The EU General Court has upheld the European Commission’s decision to include certain bioenergy activities and chemical manufacturing processes, including the production of primary plastics, in its sustainable finance taxonomy. Environmental NGO ClientEarth had sought to annul the Commission's 2022 rejection of its internal review request, arguing the sustainability classifications breach EU environmental law.
This ruling has significant implications for regulatory compliance and investment strategies across the chemicals and manufacturing sectors. It confirms that bioenergy, organic base chemicals, and primary plastics can continue to be labelled as "environmentally sustainable" under the EU Taxonomy Regulation, provided they meet specified technical screening criteria.
Bioenergy and plastics: classification upheld despite concerns
The case revolved around Delegated Regulation (EU) 2021/2139, which defines technical screening criteria under the EU Taxonomy Regulation (Regulation (EU) 2020/852). ClientEarth challenged the inclusion of forest biomass, organic base chemicals, and plastics in primary form, arguing the measures lacked a robust scientific basis and violated the “do no significant harm” (DNSH) principle.
However, the General Court dismissed all four of ClientEarth’s pleas. It ruled that the Commission had acted within its discretion by relying on available scientific evidence, including lifecycle data and existing EU legislation such as the RED II Directive and LULUCF Regulation. The Court found no manifest errors in how the Commission assessed environmental impact, carbon emissions, or circular economy obligations.
Life cycle and scientific evidence: Court endorses Commission's approach
ClientEarth had argued that the screening criteria failed to incorporate full life cycle assessments and relied on outdated legislation. The Court, however, confirmed that Article 19 of the Taxonomy Regulation does not mandate exhaustive lifecycle metrics for all activities. Instead, it allows a balanced approach where scientific certainty is not absolute, and periodic reviews under Article 19(5) accommodate evolving knowledge.
Significantly, the judgment also reaffirmed the use of transitional activity classifications. The Court accepted that certain high-emission industrial processes—such as those involved in producing base chemicals—could be considered sustainable if they meet thresholds for improved environmental performance and are essential to societal functions.
