Failure by council to consider downstream greenhouse gas emissions when granting oil well planning permission was unlawful, Supreme Court finds

Surrey County Council's decision to grant planning permission for an onshore oil drilling project was unlawful for failing to consider the downstream greenhouse gas emissions that will occur from the eventual use of the oil as fuel, the Supreme Court has ruled.

The Supreme Court justices allowed the appeal in Finch (Weald Action Group), R. (on the application of) v Surrey County Council & Ors [2024] UKSC 20 by a three-to-two majority.

Under the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 (the 2017 Regulations), which implemented European Union Directive 92/11/EU (the EIA Directive) in the UK, a development likely to have significant effects on the environment must be subject to an environmental impact assessment (EIA) ahead of planning permission.

Surrey granted permission in September 2019 for the expansion of the oil well near Horley, having conducted an EIA ahead of the decision.

The council decided that the EIA did not need to include an assessment of the greenhouse gas (GHG) emissions that would occur when the oil extracted from the wells was burnt elsewhere as fuel.

It only considered the site's direct releases of greenhouse gases during the lifetime of the project.

Local resident Sarah Finch, who represents the Weald Action Group, consequently launched a judicial review claim, arguing that Surrey did not comply with the EIA Directive and the 2017 Regulations because it failed to assess the combustion emissions that will result when the oil is later used as fuel.

Her claim was dismissed by the High Court, which held that downstream emissions could not, as a matter of law, be an effect of the development for the purposes of an EIA.

The Court of Appeal also dismissed her appeal, finding that whether the downstream greenhouse gas emissions were or were not to be regarded as indirect effects of the project was a question of judgment for the council.

In her appeal to the Supreme Court, Finch advanced grounds arguing that the Court of Appeal was wrong to:

• hold that downstream GHG emissions were not indirect effects of the development;
• hold that EIA is "project-centric" and exclude downstream GHG emissions from being indirect effects because the use of products generated by refinement of oil "was not part of the project";
• find compliance with the EIA Regulations entirely a matter of "planning judgment" even if assessment of an indirect effect is wholly absent;
• accept that downstream GHG emissions were a material consideration for the planning decision but were not indirect environmental effects.

Lord Leggatt, with whom Lord Kitchin and Lady Rose agreed, allowed the appeal, finding: "The council's decision to grant planning permission for this project to extract petroleum was unlawful because (i) the EIA for the project failed to assess the effect on climate of the combustion of the oil to be produced, and (ii) the reasons for disregarding this effect were flawed."

Lord Leggatt noted that it was an agreed fact that if the project goes ahead, it is inevitable that the oil produced from the well would be refined and eventually undergo combustion, producing greenhouse gas emissions.

It was also agreed that the amount of the emissions could be estimated using an established methodology.

The issue was whether the emissions constituted a 'direct' or 'indirect' effect of the project within the meaning of the EIA Directive and 2017 Regulations.

Lord Leggatt noted that in the view of the Court of Appeal on whether the combustion emissions were "indirect effects" of the project "depended on an evaluative judgment as to whether, given these intermediate events, there was a 'sufficient causal connection' between the extraction of the oil and its eventual combustion".

However, the Supreme Court justice rejected this "intolerably vague" approach, finding that it is "unclear how the decision-making authority is supposed to judge whether the existence or nature of the intervening stages between the extraction of the oil and the ultimate generation of emissions is such as to render the connection between them insufficiently close".

He said: "Is the number of intervening stages supposed in itself to be important? Does the nature of these stages matter and, if so, how? Is the geographical distance between the project site and the places where the GHG emissions will take place supposed to be a relevant consideration and, if so, why? What else, if anything, would be relevant in making a judgment that there was or was not a 'sufficient causal connection'?

"Without any criteria to answer these questions, developers and decision-making authorities are left completely adrift."

He also said that the fact that there is a series of intervening stages between the extraction of the oil and the ultimate generation of emissions "does not itself provide any rational basis for denying that the two are causally linked".

"If there is a clear and inexorable causal path from event X to event Y, then Y is an effect of X," he said.

Lord Leggatt also concluded that the EIA does not impose a geographical limit on the scope of the environmental effects of a project, meaning the council was wrong to confine the EIA to emissions expected to occur on the site.

It also went on to reject an argument from the Court of Appeal that the emissions occurring on combustion could not be regarded as effects of the project because what is burnt as fuel will not be the crude oil produced from the well site but an end product made at a separate facility where the oil will be refined.

Lord Leggatt reached this conclusion because there was no conjecture about how the oil would be used, unlike materials extracted in a steel plant, for instance, which could be used in a host of different products.

The Supreme Court judge also rejected an argument that relied on a paragraph in the 2019 National Planning Policy Framework (NPPF) that stated: "When determining planning applications, great weight should be given to the benefits of mineral extraction, including to the economy."

However, Lord Leggatt found that the fact that a decision to grant development consent for a particular project is dictated by national policy "does not dispense with the obligation to conduct an EIA; nor does it justify limiting the scope of the EIA".

Lord Sales offered a dissenting opinion, with which Lord Richards agreed.

Lord Sales said he would dismiss the appeal, concluding that: "In the present context, the EIA Directive, interpreted according to its terms, has a valuable role to play in relation to mitigating greenhouse gas emissions associated with projects for which planning permission is sought, but it should not be given an artificially wide interpretation to bring all downstream and scope 3 emissions within its ambit as well.

"That has not been stipulated in the text of the EIA Directive, is not in line with its purpose and would distort its intended scheme."

Adam Carey