Ms Paulus reminded the room that the Platform on Sustainable Finance had found nuclear wanting on four environmental objectives. “If you extend the transitional deadlines for aviation, where we have fleets which will be in the sky for 30 years, this is certainly creating a carbon lock-in which is what we do not want,” she added, linking diluted thresholds to stranded assets.
Science versus politics
Ms Cousin ducked the nuclear crossfire, saying the taxonomy does not discriminate against any technology. Court cases against the 2022 gas-and-nuclear delegated act, she noted, still hang over Brussels. Any revisit of those criteria must wait for judges. Only then will experts weigh fresh waste and lifecycle-emissions rules. Until that day the taxonomy stays “energy-mix neutral”.
The reform’s bulk sits elsewhere. Eleven workshops last autumn drew 250 specialists; 460 submissions greeted the draft acts released on 17 March. The commission claims the package will slash compliance costs by leaning on existing EU files, easing evidence for DNSH and dropping arcane metrics such as particle-board weightings for building materials. Ms Cousin says those steps “will translate into less red tape, greater reliance on existing documents and permits, easier demonstration of alignment… and therefore better access to green finance”.
I don’t see the point in calling this simplification. — MEP Jutta Paulus (Greens-EFA/DEU)
Sceptics spy back-door dilution. Climate-thresholds for cement, steel and fertiliser remain the best-in-class of 2023, but lobbyists want them aligned to newer—looser—industrial standards. Aviation rules now anchor to AeroControl’s December 2024 outlook; Greens fear that rolling horizon pushes real cuts beyond 2030. Even supporters urge caution. They note that ambitious screening drives investors to cleaner plants and bonds; if ambition ebbs, money may follow.
Data wars
Information, not ideology, could decide the taxonomy’s fate. Firms must report the share of turnover, capital spending and operating costs that meet the green yardsticks. Banks must publish a “green-asset ratio”. Collecting those numbers across global supply chains already hurts, especially below the tier of giant multinationals.
Parliamentarians want a single EU platform to scrape certificates, permits and emissions, sparing mid-sized suppliers a paper chase. Until one exists, reporting gaps will stay wide. Ms Cousin insists that Europe’s leadership in sustainable finance outweighs such pains. Investors from New York to Tokyo now ask whether a bond or loan is taxonomy-aligned.
Taxonomy is still too difficult to evidence. — MEP Janusz Lewandowski (EPP/POL)
That, she argues, lowers capital costs for compliant issuers and pressures laggards abroad to match the EU’s science-based thresholds. Brussels also sees a strategic prize: the taxonomy, coupled with carbon tariffs and recycled critical-materials targets, may carve a competitive lane for the bloc’s low-carbon industries.
Clock is ticking
The committees will scrutinise the delegated acts again in June. If neither chamber objects within four months, the new screening criteria will start on 1 January 2027 and feed into company reports for financial year 2026. Mr Lewandowski wants a slower glide-path; Greens want sharper teeth. Few expect either wish to come true.
For all the rows, both sides agree on the stakes. Europe must funnel private cash into a cleaner economy at speed, yet do so without drowning firms in Kafkaesque questionnaires. The taxonomy tries to square that circle. Whether the remodelled criteria reach that sweet spot will determine if the next €1tn of investment lifts the continent towards its 2050 climate goal, or merely fattens the lawyers decoding Brussels’ ever thicker rule-books.
