Challenge against EU ‘green’ label for gas and nuclear energy steps up

The challenge to an EU system labelling gas and nuclear as “green” investments has gained momentum with a lawsuit filed by Austria against the European Commission.

The Commission is already facing two separate legal challenges from environmental groups — one from Greenpeace and one from a coalition including Client Earth and the WWF — over the classification of the fuels as sustainable for investment purposes.

Austria formally submitted its complaint to the Court of the European Union on Friday, asking for the rules under the EU’s “taxonomy”, or financial classification system, to be quashed.

“We need to safeguard the trust of consumers and investors,” which must be sure that if a product “is labelled green, it’s actually green in content,” said Austria’s minister for climate action and Green politician, Leonore Gewessler.

The inclusion of nuclear and gas in the taxonomy “increases the risk of greenwashing” and of an uptick in investments into projects “that do not help us reach our climate ambition,” she said.

The EU passed a law in July deeming the two controversial fuels as sustainable energy sources, in a system designed to help direct investments into clean-energy projects.

The system is part of a broader package of legislation to support the EU’s goal of reaching net zero greenhouse gas emissions by 2050.

The decision came after months of tense discussions — and as European legislators scrambled to wean the continent off Russian gas and accelerate the shift to renewable energy.

The commission did not originally include nuclear and gas in its proposed legislation for the taxonomy, and only added them in January this year.

Austria and Luxembourg flagged their intention to challenge the law, and Austria, an anti-nuclear country since a referendum in 1978, has been the first to follow through by filing its case on Friday.

The taxonomy “is not a question of energy policy” but a matter of “whether consumers and investors . . . can trust if they have a green investment product,” said Gewessler. Given the EU’s net zero target, “there’s an inherent and quite big risk of stranded [fossil fuel] assets,” she said.

The complaint argues that nuclear and gas energy do not fulfil the requirements of the taxonomy because green technologies must not cause significant environmental or climate-related harm.

It argues that certifying gas as green could delay Europe’s transition to clean energy by encouraging further investment in the fossil fuel.

The complaint also argues that the last-minute inclusion of the fuels in the taxonomy is unlawful, since “procedural requirements, such as a required impact assessment, public consultation, and timely consultation of member states, were insufficiently met”.

One senior European development finance official said there was a role for new gas infrastructure under “limited circumstances” but “we would not claim it is green”.

While activists and others have pushed back against the classifications, Brussels has said that only gas and nuclear-related activities that meet certain criteria may be labelled “green”.

The conditions include that the fuels be used to move away from dirtier fossil fuels such as coal, and that gas projects limit their emissions to a certain intensity.

Analysts have questioned how seriously the EU will be taken at the UN COP27 climate summit in November given the inclusion in the taxonomy of gas, and the continent’s scramble to find alternative gas supplies to replace those no longer being imported from Russia.

Gewessler said she hoped that the taxonomy would not make COP27 negotiations harder, adding that the global north had a “responsibility” to support countries in the global south to transition to cleaner energy sources.