Landmark court ruling will have huge implications for new fossil fuel projects in UK

The UK Supreme Court recently ruled that Surrey County Council acted unlawfully in granting planning permission to a developer to expand their oil-drilling operations at Horse Hill in the Surrey countryside without considering the negative climate impacts both now and in the future.

The enormity of this decision has the potential to completely alter the landscape for the oil and gas industry in the UK.

Local planning authorities (mainly county councils) in the UK are required by law contained in regulations updated in 2017 to conduct an environmental impact assessment before giving planning permission to major oil and gas projects. This process is designed to identify direct and indirect environmental impacts of a proposed project when making land-use planning decisions.

The Supreme Court has made it clear that the indirect effects of taking fossil fuels out of the ground, which include greenhouse gas emissions caused when they are eventually burnt as fuel, must be included in the environmental impact assessment before development consent may be given.

The developer hoping to extract oil from four new wells in the Surrey Hills, UK Oil and Gas plc, (which has a stake in Horse Hill Development Ltd) has significant interests in several oil projects in the UK. Its statement characterises the court’s decision as “perplexing”.

While Sarah Finch, the campaigner who spearheaded the protest against the permission given to the oil project, wrote that it was an “incredible win” that “could change the future of oil and gas in the UK”.

The applicable law does not prevent local planning authorities from granting permissions to projects that are likely to cause significant environmental harm. But it does require them to reach a reasoned conclusion on the environmental impact and take this into account when granting planning permission. Economic and social factors may ultimately override environmental considerations in the decision, but this process does create opportunities for mitigation, avoidance or remediation of environmental impacts to be considered.

The court observed that oil, more generally fossil fuel, is a unique “object” as it is clearly intended to be burned as fuel from the time it is extracted until it reaches the end-user market, with a detrimental effect on the climate. This differs from other objects like steel, which later transforms into different objects (such as car parts or construction materials). There is a non-fuel use for making materials such as plastics but that only relates to about 2% of the total of extracted fossil fuels.

The court concluded that local authorities can calculate the future emissions of an oil project during the planning phase using established scientific methods prescribed by the Institute of Environmental Management and Assessment, the UK-based professional body for environmental practitioners. The ruling also clarified that choosing whether to include future emissions in environmental impact assessments should not be left to local authorities to decide.

The Supreme Court did not shirk at the global nature of climate change. Regardless of where in the world the oil would be burnt, local authorities must consider the greenhouse gas emissions before granting the planning permission. So even if the oil extracted from fossil fuel projects in the UK gets exported and burned in other countries, UK local authorities must consider such future emissions during the environmental impact assessment process.

If they don’t, roughly 10.6 million tonnes of carbon dioxide emissions could remain unaccounted for. Around 67% to 95% of emissions from oil projects is from such future emissions.

Being able to more comprehensively assess a project’s impact on the environment and, more specifically, the world’s climate could significantly increase the projected emissions reported related to proposed fossil fuel projects in the UK, making these projects inconsistent with its legally binding target of reducing emissions by 100% from 1990 levels by 2050. Before this ruling, the future emissions were not taken into account, leaving a gap in analysing how well such projects align with the UK’s net zero goals.

The way forward

This ruling will directly impact permissions already granted in the UK to fossil fuel projects which did not previously consider future greenhouse gas emissions. The approval of the Cumbria coal mine project, which did not consider greenhouse gas emissions from burning coal, has already been challenged on similar grounds. That hearing is due in the High Court in mid-July.

This ruling could also retrospectively impact the permissions granted to offshore projects which require an environmental impact assessment, such as the Rosebank oil field, and hundreds of North Sea fossil fuel projects, where future greenhouse gas emissions were not considered. It is likely that the ruling will significantly reduce new fossil fuel projects in the UK.

Beyond the UK, these changes are already happening. An Oslo district court recently invalidated three oil projects for not considering future emissions. Similarly, the US and Australian regulators and courts are increasingly considering future emissions while granting oil project permissions, but in general it is not the norm. The UK has now joined this club.

Rosalind Malcolm has previously received funding from UKRI Arts and Humanities Research Council and UKRI Global Challenges Research Fund.

Shashi Kant Yadav does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.