UK Supreme Court sends signal against new oil and gas exploration
The UK’s Supreme Court has today decided that Scope 3, or downstream emissions, should be considered in the planning application of new oil and gas projects. This judgement is expected to have a significant impact on new oil and gas exploration.
Judges found that Surrey County Council had acted unlawfully by awarding planning permission for an oil production plant at Horse Hill in Surrey. The permission had been based on the environmental impact of Scope 1 and 2 emissions but had not factored in Scope 3 emissions, the climate impact of the oil being burned.
The case had been brought forward by environmental campaigner and former Surrey resident Sarah Finch, with the backing of environmental campaign groups such as Friends of the Earth.
The decision, which was won by a 3:2 majority, could set an important precedent for the permission of new oil and gas fields in the North Sea, as well as for the permission of a new coal mine in Cumbria.
With Scope 3 emissions to be considered in environmental impact assessments, authorities could become more cautious in backing new oil and gas licences.
The UK government handed out 24 new oil and gas licences for drilling projects in the North Sea at the beginning of this year. Key investors in these projects are Shell, BP, and Equinor, who all plan to expand their oil and gas production over the next few years.
This comes despite warnings by the International Energy Agency that no further expansion of oil and gas production capacity is required if the world is to meet its 1.5-degree target. Asset owners have long decried the lack of disclosure of Scope 3 emissions among major oil and gas firms, which account for between 80-90% of total emissions.
Oil producers maintain that the precise measurement of Scope 3 emissions remains a complex task and are reluctant to disclose them. But the UK Supreme Court took a different stance: “The majority of the Court considers this question to be one of causation to which, on the agreed facts, only one answer can reasonably be given. The emissions that will occur on combustion of the oil produced are ‘effects of the project’ because it is known with certainty that, if the project goes ahead, all the oil extracted from the ground will inevitably be burnt, thereby releasing greenhouse gases into the earth’s atmosphere in a quantity which can readily be estimated,” the court said.
Despite prominent investor objections, shareholders at this year’s Shell AGM overwhelmingly voted in favour of the oil firm’s new energy transition strategy, which foresees maintaining oil production levels steady within this decade.
