EU court allows nuclear, gas in taxonomy

The EU’s General Court has ruled that nuclear energy and fossil gas activities can be included in the EU Taxonomy, dismissing Austria’s attempt to exclude them from the classification system of sustainable economic activities. The court determined that the European Commission was justified in its view that certain economic activities in the nuclear and fossil gas sectors could, under specific conditions, significantly contribute to climate change mitigation and adaptation.

The EU Taxonomy is a component of the EU Action Plan on Sustainable Finance, designed to steer capital towards activities that align with the EU’s sustainability objectives. It establishes a classification system for economic activities that significantly contribute to at least one of six environmental objectives, without causing substantial harm to others. The objectives include climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.

The taxonomy regulation came into effect at the start of 2022, with the status of nuclear and gas initially undetermined. However, the Commission later published a Delegated Act, proposing criteria and disclosure rules for their inclusion. Several EU member states opposed this inclusion, and an attempt was made by some EU Parliament lawmakers to exclude these activities, but it was not supported by most MEPs.

In October 2022, Austria filed a case with the General Court against the Commission’s decision to include nuclear and fossil gas in the EU Taxonomy. The court’s recent ruling, however, rejected Austria’s case, stating that the Commission did not exceed its conferred powers by including these sectors in the sustainable investment scheme.

The court found that the Commission was justified in concluding that nuclear energy generation has near-zero greenhouse gas emissions and that no technologically and economically feasible low-carbon alternatives exist at a sufficient scale. The court also noted that the Commission adequately considered the risks associated with nuclear power plants’ operation.

The ruling endorsed the view that economic activities in the nuclear and fossil gas sectors can, under certain conditions, significantly contribute to climate change mitigation and adaptation. The Commission’s regulation takes a gradual approach, focusing on reducing greenhouse gas emissions in stages while ensuring security of supply.

Following the ruling, Leonore Gewessler, Austria’s former Federal Minister of Climate Action and current leader of the Green Party, expressed her disapproval, stating that the decision undermines the integrity of the “green” label, associating it with nuclear power and fossil gas.