NGOs file case against EU Commission over green labeling of LNG-fueled ships

A coalition of non-governmental organizations (NGOs) has decided to take the EU Commission to court over the decision to include polluting fossil fuel ships in the EU’s flagship sustainable finance legislation, the EU Taxonomy.

As disclosed, the coalition consists of Dryade, Fossielvrij NL, and Protect our Winters Austria, supported by legal experts Opportunity Green and CLAW. The move is also supported by a petition signed by over 35,000 citizens.

On 21 November 2023 and following extensive consultation periods, the amendment to the Climate Delegated Act was formally adopted by the European Commission. The EU Commission added aviation and shipping criteria to the EU Taxonomy. The Climate Delegated Act Amendment, which came into effect at the start of 2024, included amendments to the shipping technical screening criteria in the Climate Delegated Act. The amendment specifies which shipping activities can be classified as “environmentally sustainable”.

The EU Taxonomy is a classification system that establishes a list of environmentally sustainable economic activities. It was introduced as a response to supporting the green energy transition.

According to the NGOs, the move allowed ships and planes running entirely on fossil fuels to be eligible for green finance if they meet certain weak ‘efficiency’ criteria.

In January 2024, the five NGOs launched a legal challenge, requesting the EU Commission to review the criteria; a challenge which was subsequently rejected by the EU Commission in June 2024.

Now, the organizations are filing a case in the European Court of Justice which aims to force the European Commission to review the criteria. 

In recent years, LNG has been described as a transitional fuel for the shipping industry and shipowners around the globe are taking it as a practical solution to achieving net-zero targets. Clarksons’ data shows that 109 LNG dual fuel vessels have been ordered in 2024 up to June. There are now more than 550 LNG-fueled vessels in operation, a number expected to double by 2027.

Under the current shipping criteria, massive LNG-powered ships are classified as ‘green’. However, these ships not only emit CO2 but also release significant amounts of methane, a greenhouse gas that is 80 times more potent than CO2 in the short term, according to the NGOs.

Actually, a key environmental concern related to LNG is “methane slip”, the unintentional release of unburned methane during the combustion process. Methane is a potent greenhouse gas, with a higher warming potential than CO2 over a shorter timeframe. Any methane slip can contribute to GHG emissions and impact the overall environmental footprint of LNG.

Methane leakage during the extraction, processing, and transportation of natural gas contributes to the life-cycle GHG emissions associated with LNG.

The NGOs argue that there is no robust scientific evidence for these new criteria related to LNG and that they potentially jeopardize climate mitigation efforts and the EU’s legally binding climate targets.

Given the expected lifespans of planes and ships range from 20-50 years, this means that the EU Taxonomy could drive investment to ships that pollute the air and seas for decades to come, making “a mockery of the urgent need to decarbonize all sectors”.    

Moreover, they emphasized that EU Taxonomy should act as the ‘gold standard’ for informing ethical and sustainable investments. It exists to provide a verified list of ‘green’ investments to companies, investors and policymakers, with a view to directing huge amounts of private finance to activities that deliver a fair, green transition, they noted.

“The Taxonomy is set to mobilise billions of Euros of private finance. But the aviation and shipping criteria send completely the wrong signal to investors – directing investments to planes and ships that will pollute the climate for decades to come. How are investors supposed to have confidence that their investments are truly green? We believe the criteria are unlawful and the EU Commission needs to be held to account,” David Kay, Legal Director at Opportunity Green, said.

“While judges and regulators are finally stepping up against the relentless greenwashing in the aviation and cruising sectors, the EU is taking greenwashing to the next level. By rubber-stamping extremely polluting planes and cruise ships as green, and thereby driving investments into an already growing fossil-powered industry, the EU has chained us to climate catastrophe. This needs to be stopped,” Hiske Arts at Dutch NGO Fossielvrij commented.

“If aviation and shipping are misclassified as green,  we could be setting a dangerous precedent that fuels the very future we’re striving to prevent. The Taxonomy is meant to be built on conclusive science not a cut and paste job from industry. This is why the lawsuit is crucial – it’s about ensuring our investments align with our climate goals and what the science tells us we need to do to meet them,” Florian Graber from CLAW – Initiative for Climate Justice added.

“The EU Taxonomy should give investors clear, unequivocal recommendations about green investments. By allowing shipping and aviation to be included in the Taxonomy based on these flawed criteria, the Commission completely misses the ball. These criteria have been made to fit the industry, rather than driving investment towards green activities. This is unacceptable and completely undermines the credibility of the Taxonomy,” Elias Van Marcke of Dryade stated.

The NGOs filed their case on August 27, 2024.