EU court says fossil-fueled planes count as green investment

Environmental groups won a narrow victory over missing methane limits for ships, but failed to dislodge EU rules allowing certain fossil-fueled planes and vessels to qualify for sustainable investment.(CN) — Fossil-fueled planes kept their route to green investment Wednesday, while the EU’s second-highest court faulted shipping rules for leaving a crucial methane limit unwritten.The General Court of the European Union partly upheld a challenge by environmental groups Dryade, Fossielvrij NL and Protect Our Winters Austria. They sought to overturn the European Commission’s June 2024 refusal to reconsider criteria allowing certain aircraft manufacturing, leasing, air transport and shipping activities to qualify as environmentally sustainable.Under rules adopted in 2023, some fossil-fueled planes and ships could qualify by meeting efficiency and other requirements. The EU’s sustainable investment classification system, known as the taxonomy, permits certain activities to count toward the transition to a cleaner economy where technically and economically feasible low-carbon alternatives are unavailable.Gas-fueled ships had to use technology to curb methane escaping unburned into the atmosphere. The commission imposed no emissions limit in that requirement, yet insisted compliance would be checked against thresholds elsewhere in EU legislation. The court found that approach contradictory.“If verification of compliance with a technical screening criterion necessitates ensuring that certain emissions thresholds are complied with, that criterion must either contain those thresholds or refer expressly to a standard or set of rules containing those thresholds,” the judges wrote.On aircraft, the applicants failed to clear the higher bar for challenging the commission’s scientific assessments. The court found that describing efficiency standards as insufficiently ambitious did not show they were unsuitable for gradually reducing emissions. With the commission afforded broad discretion, that criticism did not establish a clear assessment error.The court annulled the review refusal only insofar as it dismissed the need for a methane threshold. The investment rules themselves remained in place.David Kay, legal director at environmental organization Opportunity Green, which supported the applicants, said: “This ruling is a crucial confirmation that the European Commission’s discretion is not a blank check and remains strictly bound by the rules of the Taxonomy Regulation.” He warned that financing fossil-fueled fleets as sustainable investments still carried climate costs and undermined EU climate obligations.Campaigners feared that money intended to speed the departure from fossil fuels would instead finance another generation of planes and ships burning them. They asked the commission to review the criteria in January 2024. After its rejection that June, the three applicants went to court in August 2024, supported by Opportunity Green and climate law group CLAW.“With this ruling, the court has given the European Commission a small slap on the wrist,” said Boris Schellekens, speaking for Dutch campaign group Fossielvrij NL. He warned new fleets could burn fossil fuels for another 30 years and urged climate commissioner Wopke Hoekstra to turn his calls for stronger climate action into changes to the investment rules.The court accepted the commission’s position on a separate objection to the shipping criteria: It did not need to define methane control technologies more precisely because scientific literature already described them adequately. Several other shipping complaints failed because they went beyond the grounds raised in the original review request.Transport & Environment, a clean transport campaign group, warned that supporting sales of conventional aircraft could leave European manufacturers trailing competitors developing cleaner planes. “When it comes to aviation, this ruling is a worrying reversal for Europe’s climate and industrial ambitions,” the group said.The group welcomed the shipping outcome as a check on the commission’s powers but said methane safeguards alone would not prevent continued dependence on fossil gas. It cited more than 1,700 ships powered by liquefied natural gas and nearly 1,200 on order.The commission said it would review the judgment and consider an appeal; the applicants’ coalition also said it would weigh that option. Either side can appeal on points of law within two months and 10 days of notification. For now, the commission must address the methane defect, while qualifying fossil-fueled fleets remain eligible for green investment.Courthouse News reporter Eunseo Hong is based in the Netherlands.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads