Wires

EU finance ecolabels face delays as states seek more clout over greenwashing

* Green assets taxonomy could be pushed back by a few years

EU states want more power to set criteria for green investments

* Taxonomy could further widen growing green bond market

By Francesco Guarascio

BRUSSELS, Sept 19 (Reuters) - European Union standards to define which investment is green are likely to face delays as many of the bloc's governments want more time to assess them, EU officials said, a move that may undercut climate targets and limit sales of green assets.

As part of global plans to reduce carbon emissions, the European executive commission proposed last year to establish an EU-wide classification scheme for sustainable investments, known as taxonomy.

By setting clear standards on what is green, Brussels intends to widen the market in green bonds and securities, and tackle so-called greenwashing - whereby firms claim unsubstantiated environmental credentials.

The incoming president of the European Central Bank, Christine Lagarde, said this month the bank could buy more green bonds as part of its monetary stimulus after a taxonomy is introduced.

The bank held at the end of last year around 18 billion euros ($19.88 billion) in corporate and public green bonds. The market is expected to expand to $250 billion this year.

But EU's plans for a definitive classification may take longer than initially expected as governments from the 28-nation bloc seek more power to scrutinize what is green, EU officials told Reuters, as some fear strict standards could harm utilities and power-intensive industries.

An expert group set up by the European Commission in a non-binding opinion recommended in June to exclude coal and nuclear power from lists of green financial products.

Under the commission's plan, the first green lists should be published in mid-2020 in a process that would be guided mostly by experts' advice.

But many states hold a different view. They are now discussing to push back by two or three years the target date for the adoption of the taxonomy, officials familiar with the talks said.

They also want more clout on how decisions are made, in a move that could give more leverage to political, rather than technical, considerations. That could strengthen the hands of states that rely on coal, like Poland, or have powerful nuclear industries, like France.

Talks are continuing in view of a possible compromise this month. Pressure from states keener on bolder climate targets could make EU governments settle on a plan closer to the commission's. The Parliament will need to back the compromise before it becomes law.

The taxonomy could harm companies that are more exposed to climate risks, shifting investments to what is greener, but could also help those which embrace the transition, as oil firms or steel plants could expect more funding for their green activities - so far largely shunned by investors because of a lack of trusted ecolabels.

($1 = 0.9055 euros) (Reporting by Francesco Guarascio zfraguarascio in Brussels; additional reporting by Francesco Canepa in Frankfurt;)