June 21st, 2024 by James Goudie KC

Before planning permission can be granted for a development project which is likely to have significant impact on the environment legislation requires an EIA to be carried out.  In R (Finch) v Surrey County Council (2024) UKSC 20 the applicable legislation was contained in the Town and Country Planning (Environmental Impact Assessment) Regulations 2017, which requires an EIA to identify, describe and assess the likely “direct and indirect significant effects” of the project on the environment, including (among other factors) the impact on climate (for example, the nature and magnitude of greenhouse gas emissions).  The process of assessment must include public consultation.  The legislation does not prevent the planning authority from giving consent for a project that is likely to cause significant harm to the environment; but it requires the authority to reach a reasoned conclusion on the environmental impact and to take this conclusion into account in making its decision.

In this case a developer applied to Surrey County Council for planning permission to expand oil production from a well site at Horse Hill near Horley in Surrey.  The proposed project would involve the extraction of oil from six wells over a period of 20 years. The project comes within a category for which an EIA is compulsory (“Extraction of petroleum … for commercial purposes where the amount extracted exceeds 500 tonnes/day”).

The developer argued that, as regards the impact of the project on climate, the scope of the EIA should be confined to the direct releases of greenhouse gases from within the well site boundary during the lifetime of the project; and that the EIA need not include an assessment of the greenhouse gas emissions that would occur when the oil extract from the wells was ultimately burnt elsewhere as fuel. The council accepted this approach.  Its decision to grant planning permission for the project was therefore made without assessing or taking into account the emissions that will occur upon combustion of the oil produced.

The claimant, a local resident, applied for judicial review of the council’s decision.  She argued that the decision was unlawful because the EIA was required, but did not, include an assessment of the combustion emissions. By a three-to-two majority, the Supreme Court holds that the council’s decision was unlawful because the emissions that will occur when the oil produced is burnt as fuel are within the scope of the EIA required by law.

It is an agreed fact that, if the project goes ahead, it is not merely likely but inevitable that the oil produced from the well site will be refined and, as an end product, will eventually undergo combustion, and that combustion will produce greenhouse gas emissions.  It is not disputed that these emissions will have a significant impact on climate.  It is agreed that the amount of these emissions can be estimated using an established methodology; indeed, the council has provided such an estimate as part of its evidence in this case.  The issue is whether the combustion emissions constitute “direct or indirect … effects of the project” within the meaning of the EIA Direction and  2017 Regulations. If they are, they must be assessed as part of the EIA.

The Supreme Court is unanimous in rejecting the view that this question requires an evaluative judgment about whether there is a sufficient causal connection between the extraction of the oil and its eventual combustion, on which different planning authorities could reasonably take opposite views.  It is unreasonable to interpret the EIA Directive in a way that treats inconsistent answers to the question whether the combustion emissions are “effects of the project” as equally valid.

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 EIA Directive does not impose any geographical limit on the scope of the environmental effects of a project that must be assessed. The council was therefore wrong to confine the EIA in this case to emissions expected to occur at the project site.  It is in the very nature of “indirect” effects that the may occur away from the source.  Moreover, the impact of greenhouse gas emissions on climate does not depend on where the release occurs.  The process of refining crude oil does not alter its basic nature or intended use and cannot reasonably be regarded as breaking the causal connection between the extraction of the oil and its subsequent combustion. Raw materials such as steel can be put to many possible uses, and the view might reasonably be taken that no meaningful assessment or estimate can be made of what emissions will ultimately result from its use.  Oil is a very different commodity.  There is no element of conjecture about what will ultimately happen to the oil; refining the oil does not change it into a different type of object (unlike the incorporation of a part in a motor vehicle or aircraft); and a reasonable estimate can readily be made of the emissions that will occur upon its inevitable combustion.

An argument that national planning policy is relevant to the scope of the EIA required by the EIA Directive is also rejected. The UK’s national policy of encouraging domestic production of oil and gas is relevant to the decision of the planning authority whether to grant permission for the project. But it does not dispense with the requirement to assess the environmental impact of the project or justify limiting the scope of that assessment before the planning decision is taken. The purpose of the EIA is to ensure that, whatever the decision taken, it is taken with full knowledge and public awareness of the likely significant environmental consequences.

Consequently, the council’s failure to assess the effect on climate of the combustion of the oil that would be produced from the proposed well site means that its decision to grant planning permission for the project was unlawful.

There was a powerful dissent from Lord Sales.

Comments are closed.