The Supreme Court handed down a groundbreaking judgement which establishes that scope 3 emissions should also be assessed.
Background:
The case concerns Surrey County Council’s (SCC) 2019 decision to grant planning permission to a company, Horse Hill Developments Ltd, to expand oil production from the Horse Hill site. Horse Hill Development Ltd applied to retain and extend the existing well site (comprising two wells) and drill four new wells over 25 years. The developer issued an environmental statement which included an assessment of the direct greenhouse gas (GHG) emissions associated with the project but did not assess the emissions that would subsequently be produced as a result of using the product (scope 3 emissions). Sarah Finch argued that the Council failed to consider those emissions and thus the planning permission was void.
The case was dismissed by the High Court. The Court of Appeal (CoA) ruled that the decision to grant planning permission without the Environmental Impact Assessment (EIA) was lawful. The claimant appealed to the Supreme Court.
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.
Decision:
The Court decided, by a majority of 3-2 (Lord Sales and Lord Richards dissenting), to allow the appeal as the Council’s decision was unlawful and must be quashed.
The decision relates to the correct interpretation of the Town and Country Planning (EIA) Regulations 2017, in particular: the “direct and indirect significant effects of a project” on the climate. Lord Leggatt made clear that the “effects of a project” was a question of causation. In this case, the ‘but for’ test was met as unless the oil was extracted, the oil would stay underground and not burn. The parties all agreed that it was not merely likely, but inevitable, that the oil produced at the site would be refined, combusted, and result in GHG emissions. The Court considered that this brought about “the strongest form of causal connection”, such that downstream emissions were plainly “effects of a project” to extract oil.
The Court did not agree with the lower courts that the intermediate steps – such as the refining process – could break the causal chain. Such a conclusion would “be a recipe for unpredictable, inconsistent and arbitrary decision-making”. The Court also addressed the argument made in front of lower courts regarding other forms of raw materials. The Court made a distinction between raw materials such as steel and crude oil.
Moreover, the EIA Directive does not set any geographical boundaries on the extent of a project’s environmental effects that need to be evaluated. Hence, the Council was wrong in limiting the EIA to only those emissions anticipated to happen at the project site.
The argument that national planning policy encourages domestic energy production and so is relevant to the scope of the EIA Directive was also rejected.
Implications:
This groundbreaking decision will have a major impact on the grant of planning permission (at least for oil production) as councils will now be obliged to assess ‘downstream’ GHG emissions. The Court acknowledges that the legislation does not prevent the Council from authorising projects which can cause significant harm to the environment, but it requires them to give such consent with the “full knowledge of the environmental cost.”
Downstream GHG emissions are part of the assessment and need to be considered, specifically in some industries which are prone to creating such gas. Further cases on this issue are foreseeable.