Fossil fuel projects and planning permission

In a ground-breaking decision handed down last week, the Supreme Court has ruled that the grant of planning permission for oil production in Surrey was unlawful for failing to assess the ‘downstream’ greenhouse gas (GHG) emissions that will inevitably arise from the combustion of the fuel, following refinement of the crude oil. Barristers at Cornerstone Barristers analyse the ruling.

The decision in Finch v Surrey County Council [2024] EWCA Civ 187 turned on the correct interpretation of the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 (“EIA Regulations”), in particular: the “direct and indirect significant effects of a project” on the climate. The central issue was whether, when considering an application for oil extraction at the Horse Hill Well Site for commercial production, the local planning authority should have required an assessment of the downstream or ‘scope 3’ GHG emissions resulting from the eventual use of the refined products of that oil.

In his majority judgment, Lord Leggatt (with whom Lord Kitchin and Lady Rose agreed) held that the concept of “the effects of a project” within the EIA Regulations is a question of causation (§65). In the present case of oil production, the Court noted that the causal connection plainly meets the “but for” legal test: i.e. but for the extraction of the oil, the oil would stay in the ground and so would not be burnt. However, on the agreed facts, the extraction of oil is not just a necessary condition of the burning of the fuel, it is also sufficient to bring about that result because of the guarantee that it will be refined and burnt – thereby displaying the strongest possible form of causal connection and much stronger than that required as a test of causation for most legal purposes (§80).

In reaching this conclusion, the Court dismissed the reasoning of the lower courts that intermediate steps (such as the refining process) could break the chain of causation (§§118, 134). As to the Court of Appeal majority ruling, which left the issue to decision-makers as a matter of fact and evaluative judgment, the Supreme Court stated that “it would be a recipe for unpredictable, inconsistent and arbitrary decision-making” (§133). Moreover, this inconsistency “would be all the more regrettable when issues relating to climate change and the extent to which disclosure of information about GHG emissions should be required are becoming more and more salient in policy-making and public debate” (§60).

The ruling emphasised the importance of public participation in environmental decision-making, which is an objective not only of the EIA Directive but also central to the Aarhus Convention (obligations under which have been codified by subsequent amendments to the EIA Directive). The Court identified two issues in relation to public participation, namely:  increasing the democratic legitimacy of environmental decision, and serving an educational function. As Lord Leggatt summarised: “You can only care about what you know about” (§21).

The Court also dealt with the relevance of national and international legislation and policy on climate and fossil fuels. As to national policy on petroleum extraction, the Court recognised that it must obviously be taken into account, but it does not follow that a planning authority “has to ignore [the] adverse effects on climate” (§150); and in any event, UK policy and legislation is irrelevant to the proper interpretation of the EIA Directive (§151).

The Court further dismissed arguments based on the transboundary nature of GHG emissions. The majority judgment emphasised that climate change “is a global problem precisely because there is no correlation between where GHGs are released and where climate change is felt” (§97). On a similar note, the Court firmly rejected the notion that the resulting GHG emissions are “outwith the control of the site operators”; to the contrary, the Court found that such emissions “are entirely within their control” in that they could choose not to extract the oil (§103).

Notably, and of relevance to future fossil fuel projects, the Court confirmed that: (i) general estimates of combustion emissions are feasible (§81); and (ii) leaving oil in the ground does not result in a corresponding increase in production elsewhere (§2). As for the Horse Hill proposal, the Court noted that the direct GHG emissions over the lifetime of the project had been described as having a “negligible” effect on the climate. By contrast, the Court considered that the downstream GHG emissions (which would have been nearly two orders of magnitude greater), “could not have been dismissed as “negligible” in that way” (§82).

The Supreme Court ruling will no doubt have significant consequences for future planning decisions concerning fossil fuel projects as well as other high carbon-emitting proposals.

The minority judgment (Lord Sales, with whom Lord Richards agreed) is at least as long as that of the majority. It contains a detailed review of the purpose and scheme of the EIA Directive, its text, and relevant case law. Like the majority, it did not support the “evaluative judgment” approach to the question at issue which had been taken by all three members of the Court of Appeal, and §§322-326 contain a useful rationale for this key conclusion.

However, taking that approach, Lord Sales concluded that Holgate J had been correct in his first instance judgment of the application for judicial review, and that the Council had acted lawfully when granting planning permission without the EIA having assessed downstream GHG impacts.

Six members of Cornerstone Climate were instructed in this case:

• Estelle Dehon KC and Ruchi Parekh acted on behalf of Sarah Finch and the Weald Action Group, instructed by Rowan Smith and Carol Day of Leigh Day Law, with Marc Willers KC (Garden Court Chambers).
• Harriet Townsend and Alex Williams acted for Surrey County Council, instructed by Helen Forbes.
• Nina Pindham acted for Friends of the Earth, one of the four parties intervening by way of written submissions, instructed by Katie de Kauwe and led by Paul Brown KC (Landmark Chambers).
• David Welsh acted for Greenpeace UK, another intervener, instructed by Jennifer Jack of Harper Macleod LLP (Edinburgh) and led by Ruth Crawford KC (Axiom Advocates) and Richard Harwood KC (39 Essex Chambers).

There were two additional respondents: the Secretary of State for Levelling Up, Housing and Communities; and Horse Hill Developments Limited. The interveners also included the Office for Environmental Protection, making use of its powers to intervene for the first time since it was established in 2021; and West Cumbria Mining Limited.