What’s New? The role of financial investments in the transition to a global carbon-free economy has been elevated after a week of actions by leaders in the United States and the European Union. The European Commission published its screening criteria on sustainable activities for climate change adaptation and mitigation subsequent to its 2020 taxonomy of sustainable activities. During the Leaders Summit on Climate, President Biden issued an international climate finance plan, prioritizing public investments and seeking to mobilize private sector financing toward efforts that address the climate crisis.
These actions demonstrate a drive to align funding with global efforts to overcome the world’s climate challenges. Financial support, both from the public and private sectors, is being redirected to sustainable efforts, providing opportunities to rethink the role of nuclear energy in climate and impact investing.
Fast Facts:
- The European Commission’s sustainable finance taxonomy regulation is intended to help investors and businesses direct dollars towards projects that meet sustainable investment criteria. While nuclear energy is not currently included in screening criteria of the recent Delegated Act, the Commission announced a plan to take up a complementary Delegated Act that will include nuclear energy in the near term –consistent with conclusions of a Joint Research Centre report on nuclear power.
- President Biden’s U.S. international climate finance plan lays out the nation’s commitment to invest in climate solutions and carbon-free technologies abroad, while directing multiple federal agencies to prioritize climate-related investments. This includes the Development Finance Corporation, which made a critical change in its policy last year to lift the ban on nuclear energy projects.
- As financial institutions increase funding toward sustainable investment opportunities, they often rely on environmental, social and governance (ESG) screens that place carbon-free nuclear energy in categories alongside tobacco and pornography, discouraging investments in the technology.
- Climate and energy policies make a strong case for investment in new nuclear projects. The Biden administration has indicated that nuclear energy is a key element in the future energy grid, while the Energy Department has invested billions of dollars in advanced nuclear reactors. Large utilities and policymakers are also mapping a future inclusive of nuclear energy to achieve carbon-reduction commitments.
Big Picture: Private capital is critical to the development of energy innovations, like advanced nuclear reactors. Actions to increase and encourage investments in nuclear technology mirrors support by policymakers and environmental groups who view nuclear energy as essential to meeting climate goals.
The European Commission’s expected decision to include nuclear energy in its sustainable finance taxonomy would adopt a science-based approach and be a major step to redefining how nuclear is designated in financial screenings. It further acknowledges continued support for nuclear energy by the EU on its pathway to becoming carbon-neutral by 2050—despite some EU member nations’ opposition to nuclear.
The president’s climate finance plan further demonstrates a governmentwide approach to combat climate change, while underscoring the importance of public investment to develop and accelerate the growth of carbon-free technologies across the globe. This comes at a time when middle- and lower-income countries are considering nuclear energy to meet demand, achieve energy security and lower carbon emissions.
What Maria Korsnick, president and chief executive officer of NEI, has to say: “The discussions during the Leaders Summit on Climate send a strong message that the United States is prepared to step up to meet the climate challenges we face. Now our leaders must match words with actions and ensure nuclear energy is part of the solution through smart investments, international exports and effective policymaking.
“We are pleased to see policies that encourage and grow public and private investments and look forward to seeing changes made in financial practices that will value nuclear energy as a key element to successfully and affordably achieving our climate goals.”
What to Look for Next: The European Commission is expected to release updated screening criteria—referred to as a “complementary Delegated Act”—later this year to include nuclear energy as a sustainable investment. This decision could spur momentum across the financial sector to reconsider how technologies like nuclear energy are designated in ESG criteria and impact investing. Over the next few months, more details are expected to take shape in Biden’s climate finance plan, which will indicate how nuclear energy will be prioritized in climate investments and future growth opportunities around international projects.
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