Does the General Court’s ruling in Dassault Aviation v Commission open the door to labelling private jet manufacturing a ‘green investment’? Sophie Prinz, senior legal manager at Opportunity Green, examines what the judgment means for the EU Taxonomy.
The EU General Court ruled last month that the manufacturing of business aircraft – planes which are considered 14 times more emitting than commercial aircraft and 50 times more than trains – could be labelled as green investments under the EU Taxonomy.
The judgment, which followed a legal challenge brought by business and military aircraft manufacturer Dassault Aviation, was published the same week as a heatwave caused European citizens to endure record-breaking temperatures, and appears profoundly disconnected from the reality of the climate crisis and the urgency to revamp our financial system. It does not mean, however, that private jets are now automatically Taxonomy compliant. As a next step, the European Commission will have to either appeal the judgment or draft new technical screening criteria for aircraft manufacturing.
The commission will now have to consider some of the judgment’s shortcomings carefully. In particular, the judgment fails to engage meaningfully with the objectives of the taxonomy as a reliable safeguard against greenwashing as well as with the stringent requirements laid down in the Taxonomy Regulation for any activity to be labelled as sustainable.
Private jets do not satisfy the ‘transitional activity’ test
The purpose of the EU Taxonomy is to send market signals to the financial sector about what constitutes a sustainable activity, with the stated goal to “reorient capital flows towards sustainable investment” (Taxonomy Regulation, recital 6). In other words, it aims to achieve a decisive break from business-as-usual in the financial sector to ensure that the EU achieves its climate targets.
To achieve these goals, not all activities across the EU can be included in the Taxonomy. Rather, the Taxonomy Regulation lays down strict criteria to limit the number of activities which can be included, with the purpose to avoid three key risks: the risk of greenwashing and false market signals, the risk of lock in and stranded assets and the risk of environmental and climate damage.
The Dassault judgment fails to engage with this legislative framework. Instead, it implies that any activity short of fossil fuel electricity generation can be included in the Taxonomy as a transitional activity – no matter how polluting and damaging to the climate.
A rigorous application of the test laid down in the Taxonomy Regulation would have likely led the General Court to reach a different conclusion when applying the test to business aircraft manufacturing, in particular because:
- Business aircraft manufacturing is not aligned with a 1.5°C-aligned pathway and does significant harm to the Taxonomy’s climate change mitigation objective. The trajectory of the entire aviation sector is assessed as “Critically Insufficient” by Climate Action Tracker and private jets emit up to 14 times more CO2 per passenger than commercial planes. In this context, funding and expanding the fleet of fossil-fuelled private jets cannot be aligned with the EU climate commitments.
- Business aircraft manufacturing does not correspond to the best greenhouse gas emission levels performance in the sector or industry. Even compared to highly-polluting commercial aviation rather than truly sustainable alternatives such as high-speed rail (which should be the appropriate comparison point), private jets are far more emitting and should on this point alone be excluded from the taxonomy
- Private jet manufacturing leads to a lock-in of carbon-intensive assets. Private jets can fly up to 40 years before being retired. Investments made now into fossil-fuelled private jets will have consequences for decades to come, making it impossible to achieve the EU’s climate goals.
Downstream emissions associated with business aircraft manufacturing must be accounted for
The commission’s initial decision to exclude private jets from the taxonomy was rightly based on business aircraft’s outsized downstream CO2 emissions per passenger. For aircraft manufacturers, downstream emissions make up the vast majority of their total carbon footprint. Both aircraft manufacturing and passenger transportation are inherently linked and ignoring downstream emissions would allow the manufacturing sector to bear no responsibility in the significant role it plays in the climate crisis.
In this context, the General Court’s findings (see paras. 165-166 of the judgment) that CO2 emissions associated with business aircraft transportation are not relevant when assessing the climate impact of aircraft’s manufacturing is flawed and directly contradicts several other European courts’ findings around Scope 3 emissions (including, for example, the UK Supreme Court’s decision in Finch).
The same week as Dassault was published, the Paris Judicial Court found that TotalEnergies has a legal obligation to include Scope 3 emissions in its climate risk mapping due to the inherent link between fossil fuel extraction and downstream consumption by consumers.
The judgment highlights the shortcomings of the inclusion of commercial aviation in the taxonomy
Dassault argued in its legal challenge that the current inclusion of most of current commercial aircraft in the taxonomy proves that the commission’s decision to exclude business aircraft was arbitrary. It stated that the commission could not have included one activity but not the other, as both sectors have relatively similar roles in fuelling the climate crisis. The inclusion of fossil-fuelled commercial aircraft in the taxonomy was therefore central to the case but was not discussed as it is challenged in an ongoing parallel case where the judgment has not yet been rendered – Dryade and Others v Commission.
What was really discussed in the Dassault case was the lack of consistency in the commission’s decision-making. Whether private jets should or should not be included in the text was ultimately left open. Going forward, Opportunity Green argues that the exclusion of both fossil fuel powered commercial and business aircraft would address the concerns raised by the General Court around the arbitrary aspect of the commission’s decision-making process, while complying with the strict criteria laid down in the Taxonomy Regulation.
Opportunity Green is providing technical legal support to the plaintiffs in Dryade and Others v Commission, which challenges the aviation and shipping criteria of the EU Taxonomy.