Sustainability Policies

How to become EU Taxonomy compliant?

December 16, 2021

A company has various options to reduce its CO2 emissions, significantly the Scope 2 ones, and become EU Taxonomy compliant. In our previous blog, Four ways to reduce your carbon footprints, we introduced the powerful instruments to become carbon neutral, including Energy Attribute Certificates (EACs), Green Tariffs, Power Purchase Agreements (PPAs), and Direct Investments.

The EU Taxonomy regulation is a classification system designed to direct investments towards sustainable projects. It was published in June 2020 and will have a significant impact on the climate strategies of corporates and institutions.

Use our platform RE Wave to find the right solution for your corporate‘s sustainability strategy

Of the four methods presented in our previous blog, PPAs are among the most sustainable and credible instruments to source green electricity and become EU Taxonomy compliant without investing directly in renewable energy assets. Moreover, PPAs are an excellent measure for corporates to hedge against rising electricity prices in the long term.

Data on PPA volumes contracted in 2020 in Europe suggests that demand for PPAs remains strong in Europe and has not suffered from the COVID 19 pandemic.  

Are our Power Purchase Agreements (PPAs) a suitable method to become EU Taxonomy compliant?

PPAs bring along various benefits, including long-term price stability and risk mitigation in power sales and purchases. For energy sellers and developers, they are an excellent opportunity to finance their renewable energy assets. For energy buyers, PPAs are a sustainable way to reduce their carbon footprint, become EU Taxonomy compliant, and make their brand more sustainable and greener.

The positive qualities of PPAs have also been recognized by the European Commission (EC), which wants national governments to promote these long-term agreements. The Amendment to the Renewable Energy Directive, published by the European Commission on July 14,2021, sets out measures to foster the deployment of Power Purchase Agreements in the EU member states.

These measures include guidelines for member states to reduce administrative burden and financial support for small and medium-sized companies. EU member states are also required to minimize any undue barriers. At the same time, the EC aims at strengthening the regulatory measureson PPAs for the benefit of consumers and producers of renewable electricity.

The EC’s amendment has to be agreed upon by the European Parliament and the EU Council of Ministers before binding and being integrated into national legislation in the member states. However, such legislation on the part of the EU would undoubtedly mean a further push for PPAs whose trend is already pointing upwards.

Conclusion

The EU Taxonomy Regulation will undoubtedly increase the pressure on corporates to reduce their CO2 emissions and become carbon neutral. Power Purchase Agreements are a suitable solution for companies to reach their climate targets and become EU Taxonomy compliant.

We at Think RE support you in finding the right solution for your corporate‘s sustainability strategy with multiple free tools on our renewable energy platform RE Wave.

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