In 2020, the EU legislature adopted the Taxonomy Regulation, by which it established a framework to facilitate sustainable investment. That regulation is aimed at channelling finance flows towards sustainable activities with a view to achieving a climate-neutral European Union by 2050. To that end, the regulation lays down the criteria for determining whether an economic activity qualifies as environmentally sustainable for the purposes of establishing the degree to which an investment is environmentally sustainable.
In order to qualify as environmentally sustainable, an economic activity must, inter alia, according to the Taxonomy Regulation, contribute substantially to one or more environmental objectives without causing significant harm to any of those objectives, and comply with certain technical screening criteria to be established by the European Commission.
In February 2022, the European Commission adopted a delegated regulation, by which it established technical screening criteria to include certain activities in the nuclear energy and gas sectors in the category of activities contributing substantially to climate change mitigation or climate change adaptation. The European Parliament approved the regulation in August of that year, clearing the way for it to come into force from the start of 2023.
Austria filed a lawsuit against the Commission in October 2022 challenging its decision to include gas and nuclear in the EU's "taxonomy".
The Luxembourg-based General Court of the Court of Justice of the European Union - Europe's second-highest court - has now dismissed the action brought by Austria.
According to the General Court, by including nuclear energy and gas in the sustainable investment scheme, the Commission did not exceed the powers which the EU legislature properly conferred on it.
"Specifically, the Commission was entitled to take the view that nuclear energy generation has near to zero greenhouse gas emissions and that there are currently no technologically and economically feasible low-carbon alternatives at a sufficient scale, such as renewable energy sources, to cover the energy demand in a continuous and reliable manner," the court said.
The court concluded the Commission took "sufficient account of the risks associated with normal operation of nuclear power plants, serious reactor accidents and high-level radioactive waste". It said the arguments put forward by Austria relating to the negative effects of droughts and climate hazards on nuclear energy are "too speculative to be accepted".
The court said it "endorses the view that economic activities in the nuclear energy and fossil gas sectors can, under certain conditions, contribute substantially to climate change mitigation and climate change adaptation. The approach taken by the 2022 delegated regulation is a gradual approach based on a reduction of greenhouse gas emissions in stages, while allowing for security of supply".
Austria has two months and ten days to lodge an appeal with the Court of Justice against the decision of the General Court.
