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The draft list for the transport sector includes only cars with zero tailpipe emissions, such as electric and hydrogen vehicles, from 2026. It excludes airports or any other project promoting aviation. Zero direct emissions land transport like metro, tram, trolleybus, bus and rail are also eligible as well as bike lanes and public recharging stations for EVs.
There’s no agreed definition for what counts as “green” or “sustainable” in financial markets. Banks and rating agencies are free to define for themselves what a “sustainable investment” is. Almost 50% of the total managed assets in 2018 in Europe, a sum as big as 14 trillion US dollars, have been deemed ‘sustainable investing assets’, according to the Global Sustainable Investment Alliance (GSIA).
Samuel Kenny, sustainable finance officer with T&E, said: “The EU is in the process of developing a gold standard for green investment. The market for sustainable finance is booming but, with a lack of consistency or oversight, banks and rating agencies are prone to diverting money to dirty fossil fuels and other investments incompatible with the Paris Agreement. There is a need for better government involvement to ensure that ‘green’ financing is not closer to a shade of brown.”
The biggest flaw in the recommendations is the listing of so-called “bio-fuels”. The list allows for trucks, buses, and inland ships running on certified low indirect emission (ILUC) biofuels to be classifiable as “green” provided they can guarantee the fuel they use is a 100% blend. This would mean certified palm oil diesel would be allowed to receive green funds and ultimately would lead to internal combustion engines being deemed “sustainable”, risking the credibility of the entire EU taxonomy.
Samuel Kenny said: “The expert group runs the risk of jeopardising the credibility of the entire EU taxonomy with the inclusion of biofuels. Investing in such fuels such as palm oil diesel will not get us to net zero by 2050 as it will cause environmental damage upstream.”
The proposal will be the subject of a public consultation over the summer with a final list to be published by the Commission expert group in November. This final list of recommendations will then be the basis for the Commission to start drafting the EU’s taxonomy for sustainable finance.