Supreme Court decision defines scope of EIA around fossil fuel ’indirect effects’

Nick McDonald, planning law expert at Pinsent Masons, said: “This judgment has now focussed what the crux of the assessment of indirect effects should be. The Supreme Court has ruled that where there is an 'inevitable causal link' between the development and emissions, the application must assess that effect.”  

The judgment, R (on the application of Finch on behalf of the Weald Action Group) v Surrey County Council and Others(101 pages / 573 KB) clarifies the scope of EIAs and whether they must assess downstream, ‘Scope 3’ greenhouse gas emissions produced from extracted oil and other fossil fuel development. 

Matt Fox, energy infrastructure expert at Pinsent Masons, said “The focus of this judgment is twofold: the EIA Directive and Regulations focus on likely significant effects, and from that, the ability to prove an inevitable causation between a development and the claimed indirect effect.”

In this case, it was determined that it was ‘inevitable’ that the oil extracted would lead to the combustion of the oil and release of greenhouse gases into the atmosphere. Hence, the applicant should provide, in their EIA, an assessment of the greenhouse gas emissions of the development both within the redline boundary footprint of the development, and the end product once the extracted oil is refined and then burned.

This case arose from a planning permission granted by Surrey County Council to Horse Hill Developments Ltd for the expansion of oil production at a site near Horley in Surrey. The development, which would involve the extraction of oil from six wells over 20 years, was challenged by a local resident, acting on behalf of Weald Action Group. The resident argued that the council’s decision was unlawful as it did not consider the downstream greenhouse gas emissions that may follow the oil extraction.

Before planning permission is granted, the Town and Country Planning(Environmental Impact Assessment) Regulations 2017(72 pages / 700 KB), which implemented the EU EIA Directive in the UK, requires an EIA to be carried out to determine the potential environmental impact of a planned development. The assessment must identify, describe and assess the likely “direct and indirect significant effects” of a project on the environment, such as the nature and magnitude of greenhouse gas emissions.

Planning authorities are not required to refuse development applications that may have a significant impact on the environment, but they must reach a reasoned conclusion and take any harm into account when allowing or denying planning permission. Significant adverse environmental effects therefore weigh negatively in the balancing exercise a decision-maker must carry out, in determining such applications. 

The High Court and Court of Appeal previously dismissed this argument and held that the combustion emissions were not within the legal scope of the EIA Directive and the 2017 Regulations. However, the Supreme Court has now overturned both decisions, finding that such downstream emissions may be indirect effects of a project that therefore fall to be assessed as part of an EIA and taken into account in deciding whether to grant permission. 

The judgment highlights that greenhouse gas emissions are transboundary, and the fact that intervening steps between oil extraction and oil combustion may happen in a number of countries does not mean that the effect should not be assessed. The Supreme Court concluded that even if there may be several uncertain steps between a development and an effect, it does not mean that this future impact does not need to be assessed. Instead, the question is simply whether there is a clear inexorable causal path from development to effect. 

Imogen Dewar, energy consenting expert at Pinsent Masons, said: “The judgment draws a distinction between fossil fuel developments and other types of projects where the relationship between the cause and effect is less clear. However, the crucial question that remains to be answered in each case is how to apply this ‘inevitable causation’ approach to other forms of energy and infrastructure development”. Dewar also noted that “the indirect effects now more likely to be within the scope of an EIA may be beneficial, as may be the case for a facility producing a product which will decarbonise others’ operations”.