Daimler uses the refrigerant, called R-134a, in the air-conditioning units of Mercedes cars.
The Commission says Germany failed to apply an EU directive called MAC, which requires the use of a refrigerant "with less global warming potential".
Daimler says the new chemical, R1234yf, catches fire more easily.
The court case comes as German car firm Volkswagen remains under huge international pressure over its failure to comply with car emission standards.
According to the Commission, Daimler's safety concerns about R1234yf "were not shared by any other car manufacturer and were rejected by Germany's Federal Motor Transport Authority (Kraftfahrt-Bundesamt, KBA) and the [Commission's] Joint Research Centre".
If Germany loses the case at the European Court of Justice (ECJ) - the EU's top court - it could be liable for a big fine.
The MAC Directive - short for mobile air-conditioning systems - says fluorinated greenhouse gases with a global warming potential (GPW) higher than 150 must no longer be used.
Since 2011 MAC systems in cars have had to comply with the directive.
The EU Commission is taking Germany to court because the carmaker Daimler is still using a coolant chemical deemed harmful to the environment.