Brussels faces legal challenge over ‘green’ gas and nuclear labeling

The European Commission is facing legal challenges from two environmental organizations over its labeling of gas and nuclear as “green” under a scheme designed to channel investment into climate-friendly projects.

Greenpeace, the campaign group, and a separate alliance of environmental bodies, including Client Earth and the World Wildlife Fund, said they had sought a legal review of the decision that applied “faux green” labels inconsistent with the EU climate laws.

The so-called EU taxonomy classifications were set in 2020 to help push the bloc towards its goal of reaching net zero emissions by 2050.

But the commission did not include gas and nuclear in its initial legislation to set up the financial classification system, and decided to add them in January after consultations.

The group’s challenge including Client Earth only challenges the green label of gas, “a potent fossil fuel that threatens European energy security and has led to exorbitant energy prices across Europe”.

The risks associated with nuclear energy were cited by Greenpeace for their opposition to its inclusion. “Gas is one of the main causes of climate and economic chaos, while there is still no solution to the problem of radioactive nuclear waste and the risk of nuclear accidents is far too great to ignore” said Ariadna Rodrigo, Greenpeace EU Sustainable Finance Campaigner.

Both groups have asked the commission to formally reconsider its decision, for which it has 16 to 22 weeks. If he disagrees, they said they would take the case to the European Court of Justice.

Legal arguments have been made on the basis that the commission did not take into account the expert opinion given to it, which gave a negative opinion on the proposal, and that the law does not follow the science climate fundamentals.

Brussels has said that gas and nuclear-related activities can only be considered “green” if they meet certain criteria. They should only be used as a way to move away from dirtier fossil fuels such as coal and oil, and that gas projects should only operate with limited emissions and the potential to convert to renewable energy by 2035.

Nuclear power can only be funded if it meets certain radioactive waste disposal standards, he ruled.

The debate intensified during the energy crisis sparked by Russia’s manipulation of gas exports in retaliation for EU support for Ukraine. National governments in the EU have pumped billions of euros into finding alternative fuel supplies, opening liquefied natural gas terminals and, in some cases, extending the life of nuclear power plants.

Lawmakers in the European Parliament had the final say on including gas and nuclear in the taxonomy in July, but failed to prevent it by a margin of 75 votes.

Green and left-wing MEPs are also pushing for parliament to take legal action, but the process is likely to be more difficult as it would require the approval of a parliamentary majority, which is unlikely given the previous deficit.

Austria and Luxembourg are also preparing legal action to challenge the inclusion of nuclear investments in the taxonomy. This action is being led by Austria, which has a history of skepticism towards nuclear energy. This file should be presented at the beginning of October, according to those familiar with the process.

The controversy over environmental classification prompted the commission to delay a “social taxonomy” project, which would aim to push investment into “socially beneficial” businesses.

It also prompted experts from five environmental and consumer groups to quit the EU’s technical advisory group on sustainable finance this week, according to a letter sent to Mairead McGuinness, the EU’s finance commissioner, seen by the Financial Times.

The commission said it had received requests for a formal review of the taxonomy ruling and would respond “in due course.” He added that he “recognizes the work” of the members of the advisory group and “takes[s] note that some. . . have decided to withdraw.

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