February 4, 2022

Environmental Coalition Challenges Sweeping EU Finance Policy, Seeking to Block Investment in Bioenergy & Unsustainable Forestry

(Paris) As the European Commission pushes forward with new rules on so-called “sustainable” finance for bioenergy and forestry, a coalition of non-governmental organizations from across the EU– supported by partners in the UK and USA–are challenging the Commission’s actions as unscientific and in clear violation of the underpinning Taxonomy Regulation enacted by Parliament.

Elsie Blackshaw-Crosby of NGO the Lifescape Project, a convener and co-author of the legal challenge, said, “Rather than giving investors assurance that their investments are genuinely ‘green’ and environmentally friendly, the Taxonomy has turned into a big greenwashing exercise. We believe that the criteria adopted for bioenergy and forestry are unlawful and we’re holding the EU to account.”

The challenge is brought by NGOs Save Estonia’s ForestsROBIN WOOD (Germany), Clean Air Committee (Netherlands), Workshop for All Beings (Poland), ZERO (Portugal), 2Celsius (Romania), and Protect the Forest (Sweden).  Two legal teams, Clementine Baldon of  Baldon Advocats and Peter Lockley and Ben Mitchell of 11KBW spearheaded the case, with legal and scientific support by the Lifescape Project and the Partnership for Policy Integrity. An additional 50 NGOs signed an open letter to the EC declaring their support for the review and challenge.

The 2020 Taxonomy Regulation aims to establish a labelling system so that investors and consumers know what economic activities are good for the environment.  It is implemented through delegated acts, the first of which sets conditions for climate mitigation and adaptation by economic activities, as well as how such activities should avoid doing “significant harm” with regard to water resources, pollution, ecosystems, and the circular economy. The NGO request for review of the forestry and bioenergy criteria initiates a binding process under which the administrative criteria can be challenged. If the EC refuses to undertake the requested review, the complaint will be taken to the general court as one of the first environmental NGO lawsuits allowed under the recently amended Aarhus Regulation.

To designate forestry activities as “sustainable” and contributing to climate mitigation, the Taxonomy criteria require only marginal reductions in carbon losses compared to “business as usual” scenarios. For biomass energy, the Taxonomy criteria are nearly identical to highly controversial sustainability criteria contained in the EU’s 2018 recast Renewable Energy Directive (RED II) – criteria that have been deemed unprotective by the EC, which proposed changes to them in July 2021.

Fenna Swart of Dutch NGO Clean Air Committee said, “Forests are being destroyed for wood pellets now imported to the Netherlands and around the EU. The sustainable finance taxonomy is supposed to help avoid greenwashing, but by including burning forest wood for energy as a “sustainable’ activity, the European Commission has made a mockery of the process. “

The request for review points out that the criteria do not include acknowledged EU priorities such as ending logging in primary forests, and as the Taxonomy is meant to apply internationally, could then give a “green stamp” to such logging. The document also highlights that the Delegated Regulation failed to include required criteria for how forestry and bioenergy can help with “adaptation” to climate change.

“Europe’s ‘green’ finance must not support forestry or bioenergy projects that harm ecosystems, increase risk of large forest fires and worsen climate change,” said Nuno Forner, Policy Officer at ZERO (Portugal), which is one of the NGO plaintiffs. “From reducing biodiversity to polluting the skies in cities like Fundão, we know these projects have devastating consequences.”

Clementine Baldon of Baldon Advocats, who initiated the request for review, said, “The Commission’s own science staff have been warning for years that so-called “sustainability” criteria for burning forest wood greenlight forest destruction and increased greenhouse gas emissions. The Taxonomy bioenergy criteria fail the fundamental requirement of being science-based and actually delivering climate mitigation, so we’re challenging them as illegal.”

The request for review highlights some of the many warnings to the EC about climate impacts of bioenergy, including a 2016 EC impact assessment warning that that logging and burning forests for fuel increases emissions compared to fossil fuels, reduces forest carbon storage, and degrades ecosystems and biodiversity.

Referring to the RED II biomass criteria adopted into the Taxonomy, Dr. Mary Booth of the Partnership for Policy Integrity said, “The European Commission has thrown out scientific evidence in favor of financial tools that will prop up polluters at the planet’s expense. This is a cut and paste job from already-discredited criteria with zero legitimacy.”

The complaint raises substantive and procedural issues with the Delegated Act, including:

  • Failure to base policy on science and conclusive evidence: Article 19 of the Taxonomy Regulation requires the criteria to be based on science. The Commission’s Delegated Act not only omits these criteria, but runs directly counter to the recommendations of the Commission’s own advisory and expert groups, such as the Joint Research Centre.
  • Failure to deliver climate mitigation: Article 10 states activities qualify as “contributing substantially to climate change mitigation” where they help stabilize greenhouse gas levels by reducing emissions or through increasing uptake of GHGs from the atmosphere. Neither the forestry nor bioenergy criteria require projects to actually meet this standard.
  • Failure to avoid significant harm: The Taxonomy Regulation requires criteria to specify how activities can avoid significant harm, as defined in Article 17 of the Regulation. The complaint identifies numerous ways in which the Delegated Act violates this charge, for instance by failing to protect the last remnants of unlogged forests, and failing to restrict air pollution emissions.

Environmental law organization ClientEarth, is also filing an internal review request on similar grounds, focusing on the unlawful labeling of bioenergy, bio-based plastics and chemicals used to make plastics as “sustainable” in the EU taxonomy.

“The European Commission has breached the public trust and violated the law by advancing a regulatory scheme that greenwashes climate pollution and will continue business as usual exploitation of forests,” said Elin Götmark of Swedish NGO Protect the Forest. “The Taxonomy Delegated Regulation must be amended by the Commission or struck down in court.”