The Effects of the EU Taxonomy on Municipal Energy Investment Plans - A qualitative study exploring the effects of the EU taxonomy in bioenergy investment strategies related to the energy plan of Gothenburg municipality

Abstract

One of the most recent climate initiatives of the European Union (EU) is the Taxonomy Regulation (EU/2020/852), a tool to redirect capital towards sustainable investment and to achieve the goals set in Agenda 2030 and the Paris Agreement. The taxonomy’s classification system is a predetermined and union-wide definition of sustainable economic activities, risking to be in conflict with different local perceptions of what is sustainable. In Gothenburg municipality’s energy plan, bioenergy plays an important role in the local energy system and in the transition towards climate neutrality, with several investments being planned in the coming years. Bioenergy is one of the taxonomy’s most controversial economic activities, recently reclassified from a transitional to a green economic activity. Previous literature illustrates a skepticism towards the taxonomy’s effectiveness, suggesting that it might stifle innovation. The thesis therefore aims to assess whether the taxonomy is an effective regulation by identifying how the taxonomy influences municipal investment plans in bioenergy. By conducting interviews with municipal and private energy actors, it was discovered that all bioenergy investments in Gothenburg’s energy plan are estimated to be in compliance with the taxonomy. However, regardless if bioenergy investments are compliant or noncompliant, the taxonomy imposes uncertainties as well as financial- and reputational challenges for the municipal and local actors’ investment plans. By comparing the empirical data with concepts presented in the Porter Hypothesis, there are indications that the taxonomy is an ineffective regulation, at least regarding bioenergy investments. The empirical data further suggest an ambiguity within Gothenburg municipality whether it is important to strive towards taxonomy compliance or not.