EU taxonomy: the Commission adopts criteria for the circular economy, water and pollution prevention

On 27 June 2023 the European Commission adopted a package of delegated acts supplementing the taxonomy of sustainable investment. The new act sets the eligibility criteria for the four remaining environmental objectives: the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention, and the protection and restoration of biodiversity. Alongside it, amendments were presented to the climate act, which has been in force since January 2022 and covers, among other things, biogas production and the fermentation of biowaste.

What is changing

The taxonomy is based on six environmental objectives. Until now, activities were assessed mainly in terms of climate change mitigation and adaptation. The new act opens up the possibility of classifying activities also by their contribution to the other four objectives. For each activity, criteria for substantial contribution and the "do no significant harm" principle with respect to the other objectives have been set.

In the context of waste management, the new criteria concern, among other things, separate collection, sorting and recycling, and the management of biowaste. For the industry, this means that biowaste fermentation installations and organic fertiliser production may in future benefit from two qualification pathways – the climate one and the circular economy one.

Significance for the industry in Poland

For biogas installations and composting plants, especially those financed by banks and funds that report taxonomy alignment, these changes create new documentation requirements. Institutions will ask about the way digestate is managed, the protection of surface and groundwater and the quality of feedstocks.

From the perspective of municipalities and waste management companies, the criteria on separate collection and recycling may strengthen the case for investment in biowaste processing installations, including biogas plants. Current national rules (the obligation to collect biowaste separately) go in the same direction.

What to pay attention to

Operators should analyse which of their activities may qualify under the taxonomy and collect the data needed to demonstrate compliance: the quantity and type of waste received, the way it is processed, the quality parameters of the products (compost, digestate) and the impact on water.

How banks use the taxonomy

Financial institutions use the taxonomy as a portfolio classification tool: taxonomy alignment indicators go into reports, and some banks offer preferential terms for aligned projects. For biogas plants this means a benefit in raising capital, provided they can document that they meet the criteria. It is therefore worth collecting data on feedstocks, emissions, water protection and the management of digestate already at the project stage.

What next

The delegated act is undergoing a four-month scrutiny period by Parliament and the Council. Reporting companies will apply the new criteria in subsequent reporting periods. For the biogas industry it will be important to follow the final wording of the criteria for biowaste and waste management.