The General Court of the European Union annulled on 30 September part of the European Commission's EU Sustainable Finance Taxonomy, ruling that the Commission acted "contradictorily" by failing to set a quantitative threshold for methane slippage emissions from gas-fuelled ships while requiring compliance with emission limits set elsewhere in EU law.

The three environmental NGOs that brought the case lost most of their broader challenge. The General Court upheld the Commission's technical screening criteria for fossil-fuelled aviation and most maritime activities, finding that the Commission enjoys broad discretion in setting sustainability thresholds under the precautionary principle.

What did the General Court actually annul?

The court annulled only the Commission's refusal to establish a specific numerical threshold or limit for methane slippage from gas-fuelled maritime vessels. The Commission had instead required compliance with qualitative safeguards, while simultaneously acknowledging that compliance would be measured against quantitative thresholds in the FuelEU Maritime Regulation — a measure adopted after the amended taxonomy.

The court held that where compliance depends on meeting certain emissions thresholds, the taxonomy's criteria must contain those thresholds or an express reference to a standard setting them. The Commission, the court found, cannot defer to a later instrument without explanation.

What survived the challenge?

The taxonomy's criteria for aviation, and the other contested maritime criteria, stood. The General Court held that the Commission has wide latitude in selecting scientific studies, assessing risk, and fixing thresholds. It clarified that the obligation to ensure a "high level of protection" does not require "the highest level of protection that is technically possible, nor does the existence of scientific uncertainty require the Commission to refrain from adopting technical screening criteria."

What were the NGOs seeking?

Dryade, Fossielvrij NL, and Protect our Winters Austria filed the action in August 2024 with legal support from Opportunity Green and CLAW. They argued that the technical screening criteria were legally flawed, rested on inadequate scientific analysis, and imposed inadequate thresholds that would lock in high-emitting planes and ships for decades.

The NGOs conceded that newer fossil-fuelled vessels "may be marginally more fuel-efficient than older models" but said any such gain is offset by rising global traffic volumes in aviation and shipping.

What did the parties say?

Boris Schellekens of Fossielvrij NL called the ruling "a small slap on the wrist" for the Commission. He warned that the partial win still permits "an entirely new fleet of cruise ships and airplanes" to be labelled green "even though they will be fossil-fuelled for another 30 years."

David Kay, legal director at Opportunity Green, welcomed the judgment as "a crucial confirmation that the European Commission's discretion is not a blank cheque and remains strictly bound by the rules of the Taxonomy Regulation." He added: "Fossil-fuelled aircraft and ships should not be labelled as sustainable investments when they result in huge climate damages and costs to society, and encouraging green finance for them undermines the EU's legal obligations on climate change."

Schellekens called on EU Climate Commissioner Wopke Hoekstra to "ask himself: does he truly believe that it is a sustainable choice to invest in new fossil-fuelled cruise ships and aircrafts?"

What happens next?

Opportunity Green confirmed that the NGOs and their counsel will "study the judgment carefully before deciding whether to appeal." Any appeal would lie to the Court of Justice of the European Union, the EU's highest court.

Who represented the parties?

The NGOs instructed:

• Tim Johnston of the Law Library (Ireland) and Brick Court Chambers (England)
• Esther Drabkin-Reiter of Francis Taylor Building
• Fred Logue of FP Logue Solicitors

They received support from Odette Chalaby and Margherita Cornaglia of Landmark Chambers, and Ali Al-Karim of Brick Court Chambers.

The underlying 2023 Taxonomy amendment enabled certain aviation and shipping activities to qualify as environmentally sustainable investments, provided they substantially contribute to at least one EU climate objective while not significantly harming others.