Daniel Gueguen

Is this about bureaucracy or democracy?

The word “taxonomy” has the whiff of authority and makes one think of a sort of economic statism. That’s precisely what it is. Regulation 2020/852, adopted via co-decision, sets a “framework for sustainable investment”, i.e. investment that contributes to protecting the environment. It is inspired by the 2015 UN Sustainable Development Agenda, the 2016 Paris Accord and the 2018 Commission Action Plan for financing sustainable growth. The Taxonomy Regulation falls under the Green Deal agenda but in reality, predates it.

Although 40 pages long, Regulation 2020/852 can be summarised in a few words: abandoning all legislative ambition, it entrusts the Commission with adopting delegated acts to determine whether or not an economic activity is sustainable or does significant harm to the environment. Thus, the Commission becomes the power that will regulate issues of vital importance. The same goes for the draft Climate Law which proposes giving the Commission the power to fix the trajectory for reducing Europe’s carbon footprint via delegated acts.


Delegated acts: fine, but not without counter-powers

Article 290 TFEU states: “A legislative act may delegate to the Commission the power to adopt non-legislative acts of general application to supplement or amend certain non-essential elements of the legislative act.” The measures subject to delegated acts under Regulation 2020/852 are obviously essential, but the co-legislators decided otherwise.

When the co-legislators empower the Commission to adopt delegated acts, they do so via a mandate set down in the legislative act. This mandate can be wide (leaving discretion to the Commission) or restrictive by requiring an impact assessment or setting other conditions. But Regulation 2020/852 gives the Commission a very broad power to propose and adopt delegated acts “for an indeterminate period.”

Some will recall that comitology committees no longer apply to delegated acts (one of the disastrous results of the Lisbon Treaty). At most the Commission is supervised by an expert group of Member State representatives, chaired by the Commission and having only an advisory role with no right to vote. To ensure adequate consultation, the Commission is also accompanied by a Platform on Sustainable Finance which includes the whole European industry: aeronautic, chemicals, metals, construction, transport, energy and even forestry, demonstrating just how broad taxonomy is in its scope.

The problem is that the Member State expert group and this stakeholder platform meet at regular intervals, but the Commission still has not communicated to them its draft delegated act, supposed to be adopted by 31 December 2020. In short, there is a lot of talk but much is vague or unmentioned, and essential dialogue is replaced by widespread suspicion. This deliberate opacity marginalises discussion on subjects as important as nuclear energy (which is not explicitly included in the Taxonomy Regulation) and carbon capture & storage (CCS) whose current status remains unclear. Since a public consultation on the first delegated act is envisaged at an advanced stage, the draft will end up being leaked, but too late and in a completely inappropriate climate of suspicion.


Bureaucratic abuse or democratic denial?

Huge swathes of industry will be affected by the delegated acts. For some sectors, it will have financial consequences with higher credit rates and even administrative constraints, leading to outsourcing of factories outside the EU at a time when relaunching our economy should be the priority.

But it gets worse. The philosophy of the Green Deal involves sociologically intrusive impacts: it affects our travelling, our diet, our habitat. Therefore the fear is that Taxonomy eventually bans certain activities: fatty or high-calorie foods, alcohol, etc. could be under threat as “nutritionally unsustainable”. Forestry might not be spared!

Shackling the EU economy, granting bureaucracy a kind of state tutelage over business, all via opaque and unfair decision-making processes…this, I’m sorry to say, is the epitome of folly.

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October 2020

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