UK Supreme Court Delivers Landmark Decision on Downstream (Scope 3) Emissions – R(Finch) V Surrey County Council

In a landmark climate decision, the UK Supreme Court (UKSC) has found that downstream greenhouse gas (GHG) emissions (known as Scope 3 emissions) that result from the combustion of refined oil products should have been considered in the environmental impact assessment (EIA) for an oil production project. 

Key takeaways

• The decision will lead to greater scrutiny of EIA processes and expectations that downstream emissions will form part of EIAs for similar projects. Developers will need to work closely with public authorities to determine whether quantifiable downstream emissions fall within the scope of EIAs on a project-by-project basis and be prepared to justify their position where such emissions are not included.
• That said, the UKSC limited the reach of its findings, excluding commodities such as iron and steel, where the end use of products is not so readily quantifiable as was the case here. The UKSC also emphasised that the purpose of EIAs is to ensure that planning authorities properly take account of environmental impacts in decision-making, and are not concerned with the substantive decision whether to grant planning consent. 
• It remains to be seen how the UKSC’s decision is applied in upcoming cases, including challenges over a new coal mine in Cumbria and oil and gas projects in the North Sea. The decision could also have wider implications for EIAs across Europe which are based on the same EU legislation.

See our longer briefing on the decision here.

Background

A local resident applied for judicial review of a decision by Surrey County Council, which granted planning permission to a developer, enabling it to expand oil production from an onshore oil well site in Surrey. The EIA for the planning process considered only the direct releases of GHGs from within the boundary of the oil well site during the lifetime of the project.

The council had to carry out an EIA in line with the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 to “identify, describe and assess in an appropriate manner…the direct and indirect significant effects” of the project on the climate, among other factors.

The High Court and the Court of Appeal rejected the claimant’s application. The High Court found that the EIA need only assess the effects of the development for which planning permission was sought, not the environmental effects of end products created using oil extracted from the proposed project. The Court of Appeal upheld the High Court’s decision but on an alternative basis, finding that determination of the relevant effects was a matter for assessment by the council and the council’s decision was therefore challengeable only on limited public law grounds. 

The UKSC’s decision

The UKSC allowed the appeal by a 3:2 majority, finding that combustion emissions from burning the extracted oil were “direct and indirect significant effects of a project” for the purposes of the EIA legislation. As the EIA failed to assess combustion emissions, the council’s decision to grant planning permission for the project was unlawful and set aside. The council will now need to reconsider the developer’s planning application in light of the UKSC’s findings.

A matter of legislative interpretation

The UKSC considered that the question of whether downstream emissions should be included in the EIA was a matter of interpretation of the relevant legislation. Here, the legislation requires an EIA to include “any indirect, secondary, cumulative, short, medium and long term, permanent and temporary, positive and negative effects of the development.” The majority concluded that this express requirement to assess the indirect effects of a project was intended to emphasise the assessment’s broad scope.

The underlying legislation does not impose geographical limits on the environmental effects of a project.  Indeed, the UKSC observed that regardless of where GHG emissions occur, they contribute to global warming.  Similarly, the UKSC rejected an argument that national planning and climate policies were relevant to the scope of the EIA.  These were relevant to a planning authority’s decision to grant planning permission, not the EIA assessment. 

Causation

The UKSC considered that the “effects of a project” is a question of causation. Determining whether a potential effect of a project is “likely” to have a significant effect on the environment (as required by the legislation) may involve evaluative judgment in which different decision-makers may rationally take different views. In this case, however, it was agreed that it was not merely likely, but “inevitable”, that all the oil extracted would be refined and eventually undergo combustion, thereby releasing GHG emissions that would have a significant impact on the environment. 

Intervening steps between extraction and combustion away from the well site, such as refinement processes, did not break the causal chain. Similarly, the UKSC dismissed arguments that the combustion emissions were outside of the well site operator’s control, given that combustion emissions would only occur if oil were extracted. 

Relevance to other projects

In reaching its decision, the UKSC acknowledged concerns raised by the High Court about the implications for other projects and the risk of making the EIA process unduly onerous.

The UKSC considered, however, that such concerns were misplaced. Instead, it distinguished between the production of crude oil versus commodities such as iron or steel, which can be incorporated into many different types of end product – for instance, components in motor vehicles or aircraft. The court found that it would not be possible to determine the “likely” effects of these varied and indeterminate end products, and therefore that the findings in this case should not extend to such commodities. 

Dissenting views

Lord Sales (with whom Lord Richards agreed) gave a lengthy dissenting judgment. Lord Sales considered that whilst the legislation contemplates that planning permission decisions will often be taken by local or regional authorities, downstream emissions are a matter for central governments as part of national policy. It would therefore be constitutionally inappropriate for a local planning authority to assume practical decision-making authority based on its own views of downstream emissions.