A GAME CHANGER
The UK Supreme Court has delivered a landmark verdict for climate change activism.
By Tarini
With the climate crisis worsening with every passing day and even advanced Western nations facing the wrath of climate catastrophes in the shape of heat waves and flooding, fossil fuel policy has become a political hot potato. The UK is no exception, sufferingfrom climate change and its consequences, such as an unprecedented influx of migrants across the channel.
The Report of the House of Commons Committee on ‘Accelerating the Transition from Fossil Fuels and Securing Energy Supplies’ released last January was unequivocal in its assertions that the UK remains dependent on fossil energy for over three-quarters of its energy needs. Some progress has undoubtedly been made in reducing the proportion of fossil fuels burnt to generate electricity, as renewable energy generation has increased and coal has been phased out. However, fossil gas is nevertheless still used to generate a significant share of the UK’s electricity supply: in 2021 the share was just under 40 per cent. The UK also remains dependent on gas to heat most domestic and commercial properties and on oil to fuel road transport, aviation and shipping.
The report goes on to outline in stark terms the threat climate change presents to the country. On 19th July 2022, temperatures in east Lincolnshire reached 40.3°C. This was the highest temperature ever recorded in the UK, exceeding the previous UK temperature record of 38.7°C set in 2019. The record temperatures caused transport disruption as roads, rails and runways buckled; fires broke out, and power cuts took place as network infrastructure overheated. The prolonged heatwaves during July and August caused a drought across England, depleting rivers, reservoirs, and aquifers.
Under the provisions of the 2008 Climate Change Act, the UK government is bound by law to reduce greenhouse gas emissions by at least 100 per cent of 1990 levels (net zero) by 2050. This includes reducing emissions from the devolved administrations (Scotland, Wales and Northern Ireland), which currently account for about 20 per cent of the UK’s emissions.
Judicial Intervention
In the latest development, the UK Supreme Court handed down a landmark judgment (on the application of Finch on behalf of the Weald Action Group) v Surrey County Council and others on 20 June 2024. The impact of this judgment on planning decisions relating to UK energy and infrastructure projects can have significant environmental consequences.The Hon’ble Court ruled that local councils and planning authorities must consider the full environmental impact of new fossil fuel projects when approving them. The verdict has been hailed as a victory for climate activism.
Before the ruling, councils and planning authorities had to consider only the emissions from operations. Now they will have to factor in emissions produced at different points in the value chain. This would include emissions by suppliers or consumers, such as when oil is refined by suppliers or burned as fuel for consumption.
The case was triggered when the Surrey County Council granted permission to expand an oil well site. The project's Environmental Impact Assessment (EIA) accounted for greenhouse gas emissions from the well site but neglected the "downstream" emissions that would ensue when the oil was refined and consumed through combustion. Surrey County Council contended that the "downstream" emissions were too remote to be included in the project EIA. It argued that those emissions were not the project's direct or indirect environmental effect.
The court ruled by a 3:2 majority that the combustion emissions are linked to the project by legal causation. If the oil were not extracted, the combustion emissions would not occur. It was inevitable that the oil extracted would be consumed, releasing CO2 and contributing to global warming.The court pointed out that the location of the combustion does not distance it from the project, even though it does not take place on the project site. It concluded that the EIA should have calculated the expected combustion emissions, i.e., the amount of CO2 produced for each tonne of oil burnt.
The pith of the judgment was the issue of whether the downstream emissions are connected to the project by causation or whether they are too remote to be included in the EIA. The Supreme Court considered three tests for causation.
1) “But for” test – would the downstream emissions not occur without the project? In other words, but for the project, the emissions would not take place.
2) Intervening act – is there an intervening act that breaks the chain of causation? In this case, the court determined that the act of refining the oil did not break the causal link between the extraction and the emissions.
3) Necessary and sufficient – this means that if X event takes place, Y will necessarily follow.
The Supreme Court seemed to lean towards the first two tests, which have a lower standard of causation than the third. However, it did not lay down a clear rule that would apply to determining causation in such cases. Developers and authorities may now face a conundrum when deciding what factors to include in the EIA. It is also uncertain whether this test will be applied to other kinds of projects and production plants or just fossil fuel projects.
How is the Decision Unique
The ruling makes it clear that the EIA for a project should not be restricted to the immediate direct emissions of the project but should also extend to downstream emissions that impact the environment. Also known as Scope 3 emissions, these emissions are often excluded from EIAs for fossil fuel projects. Yet, they are the most significant contributors to greenhouse gas emissions in the oil production process. In this case, more than 10 million tonnes of carbon emissions would be produced from oil burning, but the EIA did not consider it.
Another key takeaway is that an EIA is not geographically restricted to the project site. All likely significant effects of the project will have to be calculated, irrespective of when and where they take place. The Supreme Court pointed out that climate change is a global problem, and its impacts are not limited to where the greenhouse gases are released.
One concern was that such a decision would open the floodgates of litigation against projects since it could be applied to the extraction of other materials. However, the Supreme Court made a clear distinction; it pointed out that oil is different from goods like iron or steel, which have diverse uses. Oil or fossil fuels are unique in that they are intended to be burned as fuel, unlike steel, which can be used to make car parts or for construction. The non-fuel use for oil is making materials like plastic but that accounts for just 2 per cent of extracted fossil fuel.
Fallout
The decision doesn’t prevent the planning authority from approving oil projects or other projects that will harm the environment. However, it stipulates that the approval should be given after accounting for the environmental cost. It means that the inevitable harmful effects of a project should be considered and not ignored.
Domestically, the decision goes beyond just planning permission for the Surrey project. It featured another case, which pertained to larger projects for exploring and extracting fossil fuels from the North Sea. Green Peace UK had challenged the EIA because it did not account for the eventual consumption of the oil. Green Peace was given leave to appeal the court’s decision by intervening in this appeal. The decision could make it more challenging for oil and gas companies to build new wells in the UK. Under Rishi Sunak, the British government encouraged further oil and gas exploration in the North Sea. The Labour government also promised not to revoke existing oil and gas licenses. UK courts considering high-profile oil and gas cases in the North Sea, like the Rosebank oilfields, will have to consider this decision. As more courts rule in favour of considering comprehensive emissions, oil companies will find it more difficult to stick to a narrow calculation. The ruling could significantly reduce new fossil fuel projects in the UK.
The case adds to a growing jurisprudence of climate change decisions. A Norway court recently struck down three oil projects for failing to consider future emissions. U.S. and Australian courts and regulators are also increasingly accounting for future emissions when granting oil project permissions, although this is not the norm.
Assessment
The decision is a milestone for climate change efforts as it makes EIA account for the most polluting steps of the fossil fuel value chain.
The verdict has ramifications for climate change activists, planning authorities, companies, and developers. While it focused on EIA for fossil fuel extraction, it could be applied to other projects where the harmful effects of extraction are inevitable.
More importantly, i
t could also set a precedent for other nations. While it only applies to the UK, it will be considered by courts across the globe.
Planning authorities are likely to
face more pressure to factor in the environmental impact of a project. Developers will also have to include downstream emissions when they are scoping the project.
