Clarity for the Oil and Gas Sector promised following Supreme Court decision in Finch

The UK Government has announced plans to produce new environmental guidance to give greater certainty to the oil and gas industry following the landmark ruling by the UK Supreme Court in Finch v Surrey County Council.

Decision

Earlier this year, the Supreme Court held that Surrey County Council's decision to grant planning permission for a new oil well had been unlawful. The environmental impact assessment ("EIA") for the project had not considered the downstream greenhouse gas ("GHG") emissions from the combustion of the oil to be extracted from the site and the majority found that the reasons for disregarding these emissions had been flawed.

Critically, the judgment concerned a failure to comply with procedural requirements of the decision-making process rather than the substance of the decision. While the Court held that downstream GHG emissions should be included in the EIAs required for most oil and gas projects, it did not find that these types of projects could not be granted permission where compliant EIAs are undertaken.

Uncertainty

As a result of this distinction, the ruling created a degree of uncertainty as to how the environmental impact of proposals should be evaluated. The Government has said that it will not defend judicial reviews brought against the decisions to grant permission to the Rosebank and Jackdaw offshore oil and gas fields, but the future of these projects has yet to be decided.

In the majority judgment, Lord Leggat noted it was 'inevitable that economic, social and policy factors will outweigh environmental factors in many instances'. At present, which instances these will be remains unclear. The offshore energy trade association OEUK has warned that this uncertainty 'impacts investor confidence'.

Certainty

Updated government guidance should provide greater clarity as to how downstream GHG emissions should be weighed against other factors and will be of use to those making decisions and those applying for permission for future projects. It will also influence which projects can be permitted and thereby, affect the scale of the impact of the Supreme Court's decision. The promised consultation on the guidance will be an opportunity for those involved to have their voices heard. The government aims to conclude its consultation by spring 2025.

We will continue to monitor updates in this area. If you would like to discuss the impact of the decision in Finch or the pending guidance on your business, please contact Iain Rutherford, Peter Begbie, or your usual Brodies contact.