BRUSSELS (Reuters) - European Union standards to define green investments are likely to face delays, because 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 a 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 -- companies claiming environmental credentials they don’t deserve.

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.

At the end of last year, the ECB held around 18 billion euros ($19.88 billion) in corporate and public green bonds. The market is expected to expand to $250 billion this year, continuing its gradual rise since its creation in 2012.

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

A delay on introducing eco-labels could dissuade investors from buying green bonds and assets.

That would also go against EU’s plans to strengthen the international use of the euro in financial markets and challenge the dollar’s dominance.

“Sustainable finance is a great opportunity for the euro,” Thierry Roland, head of global banking at HSBC Europe, told a conference in Brussels on Thursday.

The market for green bonds is mostly denominated in euros, unlike most other assets which are priced in dollars. An expansion of the green bond market would therefore contribute to make the euro stronger as a global currency, Roland said.

NUCLEAR ISSUES

Under the commission’s plan, initial lists of financial products that can be labeled as green should be published in mid-2020. Brussels is likely to heed a non-binding opinion from an expert group that in June advised the commission to exclude all assets related to coal and nuclear power.

But many states hold a different view. They are discussing delaying by two or three years adoption of the taxonomy, officials familiar with the talks said.

They also want more say over how decisions are made, which give more weight to political 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.