UK Supreme Court issues landmark decision on assessing environmental harm of extracting fossil fuels

In a landmark decision, which adds to the growing global body of climate-based jurisprudence, the UK Supreme Court has held, by majority, that before a developer is allowed to proceed with a project that extracts fossil fuels, it must carry out an Environmental Impact Assessment (“EIA”) that assesses the effect on climate (measured by greenhouse gas emissions) of the combustion of the oil to be produced.

The issue for determination

At the heart of this case was a challenge to a decision of Surrey County Council to grant planning permission allowing the retention and expansion of an existing onshore oil-well site.  The permission would have allowed the developer to drill for four new wells, enabling the production of hydrocarbons from six wells over a period of 25 years.  The EIA for the project considered the environmental impacts of “the direct releases of greenhouse gases from with the well site boundary resulting from the site’s construction, production, decommissioning and subsequent restoration over the lifetime of the proposed development.”.  It did not, however, assess the environmental impacts of the “downstream” greenhouse gas emissions that would inevitably result when the oil extracted from the development site was later refined and then consumed, for example, as fuel.

The question for the Court was whether, under Directive 2011/92 EU of the European Parliament and of the Council and the Town and Country Planning (Environmental Impact Assessment) Regulations 2017, it was unlawful for the Council not to require the EIA for a crude oil extraction project to include an assessment of the impacts of downstream greenhouse gas emissions resulting from the eventual use of the refined products of the extracted oil.

Environmental impact assessments – downstream emissions

Surrey County Council argued that the “downstream” emissions caused by combustion of the extracted oil were too remote to be covered in the EIA for this project.  It argued that these emissions could not be regarded as a direct, or even indirect, environmental effect “of the project” within the meaning of the legislation because they would occur after the oil had been taken away from the well site and was outwith the control of the site operators.

Lord Leggatt, delivering the majority judgment, firmly rejected this argument.  He found that, as a matter of legal causation, the combustion emissions are entirely within the site operators’ control.  If no oil is extracted, no combustion emissions will occur.  If oil is extracted, it can be said, with virtual certainty, that the carbon contained within it will sooner or later be released into the atmosphere as carbon dioxide and so will contribute to global warming.  He found that when or where the combustion takes place does not diminish the overall significance of the environmental impact and the EIA for this project should have included a calculation of the anticipated combustion emissions, which is easily established based on the estimated amount of carbon dioxide emitted on combustion of each tonne of oil produced.

The majority of the court also observed that the object of an EIA is to ensure that the environmental impact of a project is exposed to public debate and considered in the decision-making process.  The legislation does not prevent the planning authority from giving development consent for projects that will cause significant harm to the environment; but it aims to ensure that, if such consent is given, it is given with full knowledge of the environmental cost.  The majority judgment concluded that “The effect should have been properly assessed so that public debate could take place on an informed basis. That is a key democratic function of the EIA process. It was not fulfilled here.”

Balancing policy considerations

Lord Leggatt (with whom Lord Kitchin and Lady Rose agreed) did acknowledge that the planning authority must have regard to national policy and that UK national policy requires great weight to be given to the benefits of petroleum extraction, in particular for the economy.  However, just as the beneficial effects of a green energy project, such as a wind farm or solar farm, are relevant matters for the planning authority to consider, the corresponding adverse effects of a fossil fuel project are also a material planning consideration.

He took the view that: “It is not good enough that the potential global warming effect of the proposed development was not “completely ignored””; also observing in relation to arguments based on UK national policy that “…it does not follow that the planning authority has to ignore adverse effects on climate of a proposed project or adopt an interpretation of what constitute such adverse effects which is contrary to reality.  Just as beneficial indirect effects of a project on climate – for example, the “green” energy that would be generated by a project to develop a wind farm or solar farm – are clearly a relevant matter for the planning authority to consider, so corresponding adverse effects are also a material planning consideration”.

Dissenting opinion

The dissenting judgment was given by Lord Sales (with whom Lord Richards agreed) and contains some interesting commentary about the interpretation of the relevant legislation and particularly about the proper decision-making hierarchy contemplated by the EIA Directive.

Lord Sales essentially found that the wider climate change implications of a development are not a matter for local authorities.   He considers that it would be “constitutionally inappropriate” for a local planning authority to assume practical decision-making authority based on its own views about downstream emissions because this would involve second guessing or supplanting the decision-making authority of the national Government.

Appeal allowed

The conclusion of the UKSC majority was that the council’s decision to grant planning permission to extract petroleum was unlawful in this case because (i) the EIA for the project failed to assess the effect on climate of the combustion of the oil to be produced, and (ii) the reasons for disregarding this effect were flawed.  The appeal was therefore allowed.

Wider issues at play

The issue in this case extends well beyond this particular application for planning permission for a relatively small-scale development in Surrey.  It has previously been aired before the Scottish Courts in relation to plans for far larger projects for the exploration and extraction of hydrocarbons in the North Sea.  Greenpeace UK challenged decisions of the UK government and the North Sea Transition Authority (previously known as Oil & Gas UK) in the Scottish Courts, on this very point. Greenpeace argued, in relation to the Vorlich oil field, that the environmental assessment (in that instance by the Secretary of State) had only taken into account the effect caused by exploiting the oil field and had not included the impact of the eventual use of the oil and gas by the consumer.  The Secretary of State argued that emissions from the end use of oil and gas in the UK were considered and taken into account in the UK’s Annual Statement of Emissions and that the production of oil from the Vorlich field did not increase the use of oil.

In the Vorlich case, the Inner House accepted the Secretary of State’s position, refusing Greenpeace’s appeal and ruling that the consumption of the end product should not have been considered in the environmental assessment.  Delivering the opinion of the Court, the Lord President, Lord Carloway, said: “The clearly expressed wording of the legislation cannot be disregarded. It is the effect of the project, and its operation, that is to be considered and not that of the consumption of any retailed product ultimately emerging as a result of a refinement of the raw material.”   The Lord President also observed that, “The Secretary of State’s submission that these are matters for decision at a relatively high level of Government, rather than either by the court or in relation to one oilfield project, is correct. The issue is essentially a political and not a legal one.”  Following the Inner House decision in 2018, extraction at the Vorlich development in the central North Sea, which was reported by BP to target 30 million barrels of oil equivalent and be expected to produce 20,000 barrels gross of oil equivalent a day at peak, began in 2020.

Greenpeace UK (represented by Harper Macleod LLP, instructing Ruth Crawford KC and David Welsh of Axiom Advocates and Richard Harwood KC of 39 Essex Chambers), having been refused leave to appeal the Vorlich decision of the Scottish Court, was granted leave to intervene in this appeal.  Information provided to the UKSC by the Office of Environmental Protection, another intervener, and Greenpeace was noted as being of assistance in the majority opinion of the Court.

Impact of this decision

This is a significant decision for climate change campaigners, planning authorities and developers.  While the court’s consideration was focussed on the application of the EIA regime to the extraction of fossil fuels, this decision may, however, have a much wider application.  The decision clarifies that EIAs ought to look beyond the immediate direct emissions of a project and include an assessment of the indirect downstream emissions produced by the project over its lifetime where those emissions are “likely” to have a significant impact on the environment.