On 20 June 2024, by a three-to-two majority, the UK Supreme Court held in a landmark decision that Surrey County Council's ("the Council") decision to grant planning permission to a developer was unlawful because the environmental impact assessment ("EIA") for the project did not include an assessment of the downstream greenhouse gas ("GHG") emissions.

Downstream GHG emissions are those which will ultimately occur when the extracted oil is burned as a fuel source.

Background

The Town and Country Planning (Environmental Impact Assessment) Regulations 2017 ("the 2017 Regulations") provide that, prior to planning permission being granted for certain projects, a developer must produce an EIA which describes and assesses the likely “direct and indirect significant effects” of the project on the environment.

On 27 September 2019, the Council granted planning permission to developer, Horse Hill Developments Ltd, to retain and expand an existing onshore oil well site and to drill for four new wells, enabling the extraction of oil over a 20-year period. In doing so, the Council accepted an EIA which assessed the impact of the GHG emissions which would be released at the site over the lifetime of the project but contained no assessment of the impact on the climate from downstream GHG emissions.

A local resident, Sarah Finch, representing the Weald Action Group, applied for judicial review of the Council's decision, arguing that the failure to consider downstream GHG emissions did not comply with the UK's obligations under European Union Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment ("the EIA Directive") as implemented into domestic law by the 2017 Regulations.

The High Court dismissed the claim, ruling that downstream emissions are not properly regarded as an "indirect effect" of a relevant project and do not fall to within the scope of an EIA. This decision was appealed and, on 17 February 2022, the Court of Appeal upheld the High Court's decision on different grounds, finding that a decision-maker has discretion regarding the inclusion of downstream GHG emissions in an EIA.

The appellant appealed to the UK Supreme Court.

Decision by the UK Supreme Court

The Supreme Court, in a majority decision delivered by Lord Leggatt, allowed the appeal and found that the Council's decision to grant planning permission was unlawful as downstream GHG emissions are an effect of the extraction oil and must be assessed as part of such a project's EIA.

The key points from the judgement include:

  • Causation and effect: downstream GHG emissions resulting from the combustion of the extracted oil are an inevitable and direct consequence of the project. It was not disputed that the oil extracted from the Horse Hill site would eventually be refined and burned, releasing greenhouse gases into the atmosphere. The EIA Directive requires assessment of "direct effects and any indirect, secondary, cumulative, transboundary, short-term, medium-term and long-term, permanent and temporary, positive and negative effects of the project”. Therefore, the EIA should have considered the downstream GHG emissions.
  • Methodology and scope: it is possible to estimate the amount of downstream GHG emissions resulting from the combustion of the extracted oil using established methodologies. This estimate should have been included in the EIA to provide a complete picture of the environmental impact of the project.
  • Geographical scope: the Court rejected the notion that the EIA should be limited to emissions occurring at the project's site. The EIA Directive does not impose geographical limits on the assessment of environmental effects. The impact of GHG emissions on the global climate does not depend on the location of their release.
  • Refining process and causal connection: the Court addressed the argument that refining the crude oil at separate facilities breaks the causal chain between the extraction and combustion of the oil. It concluded that the refining process does not alter the essential nature or intended use of the crude oil. The final combustion of the refined product remains a foreseeable consequence of the extraction project and falls within the scope of the EIA. This may not be the case for other commodities such as steel which can be put to many possible uses, and it may be considered that no meaningful assessment can be made of the emissions ultimately resulting from its use.
  • Policy considerations: the Court noted that while national policy encourages domestic oil and gas production, this policy does not exempt projects from complying with environmental assessment requirements. The EIA is intended to ensure that decisions are made with a full understanding of their environmental impact, which includes downstream GHG emissions.

If you would like to discuss then please contact Niall McLean or your usual Brodies contact.

Contributors

Niall McLean

Partner & Solicitor Advocate

Rebecca Morrison

Associate (Qualified in Australia)

Sarah Keir

Trainee Solicitor