Supreme Court decision will have far-reaching implications for fossil fuel projects

A landmark judgment was handed down by the UK Supreme Court on 20 June 2024 that is probably the most significant post-Brexit decision of the UK courts on environmental matters. The judgment sets definitive parameters on how “downstream” greenhouse gas emissions should be considered in planning applications for oil production facilities. Whilst in some respects the decision was fact specific, it looks likely to have far-reaching implications for other fossil fuel projects.

The grant of planning permission was challenged because the Environmental Statement did not consider the emissions that would be generated from the ultimate use of the oil

The decision in R (on the application of Finch on behalf of the Weald Action Group) v Surrey County Council and Others related to a challenge against the grant of planning permission for expansion of an oil extraction facility in Surrey, England. Whilst relatively small-scale in the world of new oil extraction, the proposal required the submission of an Environmental Statement (ES) under the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 (the EIA Regulations). The grant of planning permission was challenged on the basis that the ES had failed to assess the downstream greenhouse gas (GHG) emissions that would arise from the development, that is, the emissions that would be generated from the ultimate use of the oil extracted as fuel.

Supreme Court held that burning the oil was an inevitable consequence of its extraction so had to be assessed within the Environmental Statement

In both the High Court and the Court of Appeal, the challenge was dismissed, albeit for different reasons, but in essence both courts ruled that the only GHG emissions that needed to be assessed were those produced directly by the project. In overturning both lower courts, the Supreme Court held that as burning of the oil produced by the proposal was the "inevitable consequence" of its extraction, those downstream emissions had to be assessed with the ES.

The decision of the Supreme Court was in some respects finely balanced and based on a three-to-two majority, but ultimately the position of the Court in the lead judgment by Lord Leggatt makes the position – at least for oil extraction facilities – very clear. How this ruling might be applied to other fossil fuel projects is likely to require further consideration.

The starting point for the Court was that all parties agreed it was “not merely likely but inevitable” that extraction of oil would lead to combustion and release of GHG, notwithstanding that refining of the crude oil was a necessary step to facilitate this. It was also common ground between the parties that reliable estimates of the amount of GHGs emitted could be made using established methodology.

The impact of UK planning policy

Arguments were also raised that matters relating to GHG emissions and climate change under the UK Climate Change Act 2008 were matters of national policy, and it was noted that current UK planning policy in fact encouraged domestic production of oil and gas. The Court held that whilst national planning policy is relevant to the decision as to whether planning permission should be granted, this did not dispense with the requirement to assess all likely significant effects or in any way limit the scope of that assessment.

What does the decision mean for other fossil fuel projects?

The judgment, whilst in some respects fact specific, inevitably raises questions over how other development proposals involving fossil fuels must now be assessed under the EIA Regulations. It was notable that one of the many interveners in the appeal was West Cumbria Mining Limited, whose approval of planning permission for a new deep coal mine in Cumbria is currently subject to ongoing proceedings challenging that decision. In obiter (i.e. not determinative to the case in hand) comments, the Court noted that “coal need not undergo any intermediate process before it is burnt as fuel”.

Will the decision have wider implications for processing activities?

The Court did however make a distinction for other activities where intermediate processing or assembly is required. Giving the example of components manufactured for use in cars or aircraft, the Court noted that in those circumstances where elements formed part of a larger whole “no realistic estimate could be made of GHG emissions arising from such use on which a reasoned conclusion could be based”.

What do developers need to do in relation to downstream GHG emissions?

Other examples will inevitably arise of development proposals involving use or processing of fossil fuels where a linkage can be made between the development proposed and downstream emissions. In each case, developers and planning authorities will need to carefully consider the implications of the Finch decision on how downstream GHG emissions should be assessed. Notably, the Finch decision relates to projects above the thresholds set out in the EIA Regulations where an ES is required. The court gave much consideration over what constituted “likely” effects, but in order to fall within the scope of an ES, those effects must also be “significant”. It seems that in the Finch decision the significance of the impact of GHGs was not a matter that was raised – rather it was the absence of any consideration of downstream GHGs that was at the core of the judgment. Inevitably the Finch decision will give rise to further litigation, and the implications for other types of project will (excuse the pun) be further refined.

Smaller scale projects not requiring an ES are not caught by the decision, but arguments may well be made in the future that even for projects where the need for an ES can be screened out, GHG emissions should be taken as a material consideration. This may well be a matter for the courts to grapple with in the future, but it will almost certainly be on a project and fact-specific basis.

As a side note, this decision was made on the basis of the English EIA Regulations, but the Court considered in some depth the EU EIA Directive (92/11/EU) from which those Regulations are derived and drew heavily on the purposes of that Directive in reaching its decision. The Court also considered case law from the European Court of Justice, albeit drawing little assistance from it given the absence of any real precedent. This approach by the UKSC, notwithstanding the UK’s exit from the EU, indicates that for as long as the UK relies upon statute largely derived from EU law, the meaning and purpose of those EU laws – at least in the environmental sphere – will continue.

TLT comment

The specific circumstances of this judgment are fairly narrow, as new fossil fuel extraction proposals in the UK are a rare beast. More widely, what this judgment may signify is an increased willingness by the courts to take account of climate change impacts in development proposals and how those are assessed – and in turn an increased willingness by objectors to raise GHG assessment as a ground of legal challenge. 

As a result, planning authorities may start taking a more precautionary approach to the scope of GHG impact assessment required within environmental statements for a broader range of development projects. Given the discourse over the meaning of “likely” effects in this context, legal advice on the scope of assessment should be sought whilst the parameters of any ES are being established. 

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.