Industry Updates

EU taxonomy faces legal dispute as member states oppose inclusion of gas and nuclear

More EU 27 lawmakers consider backing a lawsuit against the changes

Jamie Gordon

EU flags outside of EU commission

Opposition to nuclear energy and natural gas being deemed sustainable activities in the European Union Taxonomy has seen member states threaten to take legal action, with more lawmakers considering joining the cause.

The Complementary Climate Delegated Act was published only a week ago, however, discussions surrounding the inclusion of the two contentious energy sources began last year when the Act first made headlines and then accelerated when the EU published its draft proposals on 31 December last year.

In 2021, Austrian lawyers found there was no legal basis for nuclear and gas to be included within the taxonomy. Since then, Austria and Luxembourg have agreed to bring a lawsuit before the European Court of Justice.

Last month, German vice-chancellor Robert Habeck said his country’s government would examine the European Commission’s sustainable finance taxonomy proposal, adding it would “check whether everything is legally correct and clean”.

He continued: “The position of the federal government is that it would not have needed the second delegated act. We will see what kind of majority will be formed in the Council.

“And after that it will be necessary to decide whether the legal examination will lead us to a lawsuit or not.” 

While Habeck’s Green Party are opposed to the energies being included in the taxonomy, their coalition partner, the Social Democrats (SPD), are in favour. 

Furthermore, according to Steffen Hebestreit, chief spokesperson for the German government, the European Commission has the right to regulate on matters such as these and as a result, “seems to be on safe legal ground”.

Despite this, the Green Party adopted a resolution at the end of January, stating its ministers must “examine whether the delegated act is tenable and, if it is not, to initiate its own lawsuit against the classification of nuclear energy and natural gas in the EU taxonomy or, alternatively, to join the lawsuit of Austria and Luxembourg in the matter”.

Should Germany choose to offer its support to the Austro-Luxembourg lawsuit, the question then becomes whether other lawmakers will follow suit. For instance, some think Spain is aligned with those opposing the Delegated Act.

Austria’s environment minister Leonore Gewessler told EURACTIV last November: “Spain shares Austria’s position one-to-one. Spain sees neither nuclear energy nor fossil gas in the taxonomy and has made this very clear before.”

However, while noting the European Commission made a “big mistake” labelling the two energy sources green investments, Spanish ecological transition minister, Teresa Ribera backed a focus on renewable energy sources but cautioned any decision to join the existing lawsuit would have to follow clear legal analysis.

While any new resistance to the taxonomy changes will now have to happen at the eleventh hour, one might expect the debate around what can be considered green and what can be considered realistic to rumble on for the foreseeable future.

Speaking to ETF Stream, Adrian Whelan, global head of regulatory intelligence at Brown Brothers Harriman (BBH), said: “This objective measuring system mindset does not sit well in the real world, because the realpolitik is that the impact of the taxonomy on specific countries and industries can be disproportionate.

“That is what drove the inclusion of gas and nuclear; some countries said they cannot upkeep their current economic model by adhering to these rules.”

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