European NGOs Challenge the Inclusion of Natural Gas and Nuclear Energy in the Taxonomy Regulation
As indicated in the previous edition of the Climate Report, on July 15, 2022, the European Union Official Journal published Commission Delegated Regulation (EU) of March 9, 2022. This new delegated regulation includes nuclear energy as well as natural gas, under stringent technical criteria, in the European taxonomy set out by Regulation (EU) 2020/852 of June 18, 2020 (the "Taxonomy Regulation").
On September 19, 2022, several environmental non-government organizations ("NGOs") officially challenged this decision and requested that the European Commission repeal the Delegated Regulation of March 9, 2022. The NGOs' legal action is based on the "request for internal review" procedure, provided under Article 12 of Regulation (EC) No 1367/2006 of the European Parliament and the Council of September 6, 2006 on the application of the provisions of the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters to Community Institutions and Bodies (the "Aarhus Regulation"). Such procedure allows individuals and NGOs to request an administrative review of legal acts adopted by an EU institution or body on the grounds of a violation of European Union environmental regulations.
On substance, the NGOs argue that nuclear energy and natural gas should not be included in the taxonomy for sustainable finance, even with stringent requirements, and claim in particular that such inclusion is in violation of the Taxonomy Regulation itself as well as Regulation (EU) 2021/1119 of the European Parliament and of the Council of June 30, 2021, establishing the framework for achieving climate neutrality (usually referred to as the "European Climate Law").
Pursuant to the internal review procedure, the European Commission must answer the request within 17 weeks (which may be extended to 22 weeks). Depending on the Commission's answer, the NGOs may decide to take their claim before the Court of Justice of the European Union ("CJEU"). In any case, neither the internal review process nor the potential proceedings before the CJEU will suspend the implementation of Delegated Regulation (EU) of March 9, 2022. However, both nuclear and natural gas are considered as possible "transition" energy under the taxonomy which is meant to be revisited after a few years.
