EU Plans to Classify Gas and Nuclear Power as Green Won’t Change Investors’ Views

Green Energy

The EU taxonomy seeks to define what is and is not “sustainable” to set a level playing field for investment products and support the transition to a sustainable economy. However, the news that the European Commission will class certain gas and nuclear power projects as sustainable within the EU taxonomy is very much politically driven and out of line with investor sentiment. Nowadays, almost all sustainable investors already exclude nuclear power from their sustainable investments, while many go further to also exclude coal, oil, gas or even all fossil fuels. We do not think investors will change their mind, as so far, none of our clients have told us that the EU plans will trigger a change to their approach.

“Even if the EU classifies gas and nuclear power as green under the EU Sustainable Finance taxonomy, this will not change the mind of investors. The vast majority will continue to exclude these assets from sustainable portfolios.”

Pascal Dudle, Head of Listed Impact, Vontobel Asset Management

Even if gas and nuclear power are classed as sustainable, we expect asset managers will report taxonomy alignment with and without gas and nuclear power contribution in order to give clients the information they want, whilst also retaining alignment with the SFDR disclosure concept. However, we see one positive aspect about this controversial proposal: It opens the debate about the current difficult and delicate transitional period until renewables (without gas and nuclear power) will be able to cover all power needs fully and reliably.


Against this background, we search for investments in power utilities that present a responsible transition strategy. This has been an investment focus of our impact strategy for many years. In our view, this consists of channelling most investments (CAPEX) towards new renewable capacity, phasing out coal power first, then gas and nuclear, while also considering power supply security and backup needs in each region.


Therefore, we believe the discussion should be more about planning a meaningful and secure phase-out period for existing nuclear power plants rather than on investments in expensive and lengthy new projects. These will come too late anyway to help us through current electricity supply bottlenecks. The only new investments that make sense might be a few gas plants to match peak power demands and offer backup capacity, possibly in combination with carbon capture, utilization, or storage.

“A revival of current nuclear power technology is not coming. Solar and wind energy are already more cost-effective as well as far faster to bring onstream.”

Christian Rath, Senior Analyst of the utility sector, Vontobel Asset Management

From an economic perspective, we strongly believe that there won’t be a revival of nuclear power. The cost reduction and scalability potential of solar and wind electricity – with enhanced battery and power management – is too strong and project realization is so much faster that there is no need for any nuclear projects.

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