I. Introduction
On 10 September 2025, the General Court investigated and dismissed in case T-625/22 Austria v Commission, an action for annulment against the European Commission’s (the Commission)Footnote 1 delegated legislation under regulation EU 2020/852 (the Taxonomy Regulation).Footnote 2 The core legal question that was addressed is whether fossil gas and nuclear energy activities could be classified as “sustainable investments” within the meaning of the Taxonomy Regulation and whether the Commission had the legal authority to include them. This case represents one of the significant judicial interventions to date in the interpretation of sustainable finance within the European Union. It not only concerns the legality of a Commission delegated act containing technical screening criteria of the Taxonomy Regulation, but also directly implicates the classification of certain activities in the nuclear and fossil gas sectors as environmentally sustainable. Crucially, it marks the General Court’s first ruling on the application of the criteria set out in the Taxonomy Regulation to these sectors, yet the judgment can also be seen as the latest legal episode in a decade-long political contest over nuclear energy in the European Union (EU). This article starts with a short overview of the Taxonomy Regulation, followed by the political contexts of nuclear energy’s resurgence. Furthermore, it shows the main considerations of the judgment, including the relevant legal framework and the interpretation of nuclear energy and fossil gas under the Taxonomy Regulation. The question arises what the potential implications of the judgment could be at several levels, both at the political level and in practice. This article seeks to address that question by examining the judgment’s potential impact on the Commission’s discretion in developing regulations, as well as possible consequences for sustainable investment within the EU. It concludes with a forward-looking perspective, advocating a more holistic approach to assessing long-term investments in fossil gas and nuclear energy projects, one that considers the full life cycle of such investments and their lock-in effects, rather than focussing solely on greenhouse gas emissions.
II. The EU Taxonomy Regulation
The Taxonomy Regulation entered into force in July 2020 as the cornerstone of the EU’s sustainable finance framework in order to help channel private capital towards sustainable economic activities most needed for the transition, in line with the European Green Deal objectives.Footnote 3 The Taxonomy Regulation harmonises the criteria at EU level for determining whether an economic activity qualifies as environmentally sustainable.Footnote 4 In short, the classification system of the Taxonomy Regulation is built around six environmental objectives and two cumulative substantive requirements that an activity must satisfy in order to receive a “sustainable” label: it must make a “substantial contribution” to at least one environmental objective, must “do no significant harm” (DNSH) to any of the remaining objectives, is carried out in compliance with the minimum safeguards as laid down in article 18 Taxonomy Regulation and complies with the technical screening criteria established by the Commission. In that context, the Commission adopted the Delegated Regulation 2022/1214 (the “Complimentary Climate Delegated Act” or CCDA),Footnote 5 which amended the existing Delegated Regulation 2021/2139 and which established technical screening criteria for determining the conditions under which certain activities in the nuclear energy and fossil gas sectors qualify as contributing substantially to the climate change mitigation and adaptation and for determining whether that economic activity qualifies under the DNSH criterion.Footnote 6 The following figure 1 summarises which gas-related activities and nuclear-related activities are included in the CCDA and hence would qualify as transitional activities to facilitate the transition away from more harmful energy sources such as coal.
III. Nuclear energy in EU energy policy: the comeback
The taxonomy classification of nuclear energy and fossil gas-activities under this judgment T-625/22 did not emerge in a policy vacuum. The CCDA and the judgment can be situated within the context of the political and regulatory debate on nuclear energy within the EU and the Member State coalitions that have shaped this debate.
As a brief step into history, nuclear energy has been present as of the beginning of the EU as demonstrated by the Treaty on the European Atomic Energy Community (Euratom Treaty) in 1957. Despite these common rules, article 194 (2) of the Treaty of the Functioning of the European Union (TFEU) allows Member States to independently decide to include nuclear energy in its own energy mix.Footnote 7 Nuclear appetite suffered significant setback following the Fukushima accident in March 2011. Germany announced an accelerated phase-out of its three active nuclear reactors which was completed in April 2023,Footnote 8 and Belgium initially committed to a similar trajectory for three nuclear plants. The prevailing political mood treated nuclear as a technology which should be managed to decline and a consensus emerged towards renewables as the primary decarbonisation instruments, with fossil gas fulfilling the interim baseload function. This dependency of gas left several Member States critically exposed when, following Russia’s invasion of Ukraine in February 2022, European gas markets experienced severe price volatility and supply disruption. The energy security crisis that followed prompted a fundamental reassessment of the fuel mix within the EU, and also the geopolitical dependencies of importing non-EU fossil gas. The Commission’s REPowerEU Plan of 18 May 2022 acknowledged the role of nuclear energy in reducing dependence on Russian fossil fuels alongside accelerated renewable deployment.Footnote 9 As a result of this gas crisis and the REPowerEU plan, several national initiatives emerged: France announced a new nuclear reactor construction program and Belgium reversed its phase-out by extending the operational lifetime of two units. Several Member States found notable public support for nuclear energy after 2022, driven primarily by security of supply concerns.Footnote 10 In 2023, France launched the EU Nuclear Alliance, a coalition of twelve Member States, Bulgaria, Croatia, Czech Republic, Finland, Hungary, the Netherlands, Poland, Romania, Slovakia, Slovenia and Sweden, which have collectively endorsed a joint declaration recognising the important role of nuclear energy in the clean energy transition.Footnote 11 The alignment of those same states as interveners supporting the Commission in T-625/22 is not coincidental; it reflects a political reality that is constitutive of this judgment.
Austria’s action for annulment of the CCDA is accordingly best understood not as an isolated legal initiative but as the most recent expression of a sustained effort by several Member States, to constrain nuclear energy development beyond its borders. Austria is constitutionally prohibited from generating nuclear electricity by virtue of the Federal Constitutional Act on a Non-Nuclear Austria of 1999.Footnote 12 It has systematically sought to project that domestic constitutional commitment into EU law and policy. The present proceedings represent neither Austria’s first recourse to EU legal channels on this subject nor the first occasion on which such efforts have been unsuccessful. In Land Oberösterreich and Austria v ČEZ, the Court of Justice of the European Union (CJEU) held that Austrian courts could not invoke national law in a manner effectively requiring the cessation of operations at a Czech nuclear installation near the Austrian border, holding such an approach to be incompatible with EU law and, in particular, with the principle of non-discrimination.Footnote 13 Austria subsequently challenged the Commission’s State aid approval for the Hinkley Point C nuclear power plant, without success before the General Court and on appeal.Footnote 14 In the appeal judgment, the CJEU confirmed that the promotion of nuclear energy for electricity generation is capable of constituting a legitimate objective under EU State aid law, thereby rejecting Austria’s broader contention that nuclear energy cannot be treated as a permissible policy objective under EU law. Luxembourg, sharing Austria’s non-nuclear status and subject to the proximity of nuclear installations in neighbouring states, has aligned consistently with Austria in EU legislative processes and contentious proceedings alike.
T-625/22 thus represents the continuation of a structural tension within the EU between a constitutionally committed anti-nuclear bloc and an (expanding) coalition of Member States for whom nuclear energy constitutes either an established pillar of existing electricity infrastructure or an increasingly attractive option for long-term decarbonisation. That tension, rendered more acute by the energy security imperatives of 2022, forms the political and legal horizon within which the CCDA was adopted and against which the General Court’s analysis must be read.
IV. The judgment: Austria v Commission
Austria, supported by Luxembourg, brought an action before the General Court seeking annulment of the CCDA which, in its view, infringes a number of provisions of the Taxonomy Regulation. The Commission, supported by Bulgaria, the Czech Republic, France, Hungary, Poland, Romania, Slovenia, Slovakia and Finland contended that the General Court should have dismissed such action for annulment.
First off, Austria argued that the CCDA raised errors of law in the interpretation of the Taxonomy Regulation, such that the Court should conduct a full judicial review. The Commission contested this.Footnote 15 The Court confirmed, with reference to ECB v Crédit Lyonnais, that where the Commission exercised broad discretion in carrying out complex assessments under a delegated power pursuant to Article 290 TFEU, judicial review is limited to verifying that the decision was not based on materially incorrect facts and was not vitiated by a manifest error of assessment or misuse of powers.Footnote 16 Nevertheless, the Court clarified that the fact that questions of law require full review is of fundamental importance, and that an applicant seeking annulment on grounds of manifest error must adduce evidence sufficient to render the institution’s factual assessments implausible. In light thereof, Austria’s pleas were then to be examined.
To support the action for annulment, Austria has put forward sixteen pleas in law, the first eight concerning economic activities in the nuclear sector and the next eight in the fossil gas sector. As a summary, the pleas can be structured around four major objections: (1) the breach of the procedural rules; (2) the breach of the Taxonomy Regulation’s substantive criteria; (3) the Commission’s misuse of delegated legislative powers under Article 290 of the TFEU; and (4) the infringement of the precautionary principle in accordance with Article 191 sub 2 of the TFEU. Given that the judgment is structured according to the division between the nuclear and gas sectors, the following paragraphs will analyse the different categories of pleas per sector, after first examining the alleged breach of procedural rules.
1. Breach of the procedural rules
Austria argued that the Commission adopted the CCDA in a manner contrary to the procedural provisions of the Taxonomy Regulation, the interinstitutional agreementFootnote 17 and the European Climate Law.Footnote 18 The Court rejected these procedural pleas, finding that the Commission’s reliance on the impact assessment and expert consultations conducted for Delegated Regulation 2021/2139 was sufficient, without requiring any additional, specific impact assessment or public consultation.Footnote 19 The Court referred to the Technical Expert Group on Sustainable Finance (the TEG), which was established to assist the Commission in developing the taxonomy, for example by advising on the notion that an economic activity must not cause “significant harm” to one of the environmental objectives laid down in Article 9 Taxonomy Regulation (the DNSH-criterion). The EU’s Joint Research Centre (the JRC) conducted a review on the work of the TEG and established a report on the nuclear energy generation in light of the DNSG criterion by reviewing the nuclear energy life-cycle in terms of existing and potential environmental impact (the JRC Report). The Court ruled that the Commission did not have to conduct an additional assessment on the compliance of activities in the nuclear energy sector with the DNSH criterion contained in the JRC Report.
2. Nuclear energy under the taxonomy
By way of preliminary observations before the substantive pleas, the Court identified three categories of nuclear energy activities covered by the CCDA: (1) pre-commercial stages of technologies to produce energy from nuclear processes; (2) construction and operation of new nuclear power plants; and (3) electricity generation from existing nuclear installations.Footnote 20 For each category, Annexes I and II to the CCDA establish the technical screening criteria for determining whether the activity contributes substantially to climate change mitigation or adaptation and relates to the DNSH-criterion. That analysis is vital for the application of Article 10 (2) Taxonomy Regulation, which recognises so-called transitional activities: economic activities for which no technologically and economically viable low-carbon alternative currently exists and which support climate change mitigation if they meet the three following conditions: (1) their greenhouse gas (GHG) emissions must reflect the best available performance in the relevant sector or industry; (2) they must not hamper the development of low-carbon alternatives; and (3) they must not lead to a lock-in of carbon-intensive infrastructure, taking into account the economic lifespan of the assets involved.
a. Article 10 (2): nuclear energy as a transitional activity?
The judgment circles around the question whether the three categories of nuclear energy activities can be considered as a transitional activity. Firstly, Austria claimed that Article 10 (2) Taxonomy Regulation is applicable only to carbon-intensive activities and not to activities which are already low-carbon, such as nuclear activities.Footnote 21 The Court rejects the literal interpretation of Article 10 (2), whereby it refers to the judgment Illumina and Grail v Commission. Footnote 22 The Court emphasised that the transitional activity provision is restricted to carbon-intensive sectors, finding, through teleological and systematic interpretation, that low-carbon activities which do not satisfy Article 10(1) may equally qualify, provided they avoid or reduce GHG emissions and energy security considerations are taken into account.Footnote 23 Secondly, Austria stated that the Commission infringed Article 10 (2) because of the finding that the low-carbon alternatives to nuclear energy are not yet sufficiently available and that, in essence, the investments in nuclear energy impede the development of low-carbon alternatives.Footnote 24 The Commission, on the contrary, reflects that economic activities in the nuclear sector, by providing a stable baseload supply of electricity, facilitate the deployment of intermittent renewable sources and therefore does not hamper their development. Thirdly, the Court reflects that Austria failed to explain how nuclear assets have high GHG emissions, with the result that there is no risk to a lock-in effect and that Austria did not demonstrate that the Commission made a manifest error in finding that nuclear activities fulfil the conditions of Article 10 (2) Taxonomy Regulation. Consequently, the pleas from Austria were rejected and the Commission did not conduct a manifest error in interpreting nuclear energy activities as transitional to a climate-neutral economy given the absence of a technologically and economically feasible low-carbon alternative.
b. The precautionary principle
Austria submitted that the technical screening criteria set in the CCDA constitute an infringement of Article 19 (1) (f) Taxonomy Regulation which in turn refers to the precautionary principle as referred to in Article 191 TFEU. The precautionary principle is an overarching principle in risk regulation.Footnote 25 Yet, the exact definition strongly depends on the context and is not clearly defined in the TFEU, although interpreted multiple times by the General Court and the CJEU.Footnote 26 On the one hand, the precautionary principle can be interpreted that the absence of certainty of harm should not constitute a reason for refusing to regulate an action that might be potentially harmful.Footnote 27 Another interpretation is that any potentially risky activity should be banned by regulation unless there is certainty that these activities will cause no harm. In essence, the principle provides an appealing and relatively simple regulatory strategy: when in doubt, be cautious.Footnote 28 The precautionary principle holds that lack of full scientific certainty should not be used as a reason to delay action when there is a plausible risk of serious or irreversible harm. In other words, if an activity might cause harm, it is legitimate to take provisional regulatory measures even if science has not yet proven the harm conclusively. Within the EU context, these provisional measures do not have a prefixed expiry date: one can only lift precautionary measures if scientific knowledge has progressed to a point that one would be able to translate former uncertainties in terms of risk and adverse effects to terms of defined, consensual levels of harm and damage.Footnote 29
The Court identified in previous jurisprudence three steps in the decision-making procedure under the precautionary principle: the identification of the potentially adverse effects, the assessment of the risk and the risk management by the adoption of the protective measures.Footnote 30 In this case, the Court reflects that the CCDA was based on the scientific assessments of the TEG and the JRC and, furthermore, that Austria did not substantiate in detail the complaint alleging the breach of the precautionary principle. Also, the precautionary principle does not require that all reasonable scientific doubt as to the existence of environmental harm has to be ruled out.Footnote 31 As a result, it seems that the Court argues that the scientific substantiation of the CCDA was sufficient to serve as its raison d’être. Hence, Austria’s arguments did not lead to the conclusion that the Commission disregarded the precautionary principle.
c. DNSH: disregard of serious reactor incidents and radioactive waste?
The judgment continues with Austria’s complaints that the Commission disregarded the risks of serious reactor incidents which may cause significant harm to the environmental objectives under the Taxonomy Regulation: the protection of water and marine resources, environmental pollution prevention and control and protection and restoration of biodiversity and ecosystems. Parties agree on the assumption that although the seriousness of the consequences of a possible reactor accident carry a low degree of uncertainty, the probability of the occurrence of such an accident carries a high degree of uncertainty.Footnote 32 The Commission based its analysis on the findings of the JRC report on environmental impact of reactor incidents, which in turn referred to the United Nations Scientific Committee on the Effects of Atomic Radiation which was drafted after the Fukushima accident. The Court confirmed that, consistent with established case law, regulatory action cannot be made conditional on proof of zero risk, provided that scientific experts conduct a risk assessment enabling the competent authority to decide on policy in full knowledge of the facts.Footnote 33 Applying those principles, the Court rejected all of Austria’s arguments, including challenges to the adequacy of the JRC Report, the use of best-available-technology and accident-tolerant fuel criteria for new installations, and the “reasonably practicable safety improvement” standard for existing installations, finding that the Commission had committed no manifest error of assessment in concluding that the technical screening criteria and sufficiently excluded the occurrence of significant harm to the relevant environmental objectives caused by the risk of serious reactor accidents. Also for Austria’s argument that the technical screening criteria fail to prevent significant harm to environmental objectives arising from high-level radioactive waste, the Court refers to the JRC report reflecting broad scientific consensus that deep geological disposal is the safest long-term solution for spent nuclear fuel and radioactive waste and also here the Commission had committed no manifest error in its assessment.Footnote 34
d. Life-cycle assessment of nuclear energy
Next, the judgment discusses the assessment of the life-cycle of nuclear energy activities.Footnote 35 Austria argued that the CCDA infringes the obligation to take into account the environmental impact of the activities throughout their life cycle, as referred to in Articles 17 (2) and 19 (1) (g) Taxonomy Regulation. The Court rejects this argument on the ground that neither provision requires to extend its life-cycle assessment to activities situated upstream or downstream from the nuclear activity in question. As uranium mining, processing, enrichment, fuel assembly, transport, and the risks of armed conflict and proliferation can be considered economic activities situated upstream or downstream from the nuclear energy sector as referred to in the CCDA, their full life cycle should not be taken into account in order to assess the environmental impact.
3. Fossil gas under the taxonomy
In line with the nuclear energy assessment, the CCDA identifies three fossil gas activities as taxonomy-eligible transitional activities: (1) electricity generation from fossil gaseous fuels; (2) co-generation of heat/cool and power from fossil gaseous fuels; and (3) the production of heat/cool from fossil gaseous fuels in district heating and cooling systems. For these three activities, Annex 1 to the CCDA establishes the technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation.
On the central question whether the fossil gas activities can qualify as contributing substantially to climate change in absence of a technologically and economically feasible low-carbon alternative according to Article 10 (2) Taxonomy Regulation, the Court applied the same framework developed for nuclear energy, holding that the availability of such alternative must be assessed in light of the imperative of security of supply under Article 194(1) TFEU. The mere statement that viable alternatives based on renewable energy exist does not suffice to undermine the Commission’s assessment that gas-fired electric power plants were necessary as transitional and reserve capacity in current technological and market conditions.Footnote 36
a. Fossil gas emissions do not contribute to the 1.5°C objective?
Austria states that the threshold to the direct GHG emissions for electricity generation from fossil gaseous fuels (270 g CO2e/kWh of the output energy or 550 kg CO2e/kW of the total capacity over 20 years) are not compatible with the 1.5°C objective fixed in the Paris Agreement. The Commission has based the threshold on the report of the TEG as referred to in paragraph IV (I) of this article, which reflects a threshold of 100 g CO2e/kWh. This lower threshold is however not fit for the current juncture for gas fired power plants which do not have a CO2 capture system.Footnote 37 The Court rejected the Austria’s challenges and reflected that the Commission’s departure from the TEG’s recommended 100 g CO2e/kWh threshold was scientifically grounded and compatible with the Taxonomy Regulation’s objective of avoiding regulatory inaction.
On the life-cycle assessment for gas fired power plants, the Court notes, in line with the reasoning on nuclear energy, that the life-time assessment does not extend to the GHG emissions relating to different up- and downstream stages of the supply chain, such as the extraction and distribution of fossil gas and upstream from combustion. Also here, no manifest error was made by the Commission in taking into account the direct GHG emissions instead of the life-cycle GHG emissions.
b. Carbon lock-in effects?
Article 10 (2) (c) Taxonomy Regulation mentions that an economic activity for which there is no technologically and economically feasible low-carbon alternative qualifies as contributing substantially to climate change mitigation where it supports the transition to a climate-neutral economy in case that activity does not lead to a lock-in of carbon-intensive assets, considering the economic lifetime of those assets. Austria states that the CCDA contradicts with this article, as the investments required to make the existing facilities taxonomy-eligible (which in practice means that they meet the 270 CO2e/kWh emission threshold) are substantial which are undertaken for twenty-five to thirty years. As a result thereof, these investments are no longer available for renewable alternative energies. The Commission states that the CCDA requires that gas fired power plants should switch to the use of renewable and/or low-carbon fuels by 31 December 2035. Hence, the necessary alterations to the facilities in question are not non-recoverable investments in carbon-intensive activities.Footnote 38
Lastly, Austria’s final pleas were also dismissed as unsubstantiated. These pleas alleged, respectively, that the thresholds were incompatible with the DNSH criterion under Article 17(1)(a) of the Taxonomy Regulation, that the classification as contributing substantially to climate change adaptation was unfounded, and that the taxonomy inclusion created stranded assets contrary to Article 19(1)(i). On the DNSH criterion, the Court held that compliance must be assessed by reference to all relevant technical screening criteria taken as a whole, rather than by reference to any single threshold in isolation. On stranded assets, the Court found that Austria’s projections were insufficiently evidenced to render the Commission’s assessment implausible. The arguments on legal certainty and market fragmentation that mirrored those already rejected in the nuclear energy pleas, were dismissed on the same grounds, with the Court reaffirming that the existence of independent third-party verification mechanisms was sufficient to satisfy Article 19(1)(k), and that the differentiation of financial products on the market in response to the taxonomy.
As a consequence of the above, Austria’s action of annulment of the CCDA was dismissed in its entirety.
V. Impact of the judgment
This judgment constitutes a landmark decision at several levels. First off, it is one of the first interpretations of the Taxonomy Regulation and its technical screening criteria. This relatively new framework of sustainability regulations as a result of the Green Deal is still in the early days of interpretation by EU and national regulators and courts. The Taxonomy Regulation is one of the cornerstones in this set of sustainability regulations and fundamental as part of the sustainable finance agenda of the EU as reflected in the 2018 Action Plan on Sustainable Finance.Footnote 39 Given the sheer impact of the Taxonomy Regulation on financial players, and because of the spill-over effect that financial markets may have on the ordinary (“real”) economy,Footnote 40 the interpretation of the Taxonomy Regulation is worth discussing. Also, it is the first time that the Court addresses fossil gas and nuclear energy activities in light of the Taxonomy Regulation. This judgement confirms that nuclear and gas activities can continue to play a role in the EU’s transition to a climate-neutral continent, particularly where no realistic low-carbon alternatives are available.Footnote 41 It further confirms that politically sensitive sectors, including nuclear energy, fossil gas, and consequently bioenergy, may continue to qualify as taxonomy-aligned, provided that the relevant technical screening criteria are satisfied. Not only does this judgment impacts the way the role of the Commission in the interpretation of the Taxonomy Regulation should be seen, it may impact energy policy and security, financial markets and therefore society on several fronts.
1. Role delegated acts and European Commission
This judgment affirms the Commission’s broad discretion in developing and shaping the EU framework on sustainability regulations. In its findings, the Court dismisses several pleas with similar lines of reasoning highlighting the broad discretion to establish and adopt technical screening criteria and to analyse the scientific substantiation for these technical standards. Also, the Court emphasises that such broad discretion impacts the judicial review of the EU Courts: such review should not imply that a judgment would substitute the decision in case by its own assessment, but rather to ascertain that the decision is not based on materially incorrect facts, vitiated by a manifest error or a misuse of power. The judgment firmly establishes that where the Commission exercises broad discretion in making complex scientific and technical assessments, as it does in this case when setting technical screening criteria under the Taxonomy Regulation in the CCDA, the Court will only intervene if a manifest error of assessment is demonstrated. This is a high threshold, and the judgment makes clear that a claimant cannot succeed merely by showing that a different scientific conclusion was possible or that alternative methodologies existed.
The judgment also invites reflection on the suitability of delegated acts as the legal instrument of choice for regulatory decisions of this magnitude. Under Article 290 TFEU, delegation is permissible only in respect of non-essential elements of a legislative act, the essential elements being those whose adoption requires political choices falling within the respective responsibilities of the EU legislature.Footnote 42 Literature in this field emphasises that the legitimacy of delegated rulemaking depends not merely on formal compliance with Article 290 TFEU but on whether meaningful democratic accountability is preserved through the accompanying scrutiny mechanisms.Footnote 43 Also, the risk that the judicial tendency to defer to the legislature’s own characterisation of what is “non-essential” creates a structural gap in which politically consequential choices are routinely insulated from full parliamentary deliberation by being framed as technical supplements to a legislative act.Footnote 44 The classification of nuclear energy and fossil gas as taxonomy-eligible transitional activities is, as the political circumstances surrounding the adoption of the CCDA amply demonstrate, a choice of precisely the normative and economic weight that those frameworks would treat as legislatively significant. By emphasising the level of discretion of the Commission in drafting the CCDA, such a level of democratic accountability is indeed put to the test as there has not been a full democratic review on a topic which, as history shows, is controversial. Alternatively, these non-essential yet controversial elements of a legislative acts are better off when addressed in the regulation itself rather than in non-legislative delegated or implementing acts in order to ensure democratic accountability. Whether the delegation structure in the Taxonomy Regulation strikes an appropriate institutional balance is a question that the General Court left open, but which the pending appeal and opinion of the Advocate-General may need to address more directly in light of any future revision of the Taxonomy Regulation.
2. Significance for sustainable finance
To reach the sustainability transition, private investments are vital. The Taxonomy Regulation was drafted to help investors identify economic activities in line with environmental and climate objectives to support such sustainability transition. Private investments can take shape in many different forms, such as debt financing where banks provide loans to companies, project financing where financing is sought for a specific type of activity centralised in a special purpose vehicle,Footnote 45 or in private equity firms investing in both venture capital projects as well as more mature companies, which may in either case could lead to both profitability and productivity of the investee companies.Footnote 46 Large energy projects, like nuclear energy development or low emission gas combustion, are by definition projects which require both a long-term focus and long-term investment policy. The sense of security that gas-fired power plants with an aim to be remodelled to be replaced with renewable or low-carbon gas, could trigger subsidies from national governments. However, these projects are very costly and by requiring governments to bear these costs would place a disproportionate burden on society. The finance gap between what is necessary to achieve the Paris agreement goals and how much is currently being invested, far exceeds the capacity of the public or the private sector alone.Footnote 47 The sustainability transition is therefore not a process on which a society can depend on a government and subsidies alone. Every actor, individuals, companies, governments and supervisors should contribute in a way which fits their role. These large-scale energy projects therefore require private investments alongside to governmental subsidies.
Public and private investors cannot or do not want to take the same number of financial risks: their risk appetite differs. In blended finance, public and private capital mix, allowing investors with different risk appetites to finance a project together. Public investors, such as the government or a development bank, then act as a buffer for private investors who are willing or able to take less risk. In this way, climate projects can also be set up that would otherwise be difficult to finance.Footnote 48 Such blended finance structures are challenging from a legal- and a risk sharing perspective. At the same time, they are vital to bring the sustainability transition further as it lowers the financial burden for local governments and in addition enables a less risky investment for financial investors. The involvement of governments could provide a sense of security that private investors are looking for. At the same time, private investors provide the liquidity and market power to actually enable these large-scale projects. Blended finance structures may be seen as a critical enabler of the transition to a sustainable economy, but there is one condition vital to provide a fertile ground for investments: which is trust and confidence from investors in market functioning. Trust can be based on and is subject to various elements, such as transparency, clear regulations and public opinions. Nuclear energy, in that perspective, can be seen as controversial in several societies, party due to the life-time cycle and nuclear waste discussion, although the public opinion actually differs per EU Member State.Footnote 49 Judicial interpretations on the Taxonomy Regulation and more specifically on which types of investments qualify as “substantially contributing to” the EU climate and environmental objectives enhances such trust from investors. This judgment Austria v Commission gives rise to confidence that nuclear energy is classified as an activity which can substantially contribute to the transition towards a carbon-neutral economy in accordance with the 1.5°C objective as fixed by the Paris Agreement. The qualification of nuclear energy as taxonomy eligible increases such market confidence, or at least, provides transparency on the qualification and therefore credibility of the EU green labelling regime. Such an increase in transparency can provide an additional incentive for private investors to venture into projects related to nuclear energy and may give a boost to investments in this field. Also, it could motivate governments to initiate new nuclear production initiatives, now that increased attention from investors may decrease risks in developing these projects.
VI. Future outlook
Appeals against decisions of the General Court may be brought before the Court of Justice. An appeal to a decision of the General Court is limited to points of law only and may be brought before the Court of Justice within two months and ten days of notification of the decision. On 18 November 2025, appeal has been brought by Austria against this judgment.Footnote 50 Such limited judicial view implies that the Court of Justice will not take into account any facts which substantiate the parties’ pleas in law, but will focus on the legal assessment of the General Court only. In this decision, the majority of the pleas were rejected on the basis that Austria’s arguments failed to demonstrate that the CCDA had disregarded the Taxonomy Regulation or the precautionary principle. Given that the Court of Justice will not re-examine Austria’s submissions on the merits, and instead confine its review whether the General Court correctly applied the law in its reasoning and rationale, it is unlikely that a judgment of the Court of Justice would lead to a different outcome.
The delivery of the opinion of the Advocate-General might shed more light on several more factual questions relating to nuclear energy and fossil gas activities. For example, when discussing the GHG emissions of the life-cycle, the General Court confirmed while referring to the teleological interpretation of Article 10 (2) Taxonomy Regulation that only the direct GHG emissions of the activity should be taken into account rather than the GHG emissions of the entire life-cycle. With nuclear energy and radioactive waste, the GHG emissions might indeed appear to be close to zero, yet the environmental risks could be considered broader than limited to GHG emissions. When looking at the Corporate Sustainability Due Diligence Directive (CSDDD), the (potential) adverse environmental impacts across an entire value chain should be taken into account in order to foster sustainable and responsible corporate behaviour in companies’ operations.Footnote 51 In light of far-reaching due diligence and remediation obligations based on the CSDDD, shouldn’t nuclear energy activities follow the same rationale and deserve a more holistic approach now that long-term investments in these nuclear energy projects may impact the environment for generations to come? Even the contested precautionary principle could be interpreted as requiring that, in the case of potentially environmentally hazardous activities, a measured level of regulation should be adopted: one that takes into account the environmental impact across the entire life cycle of the activity in question. The decision of the General Court seems to demonstrate a view with a focus on the level of discretion of the Commission in assessing the scientific substantiation of the CCDA and the level of argumentation from Austria. Yet, the Advocate-General might take such more factual assessment of the CCDA and the underlying JRC report into account. Also on the lock-in effect of nuclear energy, the General Court seems to emphasise Austria’s inability to fully explain and substantiate its lines of reasoning. The lock-in effect plays a role in climate litigation, for example, in the case Milieudefensie et al. v Royal Dutch Shell plc., where the Dutch court ruled that Shell has an obligation to combat dangerous climate change, but that a civil court cannot determine that Shell must reduce its CO2 emissions by 45% (or any other percentage).Footnote 52 The lock-in effect was mentioned in this case and the Court emphasised that investments in new oil and gas fields are perhaps at odds with the requirement that in order to reach the climate goals of the Paris Agreement, not only emissions will have to be drastically reduced, but also the supply of fuels.Footnote 53 How would new investments in the fossil gas sector fit with this line of reasoning? Do we as a society have the luxury to take our time to include these renewable measures in existing and newly established gas fired power plants, whilst waiting for low-carbon alternatives to emerge from unknown sources? Given that a carbon lock-in effect is not likely to happen in case of a gas-fired power plant with the obligation to switch to renewables or low-carbon gas, the lock-in effect itself with a view on the entire environmental impact rather than only GHG emissions, like in the JRC report, might lead to a different outcome. At least the financial market would benefit from a reasoned opinion on the lock-in implications for both the nuclear energy and fossil gas activities. Until then, the traffic light for investing in both nuclear energy and fossil gas remains firmly green.
Gas-related and nuclear-related activities included in the Taxonomy Regulation
Source: European Commission (2022), Factsheet: EU Taxonomy accelerating sustainable investments, 2 February 2022. (European Commission (2022), Factsheet: EU Taxonomy accelerating sustainable investments, 2 February 2022 <https://finance.ec.europa.eu/document/download/e01e9e40-7698-4b08-a9ea-078fb7070f18_en?filename=sustainable-finance-taxonomy-complementary-climate-delegated-act-factsheet_en.pdf> (last accessed 12 May 2026)).
Funding Statement
Open access funding provided by Vrije Universiteit Amsterdam.
Dr. Liebrich Hiemstra is an assistant professor at the Faculty of Law and the Amsterdam Centre for Climate Change, Corporations and the Law, Vrije Universiteit Amsterdam, the Netherlands and a senior legal counsel at Vattenfall, L.M.Hiemstra@VU.NL.
Open access
