EU’s new green investment rules face legal threats

ClientEarth has raised a legal challenge to the EU’s controversial ‘green’ taxonomy that currently includes gas and nuclear energy.

ClientEarth believes the current format is “failing on all counts” and the “logic majorly flawed”.

In the case of gas, ClientEarth and other organisations including the Institutional Investors Group on Climate Change (IIGCC), which has €50tr of assets under management, have repeatedly called on EU leaders to exclude gas from the EU Taxonomy, as it would undermine its credibility and the EU’s own net-zero commitments.

Although the inclusion of gas and nuclear are major issues, they are not the only ones, with bioenergy, bio-based plastics and chemicals used to make plastics also labelled as sustainable in the taxonomy. Bioenergy, for example, includes burning wood for energy – an activity that has a severe environmental impact and is far from carbon neutral, producing more CO2 emissions than burning fossil fuels and fuelling logging linked to deforestation.

Forests lawyer Filippo Mattioli said: “To claim that forest biomass significantly contributes to combatting the climate crisis is absurd. The Commission is currently encouraging investment into biomass under a false label of sustainability, disregarding the clear scientific warnings over the harm it will cause to the climate and biodiversity.”

Similarly, ethylene, propylene and the other chemicals in question are made of fossil fuels and they are mostly used to make single-use plastics – which release carbon into the atmosphere after they are disposed of. Bio-based plastics are also mainly used for single-use plastic applications.

As a result, the organisation has filed an internal review request to the European Commission for unlawfully labelling bioenergy, bio-based plastics and chemicals used to make plastics as “sustainable” in the EU taxonomy. An internal review request is the first step NGOs have to take before being able to bring a court challenge. The European Commission now has 16 weeks to reply to this internal review request, and insufficient action can trigger a challenge before the European Court of Justice.

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