EU Taxonomy for Energy
Energy generation is the most developed sector in the EU Taxonomy — with Technical Screening Criteria covering solar, wind, hydropower, nuclear, gas, and bioenergy. The energy sector TSC are the most debated and politically contentious in the Taxonomy, with nuclear and gas generating particular controversy.
Energy generation is the most developed sector in the EU Taxonomy — with Technical Screening Criteria covering solar, wind, hydropower, nuclear, gas, and bioenergy. The primary Technical Screening Criteria for electricity generation activities is a lifecycle GHG emission intensity below 100g CO2e/kWh.
The 100g CO2e/kWh threshold — the core energy TSC
The primary Technical Screening Criteria for electricity generation activities is a lifecycle GHG emission intensity below 100g CO2e/kWh. This threshold applies to the Substantial Contribution to Climate Change Mitigation assessment.
Lifecycle assessment scope: emissions from fuel production and transport, construction of generation assets, operational emissions, and decommissioning. For intermittent renewables (solar, wind), lifecycle emissions are typically 3–25g CO2e/kWh — well below the 100g threshold.
For conventional generation: natural gas combined cycle (CCGT) produces approximately 400–500g CO2e/kWh on a lifecycle basis — far above the threshold. Coal exceeds 800g CO2e/kWh. Neither qualifies under the standard 100g TSC.
The 100g threshold reflects the IEA's assessment of the emission intensity consistent with a Paris-aligned global electricity mix by 2050 — it is not arbitrary but is scientifically grounded in decarbonisation pathway modelling.
Nuclear and natural gas — the controversial inclusions
The Complementary Delegated Act (2022/1214) added nuclear and natural gas to the Taxonomy under specific conditions — a politically contentious decision that divided member states and the European Parliament.
Nuclear power: qualifies for taxonomy alignment under Climate Change Mitigation if the facility has a plan, funding, and implementation for nuclear waste disposal; the new facility construction permit was issued before 2045; and the facility meets specific radiation protection criteria. Existing nuclear plants can qualify if they receive a licence extension permit before 2040.
Natural gas: qualifies transitionally under Climate Change Mitigation if direct GHG emissions are below 270g CO2e/kWh or lifecycle emissions below 550kg CO2/kW per year; the plant replaces a more carbon-intensive facility; a documented transition plan to renewables or low-carbon gas exists; and construction permits are issued before 2030.
For investors: nuclear and gas taxonomy inclusion remains controversial — many SFDR Article 9 fund managers exclude taxonomy-aligned gas and nuclear assets from their sustainable investment definitions despite technical eligibility.
Hydropower — the DNSH challenge
Hydropower is taxonomy-eligible for Climate Change Mitigation (lifecycle emissions typically below 100g CO2e/kWh for run-of-river plants) but faces significant DNSH challenges — particularly for Objective 6 (Biodiversity).
Biodiversity DNSH for hydropower requires: no significant deterioration of the ecological status of the water body; maintenance of ecological flows; fish passage facilities where applicable; and no significant impact on protected habitats.
Large reservoirs (storage hydropower) face particularly stringent DNSH assessment — reservoir creation typically involves flooding of terrestrial habitats and disruption of river connectivity. Many existing large hydropower dams would not meet current DNSH criteria if assessed today.
Run-of-river hydropower with good environmental management is more likely to achieve taxonomy alignment. Pumped storage hydropower (energy storage role) has a separate TSC and is generally well-positioned for alignment given its grid-stabilisation function.
Frequently asked questions
Does rooftop solar installation at a manufacturing company count as a taxonomy-aligned activity?
Yes — electricity generation from solar PV is a listed taxonomy activity, and rooftop solar typically meets the 100g CO2e/kWh lifecycle threshold easily. The CapEx for rooftop solar installation qualifies as taxonomy-aligned CapEx, and the electricity generated contributes to aligned revenue if sold to the grid or used to reduce purchased electricity.
Can we claim taxonomy alignment for our renewable energy power purchase agreements (PPAs)?
PPAs do not themselves qualify as taxonomy-aligned activities — you are not generating electricity, you are purchasing it. However, the renewable electricity consumed under a PPA reduces your Scope 2 emissions and supports your ESRS E1-5 renewable energy percentage. Taxonomy alignment requires an eligible economic activity — electricity generation, not procurement.
Is offshore wind treated differently from onshore wind in the Taxonomy?
Both onshore and offshore wind are covered by the same electricity generation TSC (100g CO2e/kWh lifecycle). Offshore wind typically has slightly higher lifecycle emissions than onshore due to installation and maintenance energy use — but still well below the threshold. DNSH assessment differs: offshore wind faces marine biodiversity DNSH scrutiny (Objective 6) while onshore focuses on terrestrial habitat and bird/bat collision risks.