EU General Court upholds Commission’s classification of nuclear energy and natural gas under the EU Taxonomy

On 10 September 2025, the EU General Court dismissed Austria’s challenge against the inclusion of nuclear energy and natural gas in the EU Taxonomy (see press release here), offering guidance for businesses navigating sustainable finance regulation. The General Court also delivered two other judgments on the same day, supporting the Commission’s position on bioenergy and wind power as potential environmentally sustainable activities under the EU Taxonomy. 

Key takeaways

• The EU General Court upheld the Commission’s decision to include nuclear energy and natural gas as potential environmentally sustainable activities under the EU Taxonomy, confirming that these energy sources may qualify as ‘transitional activities’ if they meet strict technical criteria. 
• In two other judgments, the General Court also upheld the Commission’s inclusion of bioenergy and wind power as potential environmentally sustainable activities under the EU Taxonomy.
• The judgments clarify that the Commission has wide discretion to set technical standards for sustainable finance, and that its approach – based on scientific evidence, public consultation, and existing EU law – has been validated by the General Court.
• For businesses, the decision resolves legal uncertainty for now. Companies can pursue nuclear and natural gas projects knowing they are Taxonomy-eligible and, if conducted in accordance with the Taxonomy criteria, may provide easier access to sustainable financing solutions as Taxonomy-aligned activities.

Background

The EU Taxonomy Regulation, adopted in 2020, established a framework to encourage financial flows towards sustainable investments as part of the EU’s objective to achieve climate neutrality by 2050. The Regulation sets out criteria for determining whether an economic activity is ‘environmentally sustainable’, requiring that it substantially contributes to one or more EU environmental objectives, does not cause significant harm to any of them, is carried out in compliance with certain minimum safeguards, and complies with technical screening criteria. The EU legislator tasked the Commission with developing these technical screening criteria. 

In 2021, the Commission adopted its first Climate Delegated Act, focused primarily on renewable energy activities (see our previous blog posts here and here). In March 2022, it adopted a Complementary Climate Delegated Act, which, under strict conditions, includes certain nuclear energy and fossil gas activities as ‘transitional activities’ capable of contributing substantially to climate change mitigation or adaptation. The Complementary Climate Delegated Act, together with its annexes and related guidance documents, outlines the conditions and thresholds under which nuclear and gas activities may be considered as transitional and thus sustainable for investment purposes (for more details, see our previous blog posts here and here). It entered into force on 4 August 2022 and has applied since 1 January 2023.

The inclusion of nuclear energy and natural gas has proved highly controversial. Legal and political challenges quickly followed. Several environmental NGOs requested a formal review by the Commission, arguing that the Complementary Climate Delegated Act breached EU climate and environmental law. In October 2022, Austria - supported by Luxembourg - brought proceedings before the EU General Court, challenging the validity of the Complementary Climate Delegated Act. Several other Member States, including Finland, France, Hungary and Poland, to name a few, intervened in favour of the Commission’s position. 

On 10 September 2025, after almost three years of proceedings, the EU General Court rendered its decision, dismissing Austria’s legal action in its entirety. 

The General Court’s decision in a nutshell

Following complex and lengthy reasoning, the General Court found that the Commission was entitled to take the view that certain economic activities in the nuclear energy and natural gas sectors can, under certain conditions, contribute substantially to climate change mitigation and adaptation.

The Court stressed that, in such complex cases, the Commission has wide discretion and the Court’s review should be limited accordingly. It then proceeded to review and reject each of Austria’s numerous objections. 

Regarding Austria’s procedural arguments, the General Court dismissed the claim that the Commission did not sufficiently consider the views of Member States and the public when drafting technical screening criteria for nuclear energy and natural gas. On the contrary, the Court noted that the Commission consulted a range of reports (including from the Joint Research Centre), took advice from several expert bodies, including the Technical Expert Group on Sustainable Finance and Member States’ experts, drafted an impact assessment report, and sought public views at different stages of the legislative process. 

On Austria’s objections against the Commission’s inclusion of nuclear energy, the General Court rejected the argument that, by virtue of its political and controversial nature, inclusion of nuclear energy in the EU Taxonomy would be an “essential element”, thereby depriving the Commission of acting on the basis of its delegated powers. Instead, the Court noted that the EU Taxonomy Regulation enshrines the principle of technological neutrality and only explicitly excludes power generation activities that use solid fossil fuels. Therefore, the Court found that the Commission had acted within the powers granted by the EU legislator when it included nuclear energy in the EU Taxonomy.

The General Court also rejected Austria’s contention that the notion of ‘transitional activities’ under the EU Taxonomy Regulation would apply only to carbon-intensive activities, not to those already low-carbon, such as nuclear energy. The Court found that this interpretation conflicted with the text of the Regulation and its objective to facilitate the transition to a climate-neutral economy using climate-neutral energy sources and other transitional economic activities.

Austria was also deemed wrong to challenge the Commission’s decision to consider energy solidarity and security of supply in determining which energy sources are classified as ‘transitional.’ The Court accepted the Commission’s view that the nuclear energy production has near-zero greenhouse gas emissions and that, at present, no feasible, large-scale low-carbon alternatives are capable of reliably meeting energy demand.

For these reasons, the General Court was not convinced by Austria’s argument that including nuclear energy was contrary to the Paris Agreement and the EU’s climate objectives. The fact that new nuclear capacity would take years to become operational does not undermine this conclusion. Regarding Austria’s claim that investments in nuclear energy would slow the deployment of renewable energy, the General Court deferred to the Commission’s judgment, which was based on research indicating the opposite. 

Austria also claimed that including nuclear energy in the EU Taxonomy disregarded the prohibition of lock-in effects, i.e. a ring-fencing of carbon-intensive assets, because nuclear projects are time- and cost-intensive with timelines extending beyond 2050. The General Court decided, however, that even if nuclear assets would be locked in, they are not ‘carbon-intensive assets’, so this prohibition does not apply.

The Court also found that the Commission adequately considered risks linked to normal operation, potential accidents, and waste management of nuclear reactors, and was not required to impose stricter protection standards than those in force under Euratom legislation. Austria’s concerns about the effects of droughts and climate hazards on nuclear power were deemed too speculative.

Further, the Court found the Commission was not required to consider upstream and downstream impacts (such as uranium extraction and processing), nor broader risks such as armed conflict or proliferation, when regulating energy generation activities. 

Most of Austria’s challenge against the inclusion of natural gas relied on similar grounds. On the specific natural gas claims, Austria argued that low-carbon alternatives exist but are not being pursued, and that the Commission’s emissions thresholds fail to advance a carbon-neutral economy. Austria also criticised delays in adopting best practices, non-compliance with environmental assessment requirements, and alleged barriers to greener alternatives. In addition, Austria highlighted concerns about creating long-term reliance on high-carbon options. 

The General Court again afforded wide discretion to the Commission, which explained that renewable alternatives may not yet be suitable for certain heavy industry sectors. The General Court endorsed the staged, emissions-reducing approach of the Complementary Climate Delegated Act, which ensured security of supply. The General Court found that Austria had not demonstrated that the Commission’s criteria to include natural gas were unsuitable to remove or progressively reduce greenhouse gas emissions. As for nuclear energy, the Court decided that the Commission was not required to consider upstream and downstream impacts, such as methane leaks.

The General Court also validated the inclusion of bioenergy and wind power in the EU Taxonomy

The same day, the General Court issued decisions in other cases relating to the first Climate Delegated Act.

In a first case, ClientEarth sought to annul a Commission Decision rejecting its internal review request concerning the classification of bioenergy, manufacture of organic base chemicals, and manufacture of plastics in primary form as activities substantially contributing to climate change mitigation or adaptation. ClientEarth challenged the scientific robustness and lifecycle assessment carried out by the Commission. Similarly to the Austrian decision, the Court sided with the Commission and rejected ClientEarth’s action, explaining that the Commission has wide discretion when making complex technical and scientific assessments; that there was no evidence the Commission relied on unreliable science or ignored relevant scientific findings; and that in setting technical screening criteria, the Commission was entitled to rely on existing EU legislation, notably the RED II Directive and LULUCF framework.

In a second case, several NGOs contested the Commission’s approach to electricity generation from wind power, focusing on the absence of a carbon dioxide emissions threshold, the use of qualitative (rather than quantitative) screening criteria, and alleged insufficient consideration of intermittency and potential harm to other environmental objectives. The General Court found that the Commission did not breach any procedural or substantive standards when preparing the technical screening criteria, and that these criteria (including the lack of a specific carbon dioxide threshold and the qualitative approach) fall within the Commission’s broad margin of appreciation for complex, science-based rule-making.

These judgments confirm the General Court’s strong deference to the Commission in technically complex, science-based policy areas under the EU Taxonomy Regulation. In particular, the Commission’s wide discretion in evaluating scientific evidence, balancing regulatory requirements, and applying a stepwise or pragmatic approach - especially when evidence is evolving - was upheld.

What does this mean for businesses?

For businesses, particularly those in the energy, finance, and heavy industry sectors, the General Court’s decision resolves – for now – the legal uncertainty about whether these energy sources will be included as sustainable under the EU Taxonomy. Companies can pursue nuclear energy and natural gas projects knowing they are Taxonomy-eligible and, if conducted in accordance with the Taxonomy criteria, may provide easier access to sustainable financing solutions as Taxonomy-aligned activities. 

However, the decisions may still be appealed, and the Commission could adjust its approach in the future, as the EU Taxonomy is designed to be regularly reviewed to consider and reflect technological advances and developments as well as progress towards key dates in the EU’s climate strategy (meaning in practice that requirements may ratchet upwards and certain previously eligible activities may no longer be so). Businesses should continue to monitor developments and be prepared to adapt compliance processes as needed.

Regarding the Commission’s latest position on nuclear energy, President Ursula von der Leyen stressed during her 2025 State of the Union Address that the EU “need[s] to generate more homegrown renewables – with nuclear as a baseload”.

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