CLIMATE LITIGATION: SCOTTISH COURT QUASHES CONSENTS FOR NORTH SEA OIL AND GAS FIELDS

The Court of Session in Scotland (Scotland’s supreme civil court) has quashed decisions by the previous UK Government to grant consent for the development of the Rosebank and Jackdaw oil and gas fields in the North Sea.

Key takeaways

The decision is the latest example of UK courts quashing public authority decisions approving fossil fuel projects for failing to take into account downstream (Scope 3) greenhouse gas emissions, following the UK Supreme Court’s landmark climate ligation judgment in R (Finch) v Surrey County Council last year. As a result, the North Sea Transition Authority (NSTA) and the UK Government will have to reconsider their decisions taking into account downstream emissions.

However, the court has suspended its quashing of the decisions until they have been reconsidered, enabling the developers, if they wish, to continue work on the projects – but not produce oil and gas – until the consents have been revisited. In doing so, the court has sought to balance the unlawfulness of the decisions with the need to appreciate commercial interests and the practicalities and costs involved in managing complex energy infrastructure projects.

This case and other similar cases since Finch highlight the uncertainties faced by complex energy and infrastructure projects, in particular fossil fuel projects, but also more widely due to the risks posed by changes in the law and long-running litigation challenges. 

The UK Government is seeking to address some of these uncertainties. New guidance from the Government is expected in spring 2025 on the approach to the assessment of downstream emissions in Environmental Impact Assessments (EIAs) following Finch (the consultation closed in January – see our blog post: Fuelling the Energy Transition: North Sea Oil & Gas, and Alternative Fuels). The Government is also targeting delays caused to complex infrastructure projects by unfounded legal challenges, which are currently allowed “three bites at the cherry” under the judicial review process (at paper permission stage, oral renewal hearing and appeal). In January, following an independent review, the Government announced its intention to overhaul judicial review challenges of Nationally Significant Infrastructure Projects. The proposed changes seek to streamline the judicial review process with the aim of speeding up completion of major infrastructure projects as part of the Government’s commitments to clean power and drive growth. Proposed changes include removing the paper permission stage and removing the right of appeal for cases deemed to be “totally without merit”. 

Background

The NSTA (then named the Oil and Gas Authority) granted consent for two significant oil and gas projects in the North Sea, Jackdaw and Rosebank, in 2022 and 2023 respectively. Those consents were approved by the Secretary of State. Two NGOs sought to challenge the decisions to grant and agree consent for the projects. 

Prior to the hearing, following the UK Supreme Court’s decision in Finch, all the parties agreed that the decisions were unlawful as the Environmental Impact Assessments (EIA) on which the decisions were based did not assess the effect of downstream emissions, i.e. the effect on the climate of the combustion of the oil and gas to be produced. 

The issue for the court was what remedy the court should grant in respect of the unlawful decisions. The court had to decide whether the decisions should be quashed, and therefore made again taking into account downstream emissions, or whether the decisions should stand, and the projects be allowed to proceed, despite the decisions being unlawful.

The appropriate remedy – the consents should be quashed

The court held that the consents should be quashed and therefore need to be taken again before the projects can proceed to extraction. There are differences between Scots law and English law in determining remedies for judicial review, but like English law, the Scottish courts have a wide discretion to award remedies depending on the circumstances of the case. In reaching its decision, the court placed weight on the following factors: 

• Public interest in authorities acting lawfully. The court considered that the error in decision-making was material. Had the decisions not been made unlawfully by failing to take account of downstream emissions, the decisions might have been different. The public interest in the rule of law and in authorities acting lawfully was a strong factor in favour of quashing the decisions. 
• Private interests of the public in respect of climate change. The court held that the private interests of the public weighed strongly in favour of the decisions being quashed. The effect of the burning of fossil fuels on climate change and individuals was now well recognised in law (see Finchand KlimaSeniorinnen). Individuals have an interest in the impact of the remedy (i.e. whether the consents for the projects are quashed) on their lives and in being able to contribute and have their views considered in the decision-making process. 
• Private interests of the developers. It was also necessary to consider the interests of the developers who have an obvious private interest in the projects going ahead, albeit the court considered these were outweighed by the public interest.
• Finch post-dated the consents. The law as stated by the Supreme Court in Finch also applied to decisions made before the Finch judgment. The mere fact that the judgment postdated the consents under challenge did not of itself justify a refusal to quash the decisions.
• Conduct of the parties. The developers took a commercial risk in deciding to proceed with the projects in the period between the granting of the consents and the Supreme Court’s judgment in Finch, rather than waiting until the law was made certain. That decision was one for the developers to make, but in the court’s view it did not justify quashing the decision. 
• Timing of re-consideration. There would be a delay before the decisions can be reconsidered because EIA decisions have been deferred pending publication of the new guidance on assessment of downstream emissions in EIAs (see above). The court accepted there was no consensus on how downstream emissions should be calculated and it was important therefore that the Government properly considers the issue. As there was good reason for the delay in reconsideration, it did not justify refusing to quash the consents. 
• Consequences if the projects do not go ahead. Arguments concerning the potential impact on UK energy security, jobs, the economy and the commercial interests of developers and others associated with the projects if the projects did not go ahead were not relevant to the question before the court. The question for the court was not whether the projects should go ahead, but whether the unlawful decisions should be retaken in a lawful manner. The potential consequences of a possible refusal of consent following reconsideration of the decisions did not justify the court preventing the reconsideration from taking place. 
• Public interest in inward investment to the UK. Whilst investors look for stability, predictability and certainty, the court considered that this did not mean the court should not quash the consents. Investors were entitled to certainty that decisions would be taken lawfully, and that the legal system would act impartially in ensuring the law is upheld.

Suspension of quashing order

Although the court decided the consents should be quashed, it considered it would be wrong and disproportionate for this to take effect immediately. Doing so would lead to significant disruption and costs to the projects were the consents later (re)granted. The court therefore suspended its quashing of the decisions until they have been reconsidered. The developers could therefore continue work on the projects – although the court ordered that no oil or gas could be extracted until consent has been (re)granted – or make the projects safe but then take no further action pending reconsideration. These were commercial decisions for the developers to take, taking account of the commercial risks involved. The quashing order would have prospective effect such that any works already undertaken or undertaken during the suspension would remain lawful.