by Pilar Perales Viscasillas
The financing by the European Investment Bank (EIB) of a biomass power plant project in Galicia (Curtis Project) is the basis of the litigation that faced the activist NGO, ClientEarth, with the EIB, supported by the European Commission as an intervener, on account of the denial by the EIB of the request for internal review made by the NGO of the financing concession agreement. The basis on which the EIB’s Board of Directors preliminarily granted the financing to the Curtis project was based on the project’s contribution to the EU objective of mitigating the effects of climate change, with the prior favorable opinion of the Commission and of an opinion of no objection from the Kingdom of Spain.
The NGO, ClientEarth, requested from the EIB an internal review of the agreement in accordance with Article 10 of Regulation (EC) No. 1367/2006 of the European Parliament and of the Council, of September 6, 2006, regarding the application to the institutions and to community bodies, the provisions of the Aarhus Convention on access to information, public participation in decision-making and access to justice in environmental matters (Aarhus Regulation) and Decision 2008/50 (Commission Decision of December 13, 2007, establishing the provisions for the application of Regulation (EC) No. 1367/2006 of the European Parliament and of the Council on the Aarhus Convention with regard to requests for an internal review of acts administrative).
In particular, ClientEarth criticized the EIB’s Board of Directors for having incurred, in the contested agreement, a manifest error of appreciation in estimating that the Curtis project would contribute significantly to the Union’s policy by responding to three of the objectives pursued by the latter, namely: i) the Curtis project would not contribute to the achievement of Spanish and European objectives in terms of renewable energy production, energy security, and environmental objectives; ii) the project would not contribute to preventing forest fires and to the sustainability of forestry activities in Galicia, and iii) the project was not in accordance with the EIB’s priorities in terms of loans in favor of renewable energies and the fight against climate change, so in his opinion, the Curtis project did not have a positive balance in terms of greenhouse gases.
The denial of the request for internal review was based on legal criteria relating to the application and interpretation of the Aarhus Regulation. Leaving aside the legal avatars and legal foundations that the interested reader can find in detail in the text of the Judgment itself, in particular with regard to the interpretation of the concept of measure of individual scope adopted “in accordance with environmental law”, included in the article 2, paragraph 1, letter g), of the Aarhus Regulation, it is important now to emphasize that it is a historic ruling, which has proved an NGO right in the face of an institution so sophisticated and unlikely to be the target of legal actions such as the EIB and has annulled its decision, which is to declare inadmissible the refusal to the NGO’s request for an internal review of a financing decision adopted by the EIB’s Board of Directors. The EIB’s refusal to grant legitimacy to an NGO that claims the review of a decision for (supposedly) infringing environmental criteria is curious, given that the institution, indeed, does show off something, it is its “new and ambitious climate strategy and an energy loan policy”, as advertised on its website. In any case, the tension that exists between the objectives (environmental sustainability) and the means to achieve them (independence and discretion in decision-making, without interference from third parties, NGOs or not) is revealed. In this sense, the judgment focuses its arguments on the admissibility of the request, and on the concept of “act adopted in accordance with environmental law” (which it interprets in a very broad sense) but does not go so far as to question the EIB’s discretion on the merits of the decision itself.
It is a case that also demonstrates how the involvement of third parties can contribute to the control of sustainable financing and serve as a basis, where appropriate, for future litigation in this area. Information transparency, the duty to motivate the acts, even to review them, can be key to understanding the elements that have been taken into consideration to adopt sustainable financing decisions by public authorities or private institutions.
This decision of the General Court confirms that the very decision to reject an application may be subject to litigation and that the enforcement of sustainable climate policies may be derived from the (potential) litigation faced by relevant actors, such as the companies, but from which governments, or European institutions such as the EIB, are not immune. The growing judicial activism in ESG matters (environmental, social, and corporate governance criteria), is particularly intense in relation to environmental criteria in general and climate change in particular, and it is here to stay.