European Court Finds That Scope 3 Emissions Must Be Assessed Before Approval Of Oil And Gas Projects

Last month, the European Free Trade Association (EFTA) Court issued an Advisory Opinion in The Norwegian State v Greenpeace Nordic, Nature and Youth Norway declaring that under EU/EEA law, oil and gas projects must not be approved without first assessing their greenhouse gas (GHG) emissions, including Scope 3 emissions. 

Key takeaways

• Environmental Impact Assessments (EIAs) for future oil and gas projects in EFTA countries - Norway, Iceland and Lichtenstein - will need to include Scope 3 emissions (being those emissions generated from combustion of the extracted fossil fuels sold to third parties) prior to development consent being granted.
   
• It is possible that environmental groups may also seek to rely on the decision to challenge previously approved projects if the EIAs on which development consent was granted did not include Scope 3 emissions, although the EFTA Court considered it would be possible for a defective EIA to be remedied retroactively while a project is under way or after it has been completed, provided that certain requirements are met.
   
• The EFTA Court’s Advisory Opinion is binding on the courts of EFTA member states and could have significant implications for fossil fuel projects in those countries, particularly in Norway as an important exporter of oil and gas.
   
• The EFTA Court’s consideration of EU law and the close relationship between EU and EEA law means that the Advisory Opinion could also have important implications for the approval of fossil fuel projects across Europe.  
   
• The Advisory Opinion builds on a growing body of decisions from national courts on the requirement to include Scope 3 emissions in EIAs. These include a string of judicial review challenges to approvals for UK fossil fuel projects (based on similar EU-derived rules), notably the landmark 2024 decision by the UK Supreme Court in R(Finch) v Surrey County Council (see our blog post UK Supreme Court Delivers Landmark Decision on Downstream (Scope 3) Emissions – R(Finch) V Surrey County Council) among others (see for example, Climate Litigation: Scottish Court Quashes Consents For North Sea Oil And Gas Fields). As a result, the UK Government and public authorities are having to rethink the level of climate-related information necessary for decisions on fossil fuel projects, and has led to the UK Government issuing new guidance in June for offshore oil and gas projects. We may see a similar story in other European jurisdictions as a result of the EFTA Court’s Advisory Opinion. 

Background 

In 2023, two environmental groups issued legal proceedings in the Oslo District Court against the Norwegian government’s decision to approve three oil and gas projects in the North Sea. The Oslo District Court found in favour of the environmental groups, holding that the approvals were unlawful under Norwegian law and EEA law because the EIAs that were conducted as part of the approval process did not consider Scope 3 emissions. The Norwegian government appealed. The Borgarting Court of Appeal (a Norwegian Appeals Court) sought an Advisory Opinion from the EFTA Court^[1] on how to interpret the EU EIA Directive (2011/92/EU) (as amended), including Article 3(1) which provides that EIAs “shall identify, describe and assess in an appropriate manner…the direct and indirect effects of a project…” on identified factors including the climate. 

 The EFTA Court’s Advisory Opinion

 The EFTA Court found that:  

• GHG emissions that would be released from the combustion of oil and gas extracted as part of a project falling within the scope of the EIA Directive and then sold to third parties constitute “effects” of that project within the meaning of Article 3(1) of the Directive. 
   
• EEA national courts are required under the principle of cooperation in Article 3 of the EEA Agreement, to the extent possible under national law, to eliminate the unlawful consequences of a failure to carry out an EIA required under the EIA Directive. However, the EFTA Court considered that this requirement does not preclude remedying this by conducting an EIA while the project is under way or after it has been completed, provided that:
  
  
  • National rules allowing for that regularisation do not enable the relevant parties to circumvent or to dispense with applying EEA law; and 
  • Any such EIA is not conducted solely in respect of the project’s future environmental impact but must also assess its environmental impact since the time of completion of that project. 

 A national court may not retroactively dispense with the obligation under Article 3(1) of the EIA Directive to assess the effects of a project on the environment. This is the case even where a court finds that the procedural failure to comply with the EIA Directive did not influence the outcome of the decision to grant development consent.

The appeal in the underlying Norwegian proceedings is due to be heard by the Norwegian Appeals Court in September, which will consider the case in light of the EFTA Court’s Advisory Opinion. The Appeals Court will also need to reconsider its separate decision to lift a temporary injunction issued by the Oslo District Court suspending activity on the projects after the Norwegian Supreme Court held in April that the Appeals Court had misinterpreted the relevant law.

^[1] The EFTA Court is the supranational court responsible for ensuring that EFTA member states (non-EU states that participate in the EU’s internal market) comply with EU/EEA law.