EU Commission taken to court over rules on planes and ships

Five NGOs are taking the EU Commission to court over recently introduced  changes to the EU Sustainable Finance Taxonomy which will allow a swath of aviation and shipping activities to be described as sustainable investments, on what they believe are the flimsiest of criteria.

The group is made up of Dryade, Fossielvrij NL, and Protect our Winters Austria, supported by legal experts Opportunity Green and CLAW.

The European Commission introduced the Taxonomy in 2020 as a classification system which they describe as ‘an important market transparency tool that helps direct investments to activities most needed for the transition to net zero and environmental sustainability.’

The change that causes concern for the NGOs was published in November 2023, when aviation and shipping were added to the Taxonomy, allowing fossil fuel-powered ships and planes to be eligible for green finance if they meet ‘efficiency criteria’.

The group believe that the criteria ‘go against the very requirements of the Taxonomy Regulation as they aren’t based on conclusive science and don’t support a 1.5°C pathway.’

In January of this year, the NGOs launched a legal challenge, requesting that the EU Commission review the criteria. This was  rejected by the Commission in June, leading to the NGOs today announcing that they are filing a case in the European Court of Justice, aiming to force a review of the criteria.

The problem, as identified by the group and highlighted by Transport & Environment research in advance of last year’s changes, is that new aircraft – which are more fuel efficient than the aircraft they replace – are considered ‘best in class’ and thus Taxonomy compliant, even though these emissions savings are only around 15-20%. 

The group are also drawing attention to the fact that Taxonomy Regulations require scientific evidence to prove that compliant activities are consistent with a 1.5°C pathway. Given that the most recent studies warn of rapidly rising methane emissions and the exhaustion of aviation’s carbon budget by as early as 2032, the NGOs accuse the Commission of ‘actively incentivising investment in ships and planes that fly in the face of this evidence’.

David Kay, Legal Director at Opportunity Green says: ‘The Taxonomy is set to mobilise billions of Euros of private finance. But the aviation and shipping criteria send completely the wrong signal to investors – directing investments to planes and ships that will pollute the climate for decades to come. How are investors supposed to have confidence that their investments are truly green? We believe the criteria are unlawful and the EU Commission needs to be held to account.’

Hiske Arts at Dutch NGO Fossielvrij said: ‘While judges and regulators are finally stepping up against the relentless greenwashing in the aviation and cruising sectors, the EU is taking greenwashing to the next level. By rubber-stamping extremely polluting planes and cruise ships as green, and thereby driving investments into an already growing fossil-powered industry, the EU has chained us to climate catastrophe. This needs to be stopped.’

Florian Graber from CLAW – Initiative for Climate Justice said: ‘If aviation and shipping are misclassified as green, we could be setting a dangerous precedent that fuels the very future we’re striving to prevent. The Taxonomy is meant to be built on conclusive science not a cut and paste job from industry. This is why the lawsuit is crucial – it’s about ensuring our investments align with our climate goals and what the science tells us we need to do to meet them.’

Elias Van Marcke of Dryade said: ‘The EU Taxonomy should give investors clear, unequivocal recommendations about green investments. By allowing shipping and aviation to be included in the Taxonomy based on these flawed criteria, the Commission completely misses the ball. These criteria have been made to fit the industry, rather than driving investment towards green activities. This is unacceptable and completely undermines the credibility of the Taxonomy.’