The European Union’s commitment to reaching net zero greenhouse gas emissions, generating 75% of its electricity from renewables and mobilising €1 trillion in green finance investments by the 2050s is undeniably ambitious. Yet beneath this visionary agenda lies a critical flaw: the marginalisation of the nuclear sector.

While not excluded from the EU’s plans, the EU’s Sustainable Finance Framework and taxonomy make it difficult and burdensome to finance nuclear projects. This risks suffocating the bloc's green ambitions before they can even take off. The difficulties that it has generated have created a tendency towards an over reliance on renewable energy for the green transition. This over reliance could easily undermine the EU’s ability to meet its own climate goals and may well reduce its economic resilience in the future. 

From a Central and Eastern European perspective, this will compound the already significant challenge of shifting from an outdated, predominantly coal and natural gas based energy network to a more modern mix of renewables and nuclear power. It will both reduce the scope of nuclear investments and create regulatory hurdles.

It would, however, be tabloid to claim that the EU’s taxonomy prevents its member states from pursuing nuclear projects. It is simply the case that it will over the long term make nuclear projects harder to finance and less numerous than those found in other major economies. The global norm is for a balanced mixture of renewables and nuclear as fossil fuels are gradually phased out. This makes the EU’s approach a uniquely European experiment. An experiment which if handled poorly could negatively affect the bloc’s economy for decades to come but no more so than in its Central and East European member states, which are further behind in the green transition. 

Nominally, the EU’s Taxonomy Regulation (2020/852) includes nuclear energy as a sustainable investment option. In practice nuclear projects face additional regulatory hurdles that renewable projects don't. The EU’s taxonomy has created a stringent criteria for such projects to pass in order to access funding with a strong emphasis on waste management and safety. It's understandable for the EU to want a strong emphasis on safety and responsible waste management however its ordoliberal approach risks making these added features largely theoretical. If funding cannot be secured no nation will be able to enjoy their benefits. At present all that these well meaning regulations have achieved is to produce a broken financing model and significantly increased construction costs.

This means despite the European nuclear industry's impeccable safety record and the proven ability of nuclear power to provide continuous baseload energy, it will likely play a marginal role in the European Union's energy transition. Instead, policy makers will lean heavily on renewables to meet their targets simply because they can actually access financing. That is a risky gamble for the EU to be taking and one which no other major economy has shown any interest in partaking in.

Renewable energy is a fantastic resource, it is also intermittent. Bridging the renewable intermittency gap requires scalable battery storage solutions in order to provide continuous baseload energy. Whether such a technological leap will occur or not is very much uncertain. Yes, it could be that over the next twenty years or so battery technology mitigates renewable intermittency but equally such innovations could be decades off. The EU doesn’t have decades. If it is to meet its 2050 goals and achieve energy sovereignty then the rollout of clean energy must occur rapidly over the coming years.  

What's more, the economic dangers of this gamble are stark. If breakthroughs in battery storage do not occur within the next twenty years then Europe can expect energy costs to spike by as much as 20-30% as the intermittent energy supply forces member states to seek costly backup solutions. Additionally, such an unstable energy market would inevitably reduce industrial output. 

Europe is already struggling with deindustrialisation. Its high energy costs, wages and the increasing dominance of American and Chinese industry have eaten into the profits of its legacy industries. Adding energy intermittency into the mix would simply be terminal for the bloc’s residual industry and would likely precipitate a severe economic contraction. It would completely erode the EU’s ability to compete in the emerging sectors, maintain its industrial capacity and attract foreign investment. It is a simple truth that modern economies require reliable and cost efficient energy.

All EU members are affected by high energy prices but if the EU continues down this path then the repercussions will be felt most acutely in Central and Eastern Europe. The bloc’s central and eastern member states have previously enjoyed high growth rates, largely as a consequence of their post-communist recovery and access to the single market. That era is ending. The Central and Eastern European economies are maturing and soon will experience the fiscal restraints of Western Europe. This will present an immense challenge for them in meeting EU climate goals at a time when geopolitical necessity requires high defence spending.

The unmet potential of the communist years has left an energy mix heavily dependent on fossil fuels. This represents both a national security threat but also an ecological one. Central and eastern member states have a daunting task in reducing their reliance on oil, coal and natural gas. Logic would dictate that a nuclear and renewable mix would provide the smoothest possible landing and could be rolled out quickly. The EU’s taxonomy, however, will likely foil this. Nuclear projects will flounder and struggle with patchy financing and regulatory inertia whilst renewable projects steam ahead. The result? An unsatisfactory rollout that risks bequeathing Central and Eastern Europe with intermittency and high energy costs. That is no recipe for prosperity. 

Already we can see the contours of this energy landscape taking shape. Consider Poland, where coal still generates 70% of the nation's electricity. Coal's death grip on the Polish energy market produces both considerable levels of pollution (and all the health risks associated) and an increasing economic strain as the EU’s carbon credits shred profitability. Its days are up and the Polish government knows this, that is why it has invested in the construction of six nuclear reactors by 2043, with the first reactor expected by 2033. The EU should be aiding and celebrating Poland's efforts to decarbonise. Instead, as a consequence of the EU’s stringent financing framework, the country has been forced to find alternative funding from partners in the United States, South Korea and Canada.

The Polish approach provides a clear pathway towards freedom from fossil fuels and renewable intermittency and yet its efficacy is now questionable. Ultimately, this will not prevent Poland from using nuclear energy as part of its green strategy but it will make rollout slower and far more expensive than it needs to be. 

Similar examples abound. Czechia has long been reliant on nuclear power to stabilise its grid. If there is a significant shift towards renewables without robust nuclear backups then it is highly unlikely that the already aging grid will cope or that critical emissions targets can be met. Romania too faces the twin threats of supply shocks and volatile prices if it tries to reduce its natural gas reliance without the aid of nuclear. Even in Hungary, where there are ambitious expansion plans for the Paks nuclear power plant, it is foreseeable that persistent regulatory and financial constraints could undermine progress.

Central and Eastern Europe should use renewable energy to wean itself off fossil fuels but it should not allow the EU taxonomy to effectively render nuclear off the table. Marginalising nuclear projects risks jeopardising nearly thirty years of increasing prosperity. Instead, the member states, particularly those of Central and Eastern Europe, should take the lead in lobbying for a more lucid financing framework.

Nuclear is not a silver bullet but it does have enormous potential for stabilising the European economy. New innovations like Small Modular Reactors (SMRs) and High-Assay Low-Enriched Uranium (HALEU) fuel could rapidly reshape Europe’s energy landscape. SMRs ,for instance, offer lower upfront investment, lower operational costs and enhanced safety features. They also take less time to construct, averaging out at just five years. This is dramatically shorter than traditional reactors and would buy valuable breathing room for EU member states as they transition their energy market on a large scale. Yet under the current EU sustainable finance framework, SMR’s are designated as high risk, stifling their rollout and financing options. 

Furthermore, whilst HALEU fuel could make SMRs and even traditional reactors more cost efficient, it too has been hampered by the EU’s overly restrictive taxonomy. Currently, HALEU fuel can cost as much as €20,000 per kilogram and has the disadvantage of Russia being a key global provider. Unlike other economies, however, the EU has neither invested in lowering the cost of production nor in decoupling from Russian HALEU providers. It has also failed to adapt transport regulations to facilitate HALEU fuel delivery. The EU has instead made the bizarre choice of artificially diminishing the cost competitiveness of these emerging technologies via its suffocating regulations. In effect this is a capitulation. It has driven and will continue to drive investments towards more favourable markets in North America and Asia, essentially relinquishing any major European contribution to the future of nuclear power. 

If the EU is to secure its energy future and preserve its economic vitality, decisive action is needed. The Sustainable Finance Framework needs to be readjusted to remove the undue regulatory burdens on nuclear energy. Only a sensible mixture of renewable energy and nuclear power can provide the European economy with the affordable and clean energy that it needs. 

Europe’s energy future is at a crossroads. Brussels should choose wisely. 

Owen Walden-Harris is a freelance journalist specialising in geopolitics, anthropology and European affairs. He has a strong interest in the practical mechanics behind political and institutional decision making having studied EU law, regulation and political theory at the College of Europe.