The European Commission faces growing pressure to address allegations that it indirectly financed climate lawsuits against German companies. This controversy is reigniting broader tensions between Brussels’ climate agenda and Europe’s industrial competitiveness. The Economic Council of the CDU has called for a full investigation, urging Commission President Ursula von der Leyen to clarify whether funds under her tenure supported legal actions by climate activists targeting the private sector.
At the center of the storm is a series of press reports suggesting EU-linked financial channels may have supported lawsuits aimed at accelerating climate enforcement through the courts, potentially weaponizing regulation against strategic industries. While no formal findings have been published, the political fallout has begun to spread, especially in Germany, where industries already face high energy costs and strict environmental mandates.
Hydrogen Delegated Act Deepens Industry-Policy Divide
The controversy comes just weeks after the EU Commission issued a new Delegated Act defining the conditions under which hydrogen can be labeled “renewable.” The regulation has drawn sharp criticism from industrial stakeholders who argue that the overly rigid criteria, especially the hourly correlation requirement for renewable electricity sourcing, could delay the scale-up of green hydrogen projects across the bloc.
“Hydrogen is a cornerstone for decarbonizing heavy industry,” said Wolfgang Steiger, Secretary General of the Economic Council. “But the Commission’s current trajectory risks paralyzing progress through technocratic overreach and ideological rigidity.”
Data from Hydrogen Europe supports this concern. According to its estimates, strict implementation of the Delegated Act could limit green hydrogen production to as little as 3 million tonnes by 2030—far below the EU’s stated target of 10 million tonnes. Developers argue that without flexibility on temporal and geographical correlation, electrolyzer projects may become financially unviable, especially in regions with intermittent renewable generation.
Activist Influence and Policy Legitimacy
For the Economic Council, the alleged legal funding scandal is not merely a bureaucratic misstep but a potential sign of deeper institutional drift. “The legitimacy of the Commission and thus of the entire Union is undermined if activist influence dominates policy,” Steiger emphasized, reflecting concerns that Brussels may be prioritizing environmental symbolism over strategic balance.
Industry groups have long warned that the Commission’s climate policymaking apparatus, particularly within DG CLIMA and DG ENER, has become increasingly detached from industrial realities. These concerns are compounded by the EU’s investment gap in green hydrogen infrastructure, estimated by the European Investment Bank to be over €300 billion by 2030. If climate litigation is perceived as being tacitly encouraged by the EU while industrial support lags, trust in the Commission’s impartiality may further erode.
Toward an “Industrial Deal”?
The Economic Council’s call for a shift toward an “Industrial Deal” reflects a broader policy recalibration underway in parts of Europe. As geopolitical instability, inflationary pressures, and supply chain vulnerabilities reshape the economic landscape, some member states and political actors are seeking to rebalance the EU’s Green Deal priorities to safeguard competitiveness and social cohesion.
This realignment is not without precedent. The U.S. Inflation Reduction Act, which includes robust industrial subsidies tied to clean energy, has already drawn European industry’s attention for its pragmatic blend of climate and economic policy. In contrast, the EU’s approach is often perceived as more regulatory than incentivizing—a gap that is becoming increasingly problematic for sectors like steel, ammonia, and heavy transport, where hydrogen adoption is essential but capital-intensive.
Embedded in Context
As calls for accountability intensify, the Commission faces a dual challenge: ensuring transparency around its past actions while charting a future that aligns climate ambition with economic feasibility. For Ursula von der Leyen, the stakes are not just reputational but strategic. Whether she can deliver a coherent industrial pivot without alienating environmental constituencies—or further fracturing the Union’s fragile consensus on climate—may well define the next phase of European energy transition policy.
Long story short
In 2023, the European Commission reportedly disbursed up to €700,000 in taxpayer funds to environmental groups, including ClientEarth and Friends of the Earth, to influence EU climate policy and, in some instances, support legal actions against German companies. The revelations, reported by Welt am Sonntag, are stoking a broader political and industrial dispute over the role of NGOs in shaping regulatory frameworks—and whether Brussels is crossing the line from policymaking into targeted activism.
At the core of the controversy is a €350,000 grant to ClientEarth, which has led or supported multiple lawsuits against German coal-fired power plants. Though ClientEarth maintains that no EU funds were used directly for litigation, it acknowledged using the money to cover operational costs in its Berlin office. The group insists that its activities were independently conceived and not mandated by the Commission.
That distinction has done little to ease concerns among critics, especially within the European People’s Party (EPP), the EU Parliament’s largest group and political home of Commission President Ursula von der Leyen. Members argue that Brussels may be indirectly underwriting legal strategies that weaken EU industry under the guise of environmental protection. German CDU figures, such as Wolfgang Steiger of the Economic Council, have openly called for a reorientation of EU priorities under a so-called “Industrial Deal.”
Competing Agendas: Environment vs. Industry
The issue is not limited to coal. Friends of the Earth, headquartered in Amsterdam, was reportedly funded to galvanize opposition to the EU-Mercosur trade agreement—a deal strongly supported by Germany but fiercely opposed by France and environmental activists due to the deforestation risks associated with increased agricultural exports from Brazil.
These actions raise questions about consistency in EU policy. On one hand, the Commission promotes trade liberalization with key global partners; on the other, it funds opposition campaigns that target those same agreements. The tension highlights a fragmented policymaking process that critics argue is increasingly being shaped by non-state actors whose incentives may not align with broader strategic or economic goals.
From an industrial standpoint, the allegations could not come at a more sensitive time. Europe’s hydrogen economy—touted as a pillar of the bloc’s green transition—is still struggling with regulatory bottlenecks and investment uncertainty. The recent Delegated Act on renewable hydrogen, which mandates hourly matching of renewable electricity, has been criticized by industry for raising compliance costs and undermining project bankability.
If climate NGOs, partially funded by EU grants, are also engaged in litigation or lobbying that delays infrastructure, trade, or energy projects, the result may be a net policy contradiction. Data from the European Clean Hydrogen Alliance shows that project delays are already widespread: out of over 750 announced hydrogen projects, fewer than 10% have reached final investment decision as of early 2025.
Transparency, Control, and Legal Grey Zones
The European Commission has responded to the report by asserting that no secret contracts exist and that all funding to NGOs adheres to transparency standards. It cited 2023 guidance that prevents approving NGO work programmes that contain overly specific actions directed at EU institutions or officials.
However, these guardrails appear to be weakly enforced. Funding contracts under the LIFE programme do not explicitly prohibit legal activism, nor do they include post-funding audits that scrutinize the downstream use of staff time or internal operational costs. In effect, the Commission retains plausible deniability while funding groups engaged in adversarial legal action against national governments or companies.
This dynamic introduces legal ambiguity into the EU’s role as both regulator and indirect participant in litigation. Even if the funds do not cover courtroom expenses, their allocation toward administrative support for litigating entities can be perceived as an endorsement of the outcomes. The line between funding environmental stewardship and subsidizing legal activism is blurred, and it is this blurring that is triggering institutional concerns.
A Turning Point for Brussels’ Strategy?
The backlash reflects deeper tensions in the EU’s green agenda. While the Commission has succeeded in anchoring climate policy at the heart of the bloc’s legislative activity, it now faces a credibility test. Industrial actors, particularly in Germany, are questioning whether Brussels can serve as a neutral arbiter of climate regulation while simultaneously funding organizations that litigate against its member states and economic interests.
The political implications are growing. As the 2024–2029 EU legislative cycle begins, pressure is mounting on von der Leyen and her Commission to reestablish clear boundaries between civil society engagement and institutional lobbying. Whether that leads to stricter funding criteria, a rebalancing of priorities under the “Industrial Deal” framework, or further legal scrutiny from member states remains uncertain.
What is clear, however, is that the use of EU funds to support even indirect forms of adversarial legal action will continue to draw criticism, particularly when it intersects with high-stakes sectors like energy, trade, and industrial innovation.
