The court ruled last week that the state Public Utility Commission (PUC) failed to consider Hawaii’s goal of reducing greenhouse gas emissions when it approved a power purchase agreement between the Hawaii Electric Light Company and Hu Honua, a wood-burning power plant under construction on the big island of Hawaii.

The ruling came down in favor of Life of the Land, an environmental organization which filed suit arguing that PUC failed to consider carbon emissions when approving the agreement, which is required by state law. The group also argued that PUC violated its due process rights by restricting its participation in the approval process.

The court also said the PUC denied Life of the Land “due process with respect to the opportunity to be heard regarding the impacts that the amended PPA would have on [Life of the Land’s] right to a clean and healthful environment.”

Hu Honua said it has spent $200 million on construction of the facility, which is nearly complete on the site of a former coal-fired sugar mill power plant.

The decision sends the case back to PUC, which must now give explicit consideration to the reduction of greenhouse gas emissions when reconsidering the agreement. PUC must also allow Life of the Land to participate in that process.

Hawaii passed the country’s most aggressive emissions reduction law last year, committing to 100 percent renewable energy by 2045. A year earlier, the state also passed a law committing it to uphold the principles of the Paris Climate Agreement after President Trump announced the U.S. would withdraw from that agreement.

Hu Honua said the plant did not run counter to those efforts. “This is unfortunate as we believe the PUC already considered GHG emissions when it previously approved the PPA, since the record contained evidence showing the Hu Honua project, when operating, would result in a net reduction of GHG emissions when compared to GHG emissions without the project,” Hu Honua  said in a statement posted to its website.

Research, however, shows that wood-burning power plants are worse for the climate than coal-fired plants and result in an increase in greenhouse gas emissions. They contribute to the  degradation of forest carbon sinks, which absorb carbon from the atmosphere.

An investigation by the nonprofit Climate Central in 2015 found a loophole in clean energy regulations in the EU allows wood energy to be considered carbon neutral. Because wood is considered a renewable energy source, biomass companies that convert coal-fired plants are eligible to receive renewable energy subsidies.

Those subsidies are a target of a lawsuit filed earlier this year by groups in five countries in the European General Court, aiming to stop wood energy from being considered carbon neutral.

The U.S. Environmental Protection Agency last year announced it would also consider biomass energy carbon neutral, a decision made without considering the science that shows otherwise.

It is estimated that Hu Honua would have been eligible for up to $100 million in renewable energy tax credits had the project been completed on time. It is unknown how the court’s decision will affect that eligibility.

A bill working its way through the Hawaii legislature to expand the definition of “renewable energy” for subsidy purposes, initially included wording that would have eliminated the subsidies for monoculture wood crops, like the eucalyptus trees Hu Honua plans to burn. That wording has been dropped in the bill’s most recent version.

Henry Curtis, executive director of Life of the Land, told lawmakers at an April hearing on the bill that the definition of “biofuels” has changed over time.

“Currently, if somebody decided to chop down the Amazon forest and ship it here and burn it for power, it would count as renewable energy. That’s what this clause would seek to get rid of,” Curtis said, referring to the now-eliminated wording.

“A lot of countries around the world claim that chopping down forests and burning it for electricity is carbon neutral,” Curtis said. “That was based on one statement by the forest industry in the 1990’s dealing with Kyoto Protocol—but nobody ever verified it—when it came out saying that burning is carbon neutral. It’s obvious it’s not.”