EU Taxonomy: Flash update on the 2026 review and changes to the Climate Delegated Act

The European Commission is suggesting updates to the EU Taxonomy’s technical screening criteria through a new Delegated Act that amends the Climate Delegated Act alongside a separate Delegated Act amending the Environmental Delegated Act. The two delegated acts form part of a broader usability review aimed at enhancing the Taxonomy’s practical implementation. The goal is not to reopen the Taxonomy’s core policy choices, but to update the criteria to make them clear, coherent and workable in practice without lowering environmental ambition.

The draft acts are open for feedback until 14 April, and changes are expected to enter into force 20 days after publication in the Official Journal of the European Union, with the application date: 1 January 2027.

Rationale for the review

Feedback from companies shows that proving Taxonomy alignment has been overly complex and duplicative, creating substantial administrative burdens. This review clarifies provisions, streamlines steps, and improves internal consistency across environmental objectives and sectors. The criteria are being updated to reflect the latest EU legislative developments, scientific evidence, and implementation experience. More substantive changes to EU Taxonomy reporting were introduced last year through the Omnibus Sustainability Package negotiations. These changes narrowed the scope of mandatory reporting to undertakings with more than EUR 450 million in turnover and over 1,000 employees. In addition, companies may now exclude eligible revenue, CapEx or OpEx from disclosure when it represents less than 10% of the total for each respective category.

While these changes mean that fewer companies are required to disclose Taxonomy KPIs, Taxonomy alignment remains critical for companies seeking access to sustainable finance and maintaining market credibility. Furthermore, the proposed revision of the Sustainable Finance Disclosure Regulation (SFDR) introduces taxonomy‑based criteria for classifying financial products as ESG, transition, or sustainable, which may also increase the importance of Taxonomy-alignment.

The following section provides a sector-by-sector overview of the proposed changes to the Climate Delegate Act and their implications.

Cross-cutting design choices

• Streamlining DNSH (Do No Significant Harm): DNSH criteria are simplified and harmonised, with explicit references to existing EU legislation where applicable.
   
• Targeted clarifications: Where interpretation challenges have emerged (e.g., “other low-carbon technologies”), activity descriptions and methodologies are further specified.

Sector-by-sector: Key changes

Forestry

• Clarified activity interactions (management, afforestation, etc.), simplified information requirements for forest and afforestation plans, refined climate benefit analysis, adjusted permanence and audit requirements.

Reforestation / Wetlands restoration

• Expanded scope to include restoration of partially excavated peatland and updated climate benefit analysis and guarantee of permanence references.

Manufacturing

• Enhanced regulatory consistency with recent EU rules, such as the Net-Zero Industry Act (NZIA) for renewables, hydrogen, batteries, electrical equipment and other enabling technologies. The criteria for battery manufacturing vs. recycling are split in two, resolving implementation pain points.

Other low-carbon technologies

• Sharper scope definition with clearer lists of technologies and components, specific enabling characteristics, and methodologies for calculating GHG reductions. The technologies include in particular final products and components listed in the Net-Zero Industry Act categories: ‘Heat pumps and geothermal energy technologies’, ‘CCS technologies’, ‘Transformative industrial technologies for decarbonisation’ and ‘CO2 transport and utilisation technologies’.

Plastics (primary form & compounding)

• Activity scope now explicitly includes compounding; broader acceptance of recycling technologies; refined criteria for renewable feedstocks, with stronger incentives for recycled content, aligned to the EU’s circular plastics strategy (See Dec 2025 Communication).

Energy

• Criteria revised for consistency across production, storage, and distribution; DNSH simplified with references to existing law.
   
  • Geothermal: Removes the LCA obligation and the 100 gCO₂e/kWh threshold, noting scientific evidence that emissions are well below that level.
     
  • Hydropower: DNSH for water and marine resources simplified and aligned with the Water Framework Directive safeguards, requiring compliance with achieving good status or good ecological potential of water bodies.
     
  • Bioenergy & RFNBOs: Criteria updated to align with the latest RED II/RED III thresholds and trajectories; introduces cascading use of biomass for woody feedstocks (prioritising highest environmental and economic value).

Transport

• Fuel-dedication rule rationalised: The “not dedicated to fossil fuels” condition now clarified to only apply where an asset is specifically designed for transporting or storing fossil fuels, recognising operators don’t control cargo.
   
• Road transport: DNSH on pollution prevention is improved via an EPREL-based Taxonomy filter; eligible tyre scope enlarged; temporary exemption for re-treaded tyres (not yet in EPREL).
   
• Rail: Permits the use of biofuels in existing locomotives.
   
• Water transport: Reflects technological progress and promotes sustainable marine fuels. Uses EEDI/EEXI to allow best-in-class vessels across categories to qualify.

Real estate

• New buildings: The construction complies with the zero-emission building (ZEB) requirements, replacing the criteria of 10% more energy efficient compared to nearly-zero energy buildings (NZEB).
   
• Existing buildings: New criterion introduced where buildings are considered to make a substantial contribution to climate change mitigation if their primary energy demand is reduced by at least 60% within the past ten years.
   
• Climate Change Adaptation: Revised criteria are expected to lower the threshold for demonstrating substantial contribution.
   
  • To meet the substantial contribution criterion, companies must screen for climate-related hazards. Where this screening identifies potential significant impacts, a climate risk assessment must be carried out. Finally, possible adaptation solutions to the identified significant risks are assessed in an adaptation plan that is implemented and monitored.
     
  • The DNSH criterion related to climate change mitigation has been amended for the economic activity “acquisition and ownership of buildings.” Buildings must now achieve at least EPC class D, or alternatively fall within the top 50% of the national building stock. In addition, buildings must not exceed the applicable energy performance thresholds for nearly zero-energy buildings (NZEB) and zero-emission buildings (ZEB) once these requirements are implemented in national regulation under the Energy Performance of Buildings Directive (EPBD).

In summary

The proposed updates to the EU Taxonomy introduce limited changes and should primarily be understood as a clarification and operationalisation of existing criteria rather than a revision of the overarching policy direction. The European Commission has been explicit that the objective is not to alter the Taxonomy’s fundamental environmental ambition, but to make the criteria clearer, more consistent and easier to apply in practice.

The inclusion of new economic activities, as well as more substantial revisions to the technical screening criteria that require further technical analysis or policy consideration, will be addressed in subsequent initiatives.