MUNICH, Germany ¨C With its 2020 ¡°taxonomy for sustainable activities,¡± the European Union found a way to use the European Central Bank to steer capital markets by directly subsidizing interest expenses for ¡°green¡± investment projects. Many European politicians, especially those from Green parties in German-speaking countries, have applauded this approach. But now, they are dismayed to find that the European Commission, under pressure from France, will classify nuclear power as a type of green energy.
Having emerged from the anti-nuclear movement, today¡¯s European Greens never dreamed that this ostracized source of power would not only regain respectability but even be associated with their own brand. Their humiliation couldn¡¯t be greater.
But whether nuclear power is a form of green energy isn¡¯t just a question of ideology. Huge sums of money are at stake, because the ECB will be offering banks particularly attractive refinancing conditions if they use EU-classified green bonds as collateral. The ECB also has made clear that it is more willing to buy up a disproportionate share of green bonds, thereby creating a new interest-rate structure within capital markets.
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