Landmark decision by UK Supreme Court rules that combustion emissions should be considered in planning

Why should I read this?

In a landmark judgment, the UK Supreme Court held that a local Council’s decision to grant planning permission for an oil extraction project was unlawful because the Environmental Impact Assessment (“EIA”) of the project failed to consider the effect on the climate of carbon emissions resulting from the eventual use of the oil as fuel, once it has been refined elsewhere.

This decision signifies a marked shift in approach to EIA requirements that must be complied with to obtain planning approval for major projects, particularly for the oil and gas sector – but it could have significant implications for the delivery of projects in other sectors too. Developers whose projects require EIA will now have to consider whether downstream emissions are an “inevitable” effect of their projects and, if so, assess this impact as part of the EIA process.

Case summary

On behalf of the Weald Action Group, Finch challenged Surrey County Council’s decision to grant planning permission to a developer seeking to expand oil production of its oil wells in Surrey. Finch’s complaint: that the EIA relied on by the Council in making their decision wrongly failed to address the combustion emissions that would result from the eventual burning of the oil by consumers after refinement and distribution.

The key issue was whether the combustion emissions from the use of the refined oil products were properly regarded as an “effect of the project” within the meaning of the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 (the “Regulations”), which implement EU Directive 2011/92/EU (as amended) (the “EIA Directive”).

Both the High Court and the Court of Appeal had dismissed Finch’s challenge (albeit for different primary reasons).

By a majority of 3:2, the UK Supreme Court disagreed with the lower courts, holding that combustion emissions were an “inevitable” and easily quantifiable indirect effect of the project and therefore fell within the scope of the EIA. Failure to consider such emissions rendered the Council’s decision to grant planning permission for the project unlawful. If the developer wants to go ahead with the project, it will now need to include an assessment of the downstream combustion emissions in its environmental statement and the planning application will need to be redetermined by the Council.

In a lengthy dissent, Lord Sales (with whom Lord Richards agreed) considered that the combustion emissions contemplated were too far removed from extraction of the crude oil to be an “effect of the project”, placing particular emphasis on the fact that the extracted oil would have to undergo refinement (itself an activity subject to EIA requirements) before it became an end product ready for consumer use. However, the majority held that the intermediate process of refining the crude oil does not break the causal connection between the extraction of the oil and its use: refinement does not alter the basic nature and intended use of the oil, and it is inevitable that, once extracted, the oil would undergo refinement and subsequently combustion when used by consumers.

It's worth noting that the minority (and the High Court and Court of Appeal) also expressed concerns about the practical implications of treating combustion emissions as an effect of an oil extraction project for EIA purposes:

• The minority warned that this could have far-reaching ramifications for EIA of other types of projects that involve the production of minerals and raw materials for use in industrial processes (e.g. the production of metals for future use in making parts for motor vehicles or the manufacturing of components for aircraft). However, the majority did not think the EIA floodgates would open this way, distinguishing between: (a) projects for the production of oil, which will inevitably undergo a pathway from production to combustion, meaning there is no conjecture or speculation about what will ultimately happen to it; and (b) projects for the production of other commodities such as iron or steel, which have indeterminate future uses, making it impossible to identify and meaningfully assess the greenhouse gas emissions resulting from future use.
• The minority were also swayed by the argument that it would not be appropriate for local planning authorities, when deciding individual planning applications at particular sites, to be making decisions that have a bearing on “big picture issues”, such as how to address the distribution of greenhouse gas emissions between different sectors of the economy and the balance between national economic objectives and the reduction of emissions in the transition to net zero, which are matters of national policy to be determined by central Government and are the subject of national and international regulation. The core concern was that this could lead to incoherence in decision-making on matters of national importance. However, the majority did not accept this argument, concluding that UK national policy and legislation on climate change and petroleum production, whilst relevant to the substantive decision on whether to grant planning consent, is irrelevant to interpreting the meaning and scope of EIA legislation and does not justify limiting the scope of the assessment to be undertaken. Furthermore, even if the information on downstream carbon emissions has no influence on whether the project is allowed to proceed, it is still essential for that information to be available through EIA.

What does this judgment mean for me?

Fossil fuel developers will now have to consider at an early stage the downstream emissions from consumer use of the fossil fuels, and will be required to assess and quantify those effects in the EIA carried out to support planning applications.

The purpose of including this information in the EIA is to ensure that it is available to inform public participation in the planning process and that decision-makers consider the project’s contribution to climate change prior to granting approval. It does not, however, direct decision-makers what to decide; that remains a matter for the planning decision. Whether the judgment has a real impact on the outcome of planning approvals of similar projects therefore remains to be seen.

For developers of other major projects which require EIA, the judgment could also have significant implications. As explained above, the judgments of the lower courts and the minority of the Supreme Court in this case identified the potential ramifications of treating downstream combustion emissions as an effect of oil extraction for EIA purposes. Could this open the floodgates for other types of projects to have to assess downstream (and upstream) effects as part of EIAs? If so, will the (already complex) EIA process become more onerous and subject to an increased level of consenting and legal challenge risk? The majority judgment does include some safeguards by drawing a distinction between oil production and other types of project, but time will tell how this plays out in practice. At the very least, developers and local authorities will now need carefully to consider the scope of “indirect” effects of projects to be assessed in an EIA. Trying to identify quite how far to go could prove problematic and introduce risk of legal challenge to major projects subject to EIA requirements.

Projects currently at the determination stage also face an immediate issue – it would be prudent to check environmental statements in the light of this ruling. 

What else do I need to know about?

Given the potential serious ramifications for fossil fuel projects in the UK, it is no surprise that the judgment was hotly anticipated by climate change activists, mineral extractors and public regulatory bodies alike. Indeed, there were interveners on all sides, including Friends of the Earth, Greenpeace UK, the Office for Environmental Protection and West Cumbria Mining Ltd.

The Supreme Court’s decision is yet another example of the judiciary’s willingness to quash public authorities’ decisions and policies that fail to comply with legal requirements relating to the assessment of the impact of human activities on the climate. It is also another example of the application of the soft law principles applied to assessing the environmental impact of a product or service, and the importance of accounting for the full life cycle of a product.

This is not unique to the UK judiciary though; it follows a global trend. Indeed, the majority decision admittedly mirrors that of a recent judgment of the Oslo District Court dealing with a similar question (Greenpeace Nordic v The State of Norway (Case No 23-099330TVI-TOSL/05)).

The spotlight now turns to UK decision-makers. Following Brexit, the UK is permitted to depart from the EIA regime as it sees fit. Reform of the EIA regime to make it simpler and more outcomes-based than is currently the case has already been on the agenda as part of wider planning reforms. It remains to be seen whether the UK Supreme Court judgment inspires further change to the EIA regime in the UK.