EU Taxonomy to update technical screening criteria for sustainable activities

The European Commission runs a call for feedback from 8 January to 5 February 2025 to update technical screening criteria for sustainable activities in the EU Taxonomy. The Platform on Sustainable Finance that advises the Commission proposed updating emission thresholds for energy activities: from the currently applicable 100 g CO2eq/kWh down to 45 g CO2eq/kWh in 2025, and to 25 g CO2eq/kWh in 2030. New activities with emission benchmarks are also proposed for inclusion, such as the extraction of lithium, nickel and copper used for low-carbon technologies such as battery production.

On the whole, the EU Taxonomy could have a bullish impact on the guarantees of origin (GO) and Power Purchase Agreement (PPA) markets by stimulating demand for renewable electricity and help boost the supply side of the market by incentivising investments in RES-E. However, the European Central Bank observes that green investments in the energy sector through the mechanism have been relatively limited.

The updated technical screening criteria can support the supply side of the GO and PPA markets by directing investments into renewable energy projects through gradually tightening emission thresholds for energy activities; whereas suggested sustainable activities in critical metals extraction may have a modest demand-side impact as their extraction is limited in the EU.