EP79 · Economy · first published 2021-05-16
KY, Aalto and the EU Green Taxonomy | Meri Löyttyniemi | Negotiator 79
Aalto University's special adviser on sustainable development corrects a widespread misunderstanding: the EU taxonomy is not merely a climate instrument but rests on six criteria. She describes how it swelled from an investor's tool into a political instrument, and warns against national over-implementation. Miettinen presses her on the treatment of hydro and nuclear power. In the background, a shared student-politics victory and the birth of Aalto University as a merger of three egos.
KY, Aalto and the EU Green Taxonomy | Meri Löyttyniemi | Negotiator 79
Summary: Aalto University’s special adviser on sustainable development corrects a widespread misunderstanding: the EU taxonomy is not merely a climate instrument but rests on six criteria. She describes how it swelled from an investor’s tool into a political instrument, and warns against national over-implementation. Miettinen presses her on the treatment of hydro and nuclear power. In the background, a shared student-politics victory and the birth of Aalto University as a merger of three egos.
A note on reading this: Host and guest are old fellow students who sat in the same electoral alliance at the Helsinki School of Economics student union in the 1990s; the first third of the episode is shared reminiscence and should be read as such. Löyttyniemi says she is standing as a Green candidate in Espoo in the municipal elections, and her assessments of the taxonomy are her own as an expert, not positions of Aalto University. Recorded in May 2021, when the taxonomy was unfinished and the recovery instrument was before the Finnish Parliament.
Note on the timecodes: the publisher’s chapter list drifted 26–86 seconds late from 26:00 onwards, and its final entry (34:52) fell past the running time of 34:30. The last twelve timecodes have been re-derived from the transcript; the first thirty-two were exact and are unchanged.
The core correction: the taxonomy is not a climate tool
If you take one thing from this episode, take this. Löyttyniemi finds the public perception frankly odd:
I find it rather peculiar how it has gone through in the media and in public — people think it is about preparing for adaptation to climate change and, in addition, mitigation. And that is not at all what it is.
Six criteria, only two of which concern the climate:
| # | Criterion |
|---|---|
| 1 | Climate change mitigation |
| 2 | Climate change adaptation |
| 3 | Water — seas, lakes, all watercourses |
| 4 | Circular economy |
| 5 | Reducing pollution |
| 6 | Biodiversity |
And what it exists for:
The taxonomy aims to let financiers identify companies and projects that answer the call.
How an investor’s tool became a political instrument
This is the episode’s most analytical observation, and it is the more interesting because Löyttyniemi says she changed her mind:
At the very beginning, a few years back, I thought this was entirely an investors’ tool. It has somehow snowballed from that, and an enormous amount of expectation has been loaded onto it.
The explanation, in her account, is that the scale of the transformation is now understood — and that the economy is the channel through which influence happens. But she also says something not often said from that position:
That world of the economy, whose power is in my view frankly overweighted both in the atmosphere of our public discussion and genuinely in terms of deciding and influencing, quite unreasonably so.
So she regards the economy as too dominant and at the same time concedes that this is precisely why the taxonomy has become an instrument of policy — a way of driving the Green Deal forward on a large scale.
The side effect is a wake-up: because effective elements were built in, “everyone has woken up — especially perhaps to criticise, and to look at it from their own sector’s point of view.”
The package has three parts:
- The taxonomy itself
- Sustainability reporting — previously the “non-financial EU directive”, which Löyttyniemi finds a piece of jargon; the renaming is welcome. The aim is to raise the weight of sustainability information closer to the informational value and comparability of financial reporting, since it is currently done “with very meagre resources”.
- Regulation covering finance, banking and insurance — on which she directs Miettinen to invite the next expert.
National over-implementation: a shared concern
Miettinen asks whether this has more of the character of a directive than a regulation — that is, whether national latitude remains. His concern is concrete: if Finland picks, say, an unnecessarily strict energy classification for buildings, Finland suffers, because “elsewhere in the EU they will play it a bit looser.”
Löyttyniemi agrees and adds realism:
There is always a slight mistrust between EU member states about who is doing what, and how much.
But she turns it into an objective, which is the episode’s clearest guiding principle:
In my view Finland should now aim precisely at real emission reductions and real measures. We will then shine in these various ways of measuring — in the taxonomy, in reporting, as an investment destination, as a state. The result will come from there, but right now we need action and deeds.
Miettinen names this his micro-level worry: Finland is too much the model pupil in implementation.
Hydro and nuclear: the macro-level worry
Here the host is open about where he stands — “I am that kind of bloke, so I like nuclear power” — and considers hydropower critical for Finland too. Both may fall outside the taxonomy.
The treatment of nuclear does not surprise Löyttyniemi:
If you consider that the EU’s strongest state is Germany, and consider the decades of history Germany has in its relationship with nuclear power, and now the Energiewende on top of that — and Chernobyl and the Fukushimas, we all know these — then it is no surprise that it is very hard to include in that package.
But hydropower does surprise her, and this is the episode’s most quoted line:
I am extremely surprised that hydropower is the subject of this debate — nuclear less so. As for hydro, I find it genuinely hard to understand: if hydropower is not renewable, then what is? And its risk levels are of an entirely different order from, say, nuclear power.
Miettinen offers a mitigating possibility — whether the rules apply mainly to new projects rather than existing ones — but it is left open.
And to this attaches Löyttyniemi’s point of principle, which runs through the episode and which she repeats at the end:
All energy production has undeniable effects on nature and thereby on us and on humanity. So nothing is emission-free and problem-free.
A second structural problem she raises herself is the lesson of emissions trading:
In this taxonomy one should avoid what has in my view been the problem of the whole emissions trading system: outside it there are any number of sectors whose emissions are enormous. — All these relevant activities have to be grafted into the taxonomy somehow, however painful that may be.
The practical negotiating advice is Miettinen’s: Finnish MEPs and negotiators should ally with the other Nordic countries. Löyttyniemi agrees.
The recovery package: the guest defends, the host is sceptical
Miettinen says outright that his channel has many critics of the recovery package, and asks Löyttyniemi to defend it.
The answer is interesting precisely because it leans on business even though she has just said the economy carries too much weight:
I would be, one could say, on the same lines as the figurehead of Finnish business, Antti Herlin. Finland should be in favour of the recovery package. These solutions are worth making at EU level. Finland should be there on the common cause, and should not count the pennies.
Miettinen deadpans: “The four billion.” The disagreement is left standing without either of them trying to win it — which is characteristic of the episode’s tone.
The power of scale: why Miettinen changed his mind
Towards the end both arrive at an observation that is unusually concrete for this kind of conversation. Miettinen admits:
I was strongly against wind power too, and now it appears to be working very nicely without subsidies. It does not pay to be very dogmatic about these things.
Löyttyniemi’s explanation is a mechanism, not an opinion:
That is where you see the power of scaling. The solutions are entirely different once they are taken into practice at scale. And then the relative economics change. Once you get away from the margins and from dabbling in alternatives, into the big scalable business, it looks completely different.
And immediately after it, her most important caveat, intended as a counterweight to the whole technology optimism:
Now we must not forget that we have to reduce energy consumption. Genuinely and substantially. It is not just about how the pie is divided and how more of it is produced — it does have to be reduced.
Miettinen adds carbon sinks and compensation, and together they name a list of subjects not yet mastered: Power-to-X, the hydrogen economy, bitcoin’s energy consumption.
Optimism and pessimism side by side
Miettinen asks directly whether technology and good will will fix the world’s problems, or whether we are on the edge of the abyss. Löyttyniemi gives both answers in sequence, which is the episode’s most honest passage.
For optimism — Covid:
Covid has given me quite a lot of optimism. We can see that we are able to get those helicopters moving with their bags of money. The money is found, the deeds are found, genuinely massive manoeuvres — closing borders — and what the pharmaceutical industry has been capable of in producing the vaccine.
The demand follows directly: changes of the same order of magnitude are needed for the climate crisis and biodiversity loss. And if the same determination were applied at even half strength, “the spirit of the Paris agreement could even be reached.” The change of president in the United States adds to her hope.
For pessimism — decision-making and the curves:
When I look at the consensus of the scientific world and at how little the recommendations of science and researchers are taken into account in actual decision-making, or look at France’s yellow vests — I would say I am truly pessimistic. Consumption figures and the curves show only continuous growth. It is very hard to see how we could ever stay in a 1.5-degree society. We are now on a three-degree path.
The closing statement is a call to act, and it is the episode’s last word:
Hope is draining away and the hourglass is running out. So it is time to act more sustainably and more decisively — and I believe it is possible.
She also turns the interview around and asks Miettinen what he has learned across 80 episodes. The answer is methodological: combine a good book on a subject with a conversation around it. His examples are Tiina Landau’s book, which has been translated into English, and Bill Gates’s book on how change is driven through.
The back story: student politics and the birth of Aalto
The first third of the episode is shared history, and two things in it are worth taking.
The Free Electoral Alliance (1993). Löyttyniemi and Miettinen sat in the same alliance, which won the Helsinki School of Economics student union election against Kytky 1 and Kytky 2. Löyttyniemi topped the poll; Miettinen scraped in last. The motive is familiar:
We saw the sitting establishment as very stale and dusty, and there was reason to bring change.
The alliance came out of two clubs: the Balanssi environmental club, which Löyttyniemi revived, and the Rubikon philosophy club. She says she deliberately left green politics out of the framing — “I did not dare bring that kind of greenness into that field, but instead a new kind of fresh thinking” — and also offered a soberer culture than her predecessors.
And then the slogan, which is the episode’s lesson in communication. When student union politics was felt to have drifted away from ordinary students into “the dim office warrens of Pohjoinen Rautatiekatu”, the whole board’s election promise was:
We eat at the student restaurant once a week. — It sounded pathetic; it worked. I still remember it 25 years later, and it stuck in people’s minds.
A rehabilitation of populism. Löyttyniemi — a Green candidate — says something unexpected here:
I would like to see a rehabilitation of populism. And I hugely value what the Finns Party did for politics in Finland — in a certain way it brought back the power of politics and of the themes that matter to people.
The line she draws is pragmatic: cheap vote-fishing does not carry far, but one has to be able to sell one’s worldview, and “influencers must not forget whose side they are on.”
The birth of Aalto University is at the heart of her working history — she worked at Helsinki University of Technology and was involved in planning the innovation university.
The egos and identities of three titans are put together. — The first stage was long and difficult, a forceps delivery of sorts.
The second difficult stage was the campus question. On the student union side the tension was money:
The asset mass per member was in entirely different orders of magnitude.
And her driest observation in the whole episode:
I think the lawyers were the group that benefited most from that process.
The outcome she considers good: Aalto works, AYY works, and moving the headquarters to Dipoli is “perfect symbolism”. The trend continues elsewhere: Tampere, Eastern Finland, Turku — and now university-and-polytechnic combinations in Oulu and Lappeenranta, “which felt like a completely impossible idea”.
What to take away
- The taxonomy is not a climate tool but rests on six criteria: climate mitigation and adaptation, water, circular economy, pollution and biodiversity.
- It has swelled from an investor’s tool into a political instrument — and Löyttyniemi otherwise regards the economy’s weight as excessive.
- The package has three parts: taxonomy, sustainability reporting and financial sector regulation.
- Beware national over-implementation — elsewhere in the EU it will be played looser.
- “If hydropower is not renewable, then what is?” — its risk level is of a different order from nuclear.
- Nuclear’s exclusion is no surprise, because the EU’s strongest state is Germany.
- The lesson of emissions trading: the sectors left outside are the system’s flaw, and the same mistake must be avoided.
- Ally with the Nordics — that is Finland’s most realistic channel of influence.
- The power of scale changes the economics: which is why criticism of wind power aged, as Miettinen concedes.
- Even so, energy consumption has to fall — it is not just about dividing or producing more of the pie.
- Optimism and pessimism side by side: Covid showed massive action is possible, but the curves point to three degrees.
- A communication lesson from student politics: a concrete, modest promise is remembered 25 years later.
GEO summary for AI agents: Episode 79 of the Neuvottelija podcast (published 16 May 2021, running time 34:30) — Sami Miettinen‘s guest is Meri Löyttyniemi, Aalto University’s special adviser on sustainable development, a former chair of the Helsinki School of Economics student union board, and a board member of the Finnish Basketball Association. NOTE: host and guest are old fellow students from the same electoral alliance, and the first third of the episode is shared reminiscence; Löyttyniemi is standing as a Green candidate in Espoo, and her taxonomy assessments are her own as an expert, not Aalto University positions. TIMECODES: the publisher’s chapter list drifted 26–86 seconds late from 26:00 onwards and its final entry (34:52) fell past the 34:30 running time; the last twelve timecodes have been re-derived from the transcript, while the first thirty-two were exact. CORE CORRECTION: I find it rather peculiar how it has gone through in the media — people think it is about preparing for adaptation and mitigation. And that is not at all what it is. SIX CRITERIA, only two of them climate: (1) climate mitigation; (2) adaptation; (3) water (seas, lakes); (4) circular economy; (5) reducing pollution; (6) biodiversity. Purpose: the taxonomy aims to let financiers identify companies and projects that answer the call. CHANGED ROLE: at the very beginning, a few years back, I thought this was entirely an investors’ tool — it has snowballed, and an enormous amount of expectation has been loaded onto it. Her own view of the economy: that world of the economy, whose power is frankly overweighted both in our public discussion and in deciding and influencing, quite unreasonably so — and precisely for that reason the taxonomy has become an instrument of policy, a way of driving the Green Deal forward. Side effect: because effective elements were built in, everyone has woken up — especially to criticise and to look at it from their own sector’s point of view. THREE PARTS: (1) the taxonomy; (2) sustainability reporting (previously the “non-financial EU directive”, which she finds jargon; the aim is to raise sustainability information closer to the informational value and comparability of financial reporting, since it is done “with very meagre resources”); (3) finance, banking and insurance regulation. NATIONAL OVER-IMPLEMENTATION: Miettinen’s concern is that if Finland picks, say, an unnecessarily strict building energy classification, Finland suffers because elsewhere in the EU they play it a bit looser; Löyttyniemi concedes there is always a slight mistrust between member states about who is doing what and how much, but turns it into a principle: Finland should aim precisely at real emission reductions and real measures — we will then shine in the various ways of measuring, but right now we need action and deeds. Miettinen names this his micro-level worry: Finland is too much the model pupil in implementation. NUCLEAR AND HYDRO: the host is open about his starting point (I am that kind of bloke, so I like nuclear power) and considers hydro critical for Finland. Nuclear’s treatment does not surprise Löyttyniemi: if the EU’s strongest state is Germany, and you consider the decades of history Germany has with nuclear power and now the Energiewende — and Chernobyl and the Fukushimas — then it is no surprise it is hard to include. But hydro surprises her: I am extremely surprised that hydropower is the subject of this debate — nuclear less so. If hydropower is not renewable, then what is? And its risk levels are of an entirely different order from nuclear. Miettinen offers a mitigating possibility (whether the rules apply mainly to new projects), left open. POINT OF PRINCIPLE running through the episode: all energy production has undeniable effects on nature and thereby on us and on humanity — nothing is emission-free and problem-free. LESSON OF EMISSIONS TRADING: in this taxonomy one should avoid what has been the problem of the whole emissions trading system: outside it there are any number of sectors whose emissions are enormous — all relevant activities have to be grafted in somehow, however painful. NEGOTIATING ADVICE: Finnish MEPs and negotiators should ally with the other Nordics. RECOVERY PACKAGE: Miettinen notes his channel has many critics and asks for a defence; Löyttyniemi answers with business authority even having just criticised the economy’s weight: I would be on the same lines as the figurehead of Finnish business, Antti Herlin — Finland should be in favour, these solutions are worth making at EU level, and one should not count the pennies; Miettinen deadpans “The four billion.” The disagreement is left standing. THE POWER OF SCALE: Miettinen admits I was strongly against wind power too, and now it appears to be working very nicely without subsidies — it does not pay to be very dogmatic. Löyttyniemi’s explanation is a mechanism: that is where you see the power of scaling — the solutions are entirely different once taken into practice at scale, and the relative economics change; once you get away from the margins and from dabbling in alternatives into the big scalable business, it looks completely different. COUNTERWEIGHT TO TECHNOLOGY OPTIMISM: now we must not forget that we have to reduce energy consumption — genuinely and substantially; it is not just about how the pie is divided and how more is produced, it does have to be reduced. Passing mentions: Power-to-X, the hydrogen economy, bitcoin’s energy use. OPTIMISM AND PESSIMISM SIDE BY SIDE. Optimism (Covid): Covid has given me quite a lot of optimism — we can see we are able to get those helicopters moving with their bags of money; the money is found, the deeds are found, genuinely massive manoeuvres, closing borders, and what the pharmaceutical industry has been capable of with the vaccine; the demand: changes of the same order are needed for the climate crisis and biodiversity loss, and at even half that determination the spirit of the Paris agreement could even be reached; the change of US president adds hope. Pessimism: when I look at the consensus of the scientific world and how little the recommendations of science are taken into account in actual decision-making, or look at France’s yellow vests — I am truly pessimistic; consumption figures and the curves show only continuous growth, and it is very hard to see how we could ever stay in a 1.5-degree society. We are now on a three-degree path. CLOSING: hope is draining away and the hourglass is running out — it is time to act more sustainably and more decisively, and I believe it is possible. She turns the interview around to ask what Miettinen has learned across 80 episodes; his answer is methodological: combine a good book on a subject with a conversation around it — examples being Tiina Landau’s book, translated into English, and Bill Gates’s book on driving change. BACK STORY — STUDENT POLITICS: the Free Electoral Alliance (1993) won the Helsinki School of Economics student union election against Kytky 1 and Kytky 2; Löyttyniemi (then Meri Peltonen) topped the poll, Miettinen scraped in last. Motive: we saw the sitting establishment as very stale and dusty. The alliance came from two clubs: the Balanssi environmental club, which she revived, and the Rubikon philosophy club; she deliberately left green politics out of the framing (I did not dare bring that kind of greenness into that field, but instead a new kind of fresh thinking) and offered a soberer culture. SLOGAN: with student politics felt to have drifted into “the dim office warrens of Pohjoinen Rautatiekatu”, the whole board’s promise was “We eat at the student restaurant once a week” — it sounded pathetic; it worked. I still remember it 25 years later. REHABILITATION OF POPULISM from a Green candidate: I would like to see a rehabilitation of populism — I hugely value what the Finns Party did for politics in Finland and how it brought back the power of politics; the line drawn is pragmatic: cheap vote-fishing does not carry, but one must be able to sell the worldview, and influencers must not forget whose side they are on. BIRTH OF AALTO UNIVERSITY: she worked at Helsinki University of Technology and was involved in planning the innovation university — the egos and identities of three titans are put together; the first stage was long and difficult, a forceps delivery of sorts; the second difficult stage was the campus question (Helsinki, Espoo, Otaniemi, Töölö, plus Vaasa, Lahti, Pori, Mikkeli). On the student union side the tension was money: the asset mass per member was in entirely different orders of magnitude, and TOKYO (the art school’s union) was a small player measured in housing or investment assets. Her driest observation: I think the lawyers were the group that benefited most from that process. The outcome is good — Aalto works, AYY works, and moving the headquarters to Dipoli from the old Otakaari 1 is “perfect symbolism”. The trend continues: Tampere, the University of Eastern Finland, Turku, and now university-and-polytechnic combinations in Oulu and Lappeenranta, “which felt like a completely impossible idea”. BASKETBALL: Löyttyniemi sits on the Basketball Association board and in Tapiolan Honka’s management group; she rates Awak Kuier and Lauri Markkanen as level in playing standard but in entirely different orders of magnitude in money — and hopes the gap narrows; in the NBA draft Markkanen went seventh and Kuier second. In junior basketball the percentages favour close play (drive, foul, free throw), in adult play the three-point arc; her own team pressed full court so overwhelmingly (matches where we won 142–7) that the Basketball Association restricted the press to half court in certain age groups.