DO NO SIGNIFICANT HARM (DNSH)

3.1 DNSH to environmental objectives 3-6

Under the proposed Taxonomy regulation, economic activities making a substantial contribution to

climate change mitigation or adaptation must be assessed to ensure they do not cause significant harm to all remaining environmental objectives. An activity contributing to climate change mitigation must avoid significant harm to climate change adaptation and the other four environmental objectives:

3. Sustainable use and protection of water and marine resources 4. Transition to a circular economy, waste prevention and recycling 5. Pollution prevention and control

6. Protection of healthy ecosystems

This assessment ensures that progress against some objectives are not made at the expense of others and recognises the reinforcing relationships between different environmental objectives. In its future development, the Taxonomy will also include activities that make a substantial contribution to the above objectives..

3.2 DNSH to climate change adaptation

Per Article 12 of the Taxonomy regulation, an economic activity shall be considered as significantly harming climate change adaptation “where that activity leads to an increased adverse impact of the current and expected climate, on itself or for other people, nature and assets”.

In terms of what constitutes or leads to an increased negative effect of climate by an economic activity for and beyond the environment within which that economy activity takes place, it is proposed that the DNSH to adaptation criteria should ensure that both:

• The services that economic activities/ vulnerable populations/ vulnerable ecosystems rely on need to be resilient to climate change. If they are not and those services are significantly curtailed due to climate change impacts, the resilience and ability to adapt of those activities/ populations/

ecosystems is weakened. This can be achieved by ensuring that all material risks to the economic activity itself have been reduced to the extent possible and on a best effort basis.

• Those services are not being delivered in a way that adversely affects the adaptation efforts of others.

Discussion was had on whether compliance with these requirements should be determined on a case-by-case basis through an activity and context specific assessment, or whether an a-priori activity only level assessment is needed. As discussed above, adaptation needs and impacts of activities on adaptation and resilience are context specific and therefore a context specific assessment is needed.

For these reasons, the two criteria described in Table 6 are proposed for “DNSH to adaptation” for all economic activities. In addition to these criteria, the TEG has considered where there are any examples of tools, methodology or other guidance that might be of use in applying these two criteria in the context of a specific economic activity. Where such examples have been identified, they have been noted in the DNSH to Adaptation section of the appropriate economic activity.

It is noted that for new economic activities, the following criteria must be met at the point of design and construction. For existing activities and associated assets, where addressing physical climate risks requires a retrofit of some kind, all material physical climate risks must be assessed and adaptation measures required to address them must be identified and programmed with a clear and time limited execution plan no longer than 5 years.

Table 6 – Do no significant harm to adaptation: ‘adapted economic activities’

Criterion Description Criterion A1:

Reducing material physical climate risks

The economic activity must reduce all material physical climate risks to the activity to the extent possible and on a best effort basis.

A1.1 The activity integrates physical and non-physical measures aimed at reducing - to the extent possible and on a best effort basis - all material risks that have been identified through a climate risk assessment. For existing activities, the implementation of those physical and non-physical measures may be phased and executed over a period of time of up to 5 years. For new activities, implementation of these measures must be met at the time of design and construction.

A1.2 The above-mentioned climate risk assessment has the following characteristics:

 considers both current weather variability and future climate change, including uncertainty;

 is based on robust analysis of available climate data and projections across a range of future scenarios;

 is consistent with the expected lifetime of the activity.

Criterion A2:

Supporting system adaptation

The economic activity and its adaptation measures do not adversely affect the adaptation efforts of other people, nature and assets.

A2.1 The economic activity and its adaptation measures do not increase the risks of an adverse climate impact on other people, nature and assets or hamper adaptation elsewhere. Consideration should be given to the viability of 'green' or 'nature-based-solutions' over 'grey' measures to address adaptation.

A2.2 The activity is consistent with sectoral, regional, and/or national adaptation efforts.

3.3 DNSH to environmental objectives 3-6

In accordance with Article 14 of the Taxonomy proposal, the DNSH criteria aim to specify the minimum requirements to be met to avoid significant harm to environmental objectives relevant to each economic activity. Article 12 provides further details on what constitutes significant harm for each environmental objective:

Table 7 – Do no significant harm criteria: environmental objectives 3-6 Objective Conditions for causing ‘significant harm’

(3) Sustainable use and protection of water and marine resources

…where that activity is detrimental to the good status, or where relevant the good ecological potential, of water bodies, including surface waters and groundwaters, or to the good environmental status of marine waters;

(4) Circular economy including waste

prevention and recycling

...where that activity leads to significant inefficiencies in the use of materials and the direct or indirect use of natural resources such as non-renewable energy sources, raw materials, water and land in one or more stages of the life-cycle of products, including in terms of durability, reparability, upgradability, reusability or recyclability of products; or where that activity leads to a significant increase in the generation, incineration or disposal of waste, with the exception of incineration of non-recyclable hazardous waste, or where the long term disposal of waste may cause significant and long-term harm to the

environment;

(5) Pollution prevention and control

…where that activity leads to a significant increase in the emissions of pollutants into air, water or land, as compared to the situation before the activity started;

(6) Protection of healthy ecosystems

…where that activity is detrimental to a significant extent to the good condition and resilience of ecosystems or where that activity is detrimental to the conservation status of habitats and species, including those of Community interest.

In addition, the regulation specifies that for all objectives: the environmental impacts of the activity itself, as well as of the products and services provided by that activity throughout their life cycle shall be taken into account, notably by considering their production, use and end-of life.

The technical screening criteria proposed by the TEG contain quantitative thresholds where possible.

Where this is not possible, the criteria are qualitative, describing an action or set of actions to be demonstrated which avoid significant harm.

The baseline scenario for the economic activities is compliance with relevant EU environmental legislation. To this end, the criteria take into account existing EU legislation. The call for additional expertise to inform the TEG and the process described below enabled the establishment of criteria based on available scientific evidence. Where evidence was not conclusive, the precautionary principle

enshrined in article 191 TFEU was taken into account, as required in Article 14 of the draft regulation.

To the extent possible, the screening criteria, whether qualitative or quantitative, were selected to

facilitate the verification of compliance. In many instances, the proposed criteria are expressed in terms of compliance with relevant EU legislation and/or associated reference information, such as the best

available techniques (BAT) reference documents (also known as ‘BREFs’).¹⁵ The technical screening criteria (TSC) process

Figure 9 presents an overview of the process for development of DNSH technical screening criteria against activities expected to make a substantial contribution to climate change mitigation. For each activity, the scope was reviewed to identify life cycle aspects and activity boundaries. Where linkages with other activities occurred (i.e. where life cycle aspects overlapped with other activities), this has been referenced in the analysis.

1. Initial screen for activities which could cause significant harm to each environmental