Valmet sees that the European Commission’s proposal on the sustainable finance taxonomy delegated regulation should be rejected

Jun 22, 2021

Valmet Oyj’s statement June 22, 2021 at 9:00 a.m. EET

On April 21, 2021, the European Commission published a package of measures for sustainable finance, which includes a proposal on delegated regulation for the sustainability criteria for economic activities. Formally the proposal was adopted on June 4, 2021. The delegated regulation would supplement the Taxonomy Regulation enacted in the summer of 2020.

The proposal includes criteria for climate change mitigation and climate change adaptation. The criteria will be complemented later with criteria for other environmental objectives of the taxonomy. The goal of sustainable finance and the proposals is to direct investments to technologies and companies making a substantial contribution to the environmental objectives and thus advance the climate neutrality of Europe by 2050.

Valmet supports the principal idea of sustainable finance, where the goal is to direct financing to sustainable economic activities. Climate actions require significant investments, and the finance sector plays a major role in enabling them.

However, Valmet sees that the European Commission’s proposal on the sustainable finance taxonomy delegated regulation, i.e. criteria for the classification of economic activities, should be rejected. According to the company, the Commission’s proposal is problematic in many respects. The main issues are:

The Commission’s proposal acts against bioenergy as it excludes bioenergy generated through multifuel combustion, as well as installation, maintenance and repair activities for bioenergy from sustainable economic activities. The proposal is thus significant for countries where the majority of renewable energy by energy producers and industry consists of bioenergy.
There are no scientific grounds for the exclusions above, but for the market they would give a signal that would put bioenergy at a disadvantage compared to the other renewable energy forms. This could also jeopardize the attainment of the EU’s climate targets.
In particular, concerning multifuel combustion, or the co-firing of biomass and other fuels, it should be noted that there is a rapid transition in progress in many countries to decarbonize the production of heat and steam, as well as combined heat and power generation (CHP). Fossil fuels and peat are being replaced with renewable fuels, and in addition to forest biomass, waste derived fuels are seen used as interesting complementary fuel, improving delivery reliability and the security of supply, and decreasing costs.
The sustainability criteria should be based on science. However, the Commission’s proposal excludes certain sustainable solutions from sustainable finance in a way that is not justified scientifically or in light of other Union legislation. Considering that the sustainability criteria are intended to give a powerful signal to the market on where to focus investments, such exclusions based on political judgement that create uncertainty concerning investments should not be implemented.
A delegated regulation should be used to supplement or amend specific non-central parts of a legislative act. In Valmet’s opinion, which economic activities are considered sustainable and on what basis is a central part of the sustainable finance taxonomy, through which a significant impact on the internal market is sought. The Commission’s delegated regulation adopted with conferred powers is thus not the correct tool for deciding on the criteria; instead, this should be done in the ordinary legislative procedure in which the Council and the European Parliament can change the Commission’s proposal if they so choose.

It is Valmet’s view that creating the sustainability criteria is no more important than ensuring a market that operates transparently and according to fair principles. The European Union needs clear, technologically neutral and scientifically justified rules for decreasing emissions so that investments would properly start. Companies’ investments in product development also requires predictable guidelines.

The European Commission’s proposal, on the other hand, will lead to uncertainty on the market, the unnecessary rejection of good solutions that would decrease emissions, and unreasonable costs to companies. Valmet hopes that the Member States will take a bold stance and move to reject the proposal in the Council.

Attachments:
Valmet statement in full
Memo by Afry: Use of waste-based fuels in co-incineration in Finland – Potential impacts of EU Taxonomy on the fuel use

VALMET
Corporate Communications

For further information, please contact:
Carita Ollikainen, Director, Corporate Relations, Valmet, tel. +358 46 921 2437
Bertel Karlstedt, Business Line President, Pulp and Energy, Valmet, tel. +358 10 672 0000

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