On 20 June 2024, the Supreme Court handed down its long-awaited judgment in R (on the application of Finch on behalf of the Weald Action Group) (Appellant) v Surrey County Council and others (Respondents) [2024] UKSC 20.

By a 3:2 majority, the Supreme Court held that the effects on climate of emissions caused by the combustion of fossil fuels extracted from a development must be included in an Environmental Impact Assessment (EIA) and therefore considered by a local authority when deciding whether to grant planning permission for that development.

Since the downstream emissions of a fossil fuel extraction development will be significantly greater than the direct emissions of the project, this means that local authorities will have to place weight on the wider climate effects of the project when considering whether to grant planning permission.

The ruling in Finch is therefore very likely to affect the arguments before the courts in upcoming planning cases – as well as potentially shaping the future development of fossil fuel extraction projects in the UK.

Background

The history of the case is discussed in our previous blog on the topic. As a summary, the claim was brought by Ms Sarah Finch, a former resident of Surrey, in respect of the development of an oil well and production facilities at Horse Hill, near Gatwick. Under the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 (EIA Regulations), EIAs, which are required for planning permission, must consider the “direct and indirect significant effects of the proposed development on […] land, soil, water, air and climate” (emphasis added). As per the EU Directive on EIAs,[1] which gave rise to the EIA Regulations, this requires consideration of the likely effects of a proposed development.

In 2019, Surrey County Council (SCC) accepted an EIA which considered only direct releases of greenhouse gas within the well site boundary over the lifetime of the project. Ms Finch challenged the SCC’s 2019 decision arguing that the EIA required consideration of the greenhouse gases which would be emitted as a result of the use of the refined oil product.

In 2020, the High Court held that there was no requirement for the EIA in this case to consider the environmental effects of the use of a product emanating from the development. In 2021, the Court of Appeal dismissed Ms Finch’s appeal, but noted that the question of whether the downstream emissions needed to be assessed as part of the EIA was one of fact and evaluative judgment for the planning authority. Ms Finch appealed to the Supreme Court.

Decision by the Supreme Court

By a 3:2 majority, the Supreme Court held that emissions from the combustion of oil products from the well would be part of the effects of the development, and that therefore the SCC was wrong to grant planning permission on the basis of an EIA which did not consider these downstream emissions.

The Court – in line with both lower courts – found that it was inevitable that oil produced from the site would be refined and would eventually be combusted. It distinguished the extraction and burning of fossil fuels from the process of manufacturing commodities (such as iron or steel), in which the environmental impacts due to the end use of the product would vary significantly. It also held that the downstream emissions would need to be considered in an EIA regardless of where the oil products were eventually burned.

The Court was unanimous in deciding that the Court of Appeal was incorrect to hold that whether to consider the downstream emissions of a development was a matter for the local authority, noting that this would lead to inconsistent application of the law.

Impact on ongoing cases

The need to include downstream emissions in EIAs may tip the balance for local authorities when deciding whether to grant planning permission for fossil fuel extraction projects. The significant difference in the volume of greenhouse gases which must be considered – and the corresponding impacts of those gases – will likely give significantly more weight to the consideration of the impact of the project on the climate.

The impact of Finch may be the subject of judicial discussion very soon. As mentioned in our previous blog, Finch is one of several cases in which campaigners have challenged planning permission granted for carbon-intensive developments in the UK.

On 16-18 July 2024, the High Court will hear a statutory review regarding the Secretary of State’s decision to approve planning permission for the development of the Woodhouse Colliery scheme, a proposed metallurgical coal mine in West Cumbria.[2]

The Secretary of State’s decision followed the approach adopted by the Court of Appeal in Finch, and considered that whether downstream emissions would need to be considered as part of an EIA was a question of fact and judgment for the relevant decision-maker. In that case, the Secretary of State decided that there was not a sufficient causal connection between the proposed development of the coal mine and the emissions caused by its use in a blast furnace to make steel for the emissions to be considered as part of the EIA.

In particular, the Secretary of State considered that the developer of the coal mine would not have sufficient knowledge or control as to the use of the coal in coking, including whether any greenhouse gas mitigation measures could be installed. He then went on to note that even if downstream emissions were considered, the use of coal from the project would overall be neutral or positive for the climate, since it would be a part of a substitute for the import of overseas steel.

It will be interesting to see whether, following Finch, the Court in West Cumbria finds that the Secretary of State should have considered downstream emissions. This may be an interesting test as to the degree of certainty required for downstream emissions to be considered under an EIA. It will also be interesting to see whether the Court considers how arguments on substitutability of fossil fuels from UK sources versus overseas sources should be factored into the decision-making process.

Planning permission, climate change and human rights – the approach of other jurisdictions

The issue of considering downstream emissions is complex, as reflected in the dissenting judgment in the Supreme Court and the variety of approaches taken in different jurisdictions.

As noted by the Supreme Court in Finch, the Norwegian courts have adopted an approach which reflects that taken by the UK Supreme Court.  The Norwegian Supreme Court has held that greenhouse gas emissions from possible combustion of fossil fuels from reserves which might be found during exploratory drilling was too uncertain to require inclusion in an EIA.[3] However, the District Court has subsequently held that EIAs should consider the downstream emissions of extraction projects.[4] Therefore, the degree of certainty of the emissions emanating from the project appears to be an important factor, which reflects the approach taken by the UK Supreme Court.  This is unsurprising, given that the relevant domestic legislation in each case is derived from EU law.

In contrast, other jurisdictions have adopted an approach of considering the materiality of emissions, and rights-based arguments. In Australia, the Federal Court recently ruled that the Minister for Environment had not erred in deciding that the approval of two coal mines would not substantially contribute to climate change.[5] This decision may be contrasted with the approach taken by the Queensland Land Court, which held that it was able to take scope 3 emissions of a coal mine (i.e. those caused by the combustion of the product) into account, and found on that basis that the impacts of climate change, including on human rights, meant that the coal mine developments should not be approved.[6] Likewise, in South Africa, a court granted an order prohibiting Shell from carrying out a seismic survey and exploratory drilling off the Eastern Cape coast, finding that Shell had failed to properly consult the claimants, and the proposed exploration was likely to infringe the claimants’ constitutional rights to a healthy environment and to the enjoyment of their cultural community.[7]

Therefore, while an EIA does not require consideration of the human rights impacts of a project, the development of human rights jurisprudence on climate change – such as the recent European Court of Human Rights in the KlimaSeniorinnen case, in which the Court held that Convention rights encompass the right to effective protection by the state from the serious adverse effects of climate change – may influence the development of future case law on planning permission in which climate change impacts may be substantial.

Comment

The Supreme Court ruling means that for fossil fuel extraction projects, where it is certain that the end products will be combusted, the emissions emanating from such combustion must be considered as part of the planning process. This will provide significant additional weight to the consideration of the impact of a proposed development on the climate.

The extent to which downstream emissions should be considered for other types of development may depend upon the degree of certainty that the use of the end product will lead to greenhouse gas emissions. Therefore, the development of a steel production plant would not require an assessment of downstream emissions, due to the uncertainty as to the use to which the steel would be put. It will be interesting to see how the courts deal with this issue in West Cumbria. Finally, where the limits to the planning regime are stretched, we may see rights-based arguments advanced, as has been done in other jurisdictions.

Author: Simon Bishop, Chrysanthi Bampali and Alex Cooper

Footnotes

[1] Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment. See also paragraphs [72]-[78] of the judgment of the Supreme Court in Finch.
[2] Friends of the Earth Ltd and South Lakeland Actions on Climate Change – Towards Transition v Secretary of State for Levelling Up, Housing and Communities, West Cumbria Mining Limited and Cumbria County Council.
[3] Nature and Youth Norway v The State of Norway Case No 20- 051052SIV-HRET.
[4] Greenpeace Nordic v The State of Norway, Case No 23-099330TVI-TOSL/05.
[5] Environment Council of Central Queensland Inc v Minister for the Environment and Water [2024] FCAFC 56. This decision has been appealed, with the appeal judgment currently reserved.
[6] Waratah Coal Pty Ltd v Youth Verdict Ltd & Ors (No 6) [2022] QLC 21.
[7] Sustaining the Wild Coast v Minister of Mineral Resources and Energy Case No.: 3491/2021.