The European General Court has annulled Section 3.21 of the Climate Delegated Act, the provision that excluded business aviation aircraft manufacturing from the EU Taxonomy, in a ruling the European Business Aviation Association (EBAA) has welcomed as restoring an evidence-based approach to sustainable finance regulation.

The EU Taxonomy Regulation establishes a classification system defining which economic activities qualify as environmentally sustainable, guiding public and private investment towards activities aligned with the EU's climate goals. In practice, it has become a key reference framework for financial institutions when assessing the sustainability of investments.

The European Commission adopted the Climate Delegated Act in 2023, setting out technical screening criteria for aviation activities under the Taxonomy. Business aviation was explicitly excluded, with the Commission citing concerns over the sector's environmental footprint.

EBAA intervened in support of Dassault Aviation and Daher, arguing that the exclusion was disproportionate and discriminatory and failed to reflect the sector's limited share of total aviation emissions or its active pursuit of decarbonisation through sustainable aviation fuel (SAF) uptake, fleet modernisation and technological innovation.

In its reasoning, the Court found that the Commission had not demonstrated that other transport modes necessarily constitute credible low carbon alternatives to business aviation in all cases. The Court also noted that the criterion the Commission had relied upon related to the operation of aircraft rather than their manufacture, an important distinction given the delegated act targeted manufacturing eligibility.

The ruling removes a provision that had risked discouraging investment in a sector working to reduce its carbon footprint. While the Taxonomy does not directly regulate aviation operations, banks, investors and financial institutions increasingly rely on the framework to determine which sectors qualify as sustainable, meaning exclusion carried material financial consequences.

EBAA says the judgment underlines that sustainable finance rules must remain evidence-based, proportionate and aligned with the actual characteristics of the activity being regulated. Business aviation manufacturers and operators are contributing to SAF uptake under the ReFuelEU Aviation framework and continue to develop more efficient aircraft, advanced materials and lower-emission propulsion pathways. EBAA believes the ruling sends a signal that EU legislation must properly reflect business aviation's contribution to European connectivity, innovation and industrial competitiveness.