European Court Allows Classification of Nuclear and Natural Gas as Sustainable Investments for Green Transition

Nuclear energy and natural gas will continue to be categorized as environmentally sustainable investments within the European Union, as determined by a court decision on Wednesday. This inclusion may potentially channel substantial funding into projects that many do not typically associate with being “green.”

Austria filed a lawsuit against the European Commission, the EU’s executive body, over the decision to label gas and nuclear as sustainable in the EU’s system for environmentally friendly economic activities. This system steers investments towards initiatives crucial for reducing greenhouse gas emissions that lead to global warming.

The General Court at the European Court of Justice on Thursday ruled in favor of the commission, dismissing Austria’s action.

Nuclear power, while free from carbon emissions, is not commonly considered green energy like solar or wind power. Creating nuclear energy involves mining and processing uranium for fuel, an energy-consuming activity that results in emissions.

Nuclear reactors also produce radioactive waste and carry risk of accidents. Although fossil gas emits less carbon than coal, it still contributes to global warming when utilized for electricity generation.

The commission stated that the court upheld the legality of their established sustainability criteria. European companies are increasingly relying on this classification system to strategize their environmentally friendly investments, which amount to hundreds of billions of euros.

The European Union aspires to achieve “climate neutrality” by 2050, aiming for an economy where the emissions of greenhouse gases do not exceed what is naturally absorbed. In 2020, the European Parliament and the Council of the European Union set up a framework to guide investments towards actions that address climate change.

In 2022, the European Commission adopted a regulation to include certain activities in the nuclear energy and fossil gas sectors, as transitional ways to accelerate progress to climate neutrality. It was an acknowledgement of how countries have different energy mixes and were at different starting points in deploying renewables at scale.

Austria sought to have that regulation annulled. Leonore Gewessler filed the suit in 2022 while serving as Austria’s environment minister because she said the regulation was “opening the door to the greenwashing of climate-harming and dangerous technologies.” Austria does not have any operational nuclear power plants.

Luxembourg supported Austria’s case. The commission was supported by Bulgaria, the Czech Republic, France, Hungary, Poland, Romania, Slovenia, Slovakia and Finland.

The court found that the commission did not exceed its authority by including nuclear energy and gas. The court endorsed the view that economic activities in the nuclear energy and gas sectors can, under certain conditions, contribute substantially to climate change mitigation and adaptation.

The Brussels-based trade association for the nuclear energy industry in Europe, “nucleareurope,” said being in the taxonomy can help encourage private investments in nuclear projects.

Now the parliamentary leader of the Austrian Greens, Gewessler called on the Austrian government to appeal. She said an enormous amount of funding is at stake, which should go into safe renewables, not into risky and costly reactors.

“This ruling sends a disastrous signal to the entire EU,” Gewessler said in a statement Wednesday. “If this decision stands, it undermines a fundamental principle: where it says green, it is no longer truly green. Those seeking green investments may end up supporting nuclear power or dirty gas.”

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AP writer Sam McNeil contributed to this report from Brussels.

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