The EU taxonomy defines which economic activities can be considered as sustainable based on strict technical screening criteria. The taxonomy’s aim is to establish consistent criteria for sustainability, prevent greenwashing, and to act as a compass directing funding towards sustainable activities.

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So far, the taxonomy is set to cover many industries, including energy, manufacturing, and transport. However, the possible inclusion of nuclear power as a sustainable activity has proved controversial and led to heated debate between EU member states.

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Some member states have argued that it provides a useful transitional energy source that is more sustainable than fossil fuels, while others argue that it should not be viewed as sustainable. They point out potential safety risks and difficulties surrounding nuclear waste disposal. France has traditionally been a big proponent of nuclear energy, while Germany has been staunchly opposed based on safety concerns.

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In 2019, France, the UK and several eastern European countries had argued for the inclusion of nuclear power as a green investment in the EU taxonomy. The UK’s stance had impacted EU policy as it had consistently used its vote in the EU Council to advance nuclear power. Because of this, the departure of the UK from the EU has led to speculation that it may tip the balance in favour of the anti-nuclear EU member states, and lead to the exclusion of nuclear power from the taxonomy.

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At the UN COP26 climate conference in Glasgow, the environmental ministers of Germany, Denmark, Luxembourg, Austria and Portugal issued a joint statement warning against the inclusion of nuclear as a sustainable activity. They suggested that the inclusion of nuclear could damage the “integrity, credibility and therefore usefulness” of the taxonomy by appearing as greenwashing. Portugal's environment minister Joao Pedro Matos Fernandes argued that finance directed towards nuclear power is money that is not available for investments in renewable energies.

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However, despite strong opposition from some member states, the inclusion of nuclear power is still on the table. After the latest European Leaders’ summit in Brussels, Ursula von der Leyen, the President of the EU Commission, stated that while “We need more renewables” as they are “cheaper, carbon-free and homegrown”, we also “need a stable source, nuclear, and during the transition, gas”.

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Right now, it is not certain whether nuclear will appear in the taxonomy or what form any inclusion may take. What is clear is that the inclusion of nuclear energy in the EU taxonomy could have effects that reach far beyond investments and the financial market; the decision could have impacts that will shape the direction of EU climate and energy policy for years to come.

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