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In Europe and elsewhere, reactions to the long-awaited EU ruling are as you would expect: Environmental purists decry it as craven greenwashing, Jeffrey Jones writes.Andrea Mantovani/The New York Times News Service

The European Union Parliament has declared that nuclear power and natural gas can be labelled as green for investment purposes, alongside wind, solar and other renewable energy sources.

Environmental activists are not at all pleased, saying including the two energy sources in the EU’s green “taxonomy” will only hamper the fight against climate change. Now the focus turns to other countries, including Canada, hard at work on standards for investments that fit with their own low-carbon transitions.

Let’s be honest – it was hard to imagine gas and nukes not being part of Canada’s plans. They both play major roles in the energy mix, and their backers say they can help eliminate the use of coal at home and abroad. In addition, Canada’s financial institutions are heavily invested in fossil-fuel energy and have pledged to help companies cut their carbon emissions.

Still, the EU’s contentious decision stands as a precedent that gives more leeway to include those sources in a Canadian taxonomy – a shopping list of acceptable purchases for investors with mandates to oversee portfolios that feature environmental, social and governance goals.

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In Europe and elsewhere, reactions to the long-awaited EU ruling are as you would expect: Environmental purists decry it as craven greenwashing, a sleight of hand that provides cover for investors seeking opportunities to keep putting their money into fossil fuels when a wholesale switch to renewables is what the climate crisis demands.

“This will delay a desperately needed real sustainable transition and deepen our dependency on Russian fuels,” climate activist Greta Thunberg wrote on Twitter in reaction to the EU vote. “The hypocrisy is striking, but unfortunately not surprising.”

Indeed, delay is a risk, given the massive amount of money required to remake the world’s energy systems, and, at the same time, the immediate need for all forms of energy to deal with a crisis brought on by war in Europe. It’s a precarious time for the continent that has led the globe in financial and regulatory efforts to align investing to the emission-cutting goals of the Paris agreement.

The International Energy Agency has estimated that spending on wind, solar and other renewable energy sources will need to triple to US$4-trillion annually in the next seven years if there is any hope of the world achieving net-zero emissions by 2050.

But Russia’s invasion of Ukraine, and its punitive restrictions on gas shipments in response to global sanctions, have raised fears of shortages, sent prices skyward and pushed energy security to the top of the agenda. Coal-fired power is even making a comeback. When the crisis finally ends, that could mean the world is left with a string of new gas projects that will have to be dealt with in pricey phase-out scenarios while the carbon budget gets eaten up.

That’s not how many in industry and the finance world see it. They’re pleased that nuclear power and gas, especially, will be formally recognized as a bridge from dirtier sources as economies gradually drain carbon from their energy systems. They say science and economics back their contention that the transition on a grand scale is impossible without their contributions.

EU commissioner Mairead McGuinness said the move will help Europe seek alternative sources of gas, including liquefied supplies, from global allies. Canada is one country hoping to build up its capacity to become a key supplier. “It sends a signal that we support investment in gas infrastructure – power plants – during our transition. It does not deepen our dependence on Russian gas,” she said at the start of the debate.

In Canada, the federal government established the Sustainable Finance Action Council, or SFAC, with representatives from banks, insurers and pension funds to help scale up sustainable finance and integrate climate goals into investment decisions. It is working with CSA Group on Canada’s taxonomy efforts.

In June, SFAC chair Kathy Bardswick was asked at a conference whether natural gas would be included in Canada’s list of eligible green investments. She did not say yes or no, but explained that the council was looking at a number of “sector-specific considerations” that are based on credible science.

An official in the Department of Finance said on Wednesday that SFAC closely monitors developments in other jurisdictions as part of its work.

There is no word yet on when a proposed taxonomy is expected to be released, but now that Europe has set the stage, don’t expect Canada to be more restrictive.

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Jeffrey Jones writes about sustainable finance and the ESG sector for The Globe and Mail. E-mail him at jeffjones@globeandmail.com.