EGEC Response to the public consultation on sustainable finance

Sustainable finance is an increasingly important topic in European policy making. A proposed regulation by the European Commission on this topic will have a major impact on the private financial sector, and its relationship with geothermal and other renewable energy investments.

The proposed Sustainable Finance Regulation will serve multiple purposes:

• Establish clear criteria for what investments are sustainable and therefore eligible for “sustainable finance” such as green bond, green private equity funds, etc. The regulation proposes a taxonomy that sets criteria for eligibility as a sustainable investment. These criteria will be used by actors of the financial sector to direct their investments to projects that allow their financial products to be considered sustainable finance;
• Increase trust in the impact of sustainable finance to increase the amount of capital flowing towards such products, by this mean alleviating the risk of greenwashing;
• Increase transparency, and possibly tradability of sustainable finance assets, again with the objective of facilitating private investment in sustainable projects.

For the geothermal sector, this Regulation will have a major impact, as it will define the type of projects that may be financed by the private sector.

The Regulation proposal includes a draft Taxonomy that establishes criteria for the technologies that may be eligible. For the geothermal sector, these criteria notably include limits for life-cycle emissions of projects. The response from EGEC is that the criteria put for the elibility of geothermal to Sustainable Finance should not be discriminatory, and be applied in a similar manner to all technologies that may be eligible under the regulation.

EGEC contribution Sustainable Finance Taxonomy consultation