0
Overturning the Court of Appeal, a majority of the Supreme Court (Lord Leggatt, with whom Lord Kitchen and Lady Rose agreed, Lord Sales and Lord Richards dissenting) held that the emissions from the use of oil extracts from an oil well were indirect effects of the extraction of the oil, notwithstanding that the project was confined to oil extraction and did not include any refining process.
The majority and dissenting judgments are notable in that they reach opposite conclusions on not only the deciding issue but as a matter of detail on almost every component element which contributed to those conclusions. They have potentially far-reaching implications for the contents of environmental impact assessments given that the oil extracted cannot be used unless it undergoes further processing/refinement although the majority sought to make clear that this was specifically concerned with the nature of oil and its inevitable combustion.
In allowing the appeal, giving the judgment of the majority, Lord Leggatt held:
“84. From one point of view the distinction between “direct” and “indirect” effects does not matter, as both types of effect must be assessed in the EIA process. There is still, I think, some value in considering what these terms mean. No case law has been cited which has sought to define “direct” and “indirect” effects. A natural way to understand the distinction - and how it is commonly used in social sciences - is to define a direct effect of one event on another event as an effect which is not mediated by one or more variables. An indirect effect, by contrast, is one which depends on one or more variable intermediate factors that may alter the total effect observed: see eg J Pearl, “Direct and indirect effects” in Proceedings of the American Statistical Association, Joint Statistical Meetings (2005), pp 1572–1581.
85. On this definition combustion emissions are direct effects of the extraction of oil because they are almost entirely independent of any intermediate variables. To know that combustion emissions will occur and quantify them, there is no need to know anything about where the oil will go after it is extracted or what the oil will be used for or when or where it will be burnt. It is sufficient to know - as is known with virtual certainty - that the oil will be refined and ultimately used as fuel. There are no variables in the intervening events which will significantly alter the fact or amount of the combustion emissions or their impact on climate. So on this definition the combustion emissions are a direct effect of the activity of extracting the oil.
[Lord Leggatt considered the Commission’s 2013 Guidance on Integrating Climate Change and Biodiversity into Environmental Impact Assessment]
“91. The 2013 Guidance, at p 29, also provides a table of “examples of main climate change and biodiversity concerns to consider as part of EIA.” Under the heading “climate change mitigation” the table lists: “direct GHG emissions”; “indirect GHG emissions due to increased demand for energy”; and “indirect GHG emissions caused by any supporting activities or infrastructure that is directly linked to the implementation of the proposed project (eg transport …).” In the terminology of the GHG Protocol and IFRS S2, the first of these categories corresponds broadly to scope 1 GHG emissions, the second to scope 2 GHG emissions, and the third to certain types of scope 3 GHG emissions.
92. Doubtless the categories given as examples were chosen because they are likely to be relevant to many different types of project - unlike combustion emissions which arise as a consequence of projects for the extraction of fossil fuels. But there is no suggestion that the categories stated as examples are considered to be exhaustive of the circumstances in which GHG emissions can occur as indirect effects of a project. To the contrary, the 2013 Guidance states expressly that they are examples only, that the list “is not comprehensive”, that “the issues and impacts relevant to a particular EIA should be defined by the specific context of each project”, that “flexibility is therefore needed”, and that the table provided “should be used only as a starting point for discussion.” The examples given therefore cannot be read as somehow cutting down the definition of “indirect effects” given earlier in the 2013 Guidance. Applying that definition, the combustion emissions are “indirect effects” of the project in issue here.”
“102. The flaws in the reasons given by the developer and accepted by the council for limiting the scope of the assessment in this way are also in my view plain. The fact that the combustion emissions would emanate from activities beyond the well site boundary which were not themselves part of the project was not a valid reason to exclude them. An impact is not precluded from being an effect of a project by the fact that its immediate source is another activity that occurs away from the project site. As already discussed, it is in the very nature of “indirect” effects that they may occur as a result of a complex pathway involving intermediate activities away from the place where the project is located.
103. The associated reason given that GHG emissions beyond the well site boundary are “outwith the control of the site operators” (see para 36 above) was equally flawed. The combustion emissions are manifestly not outwith the control of the site operators. They are entirely within their control. If no oil is extracted, no combustion emissions will occur. Conversely, any extraction of oil by the site operators will in due course result in GHG emissions upon its inevitable combustion. It is true that the time and place at which the combustion takes place are not within the control of the site operators. But the effect of the combustion emissions on climate does not depend on when or where the combustion takes place. Those factors are irrelevant to the size and significance of the environmental impact.
104. One potential benefit of the EIA process is that it may sometimes result in the identification of ways in which the design of the project can be modified without undue detriment to its aims so as to avoid or reduce what would otherwise have been a significant adverse environmental effect of the project. The EIA Directive contains provisions specifically aimed at this. Thus, article 5(1)(c) states that the information provided by the developer in the environmental statement must include “a description of the features of the project and/or measures envisaged in order to avoid, prevent or reduce and, if possible, offset likely significant adverse effects on the environment”; see also Annex IV, para 7. And where development consent is granted, the decision to grant it must incorporate “a description of any features of the project and/or measures envisaged to avoid, prevent or reduce and, if possible, offset significant adverse effects on the environment”: see article 8a(1)(b). Member States must ensure that any such features or measures are implemented by the developer: article 8a(4).
105. In the case of oil extraction, there are no measures within the control of the developer which, if the project proceeds, would avoid or reduce the combustion emissions and their impact on climate. But that is not a reason to dispense with an EIA. Identifying mitigating measures, where they are available, may be a valuable result of the EIA process. But it is not its sole - or even its main - purpose. If there are no measures which could be taken to mitigate adverse environmental effects of a project, then this is itself something the decision-maker and the public need to know. The EIA process would not fulfil its essential purpose of ensuring that decisions likely to affect the environment are made on the basis of full information if the fact that significant adverse effects are unavoidable were treated as a reason not to identify and assess them.
Other environmental regimes
106. The further reason given by the developer and accepted by the council for confining the assessment to direct GHG emissions from sources within the well site boundary was that the council should not concern itself with emissions that will occur “downstream” when the oil produced from the wells is processed and used because such processes are regulated by other, non-planning regimes and the council “can assume that these regimes will operate effectively to avoid or mitigate the scope for material environmental harm” (see para 36 above).
107. Para 122 of the developer’s environmental statement, which made this argument, quoted from the National Planning Policy Framework (July 2018), para 183, which stated:
“The focus of planning policies and decisions should be on whether proposed development is an acceptable use of land, rather than the control of processes or emissions (where these are subject to separate pollution control regimes). Planning decisions should assume that these regimes will operate effectively. …”
Reference was also made in footnotes to para 122 to the National Planning Practice Guidance, Minerals, para 012, which was in similar terms, and to R (Frack Free Balcombe Residents Association) v West Sussex County Council [2014] EWHC 4108 (Admin). This case was cited for the proposition that a “local planning authority may consider that matters of regulatory control can be left to a statutory regulatory authority to consider.”
108. It was a clear legal error to regard this aspect of planning policy as a justification for limiting the scope of an EIA. An assumption made for planning purposes that non-planning regimes will operate effectively to avoid or mitigate significant environmental effects does not remove the obligation to identify and assess in the EIA the effects which the planning authority is assuming will be avoided or mitigated. This is clear from a line of authority referred to in the Frack Free Balcombe Residents Association case. In R (Lebus) v South Cambridgeshire District Council [2002] EWHC 2009 (Admin); [2003] Env LR 17, paras 41-46, Sullivan J held that it is an error of law to reason that no environmental statement is needed because, although a project would otherwise have significant effects on the environment, mitigation measures will render them insignificant. What is required in such a case is an environmental statement setting out the likely significant effects and the measures which can be taken to mitigate them; see also R (Champion) v North Norfolk District Council [2015] UKSC 52; [2015] 1 WLR 3710, paras 49-51. The same principle must apply in determining the scope of the assessment required where an environmental statement is carried out.
109. As pointed out in those cases, the requirement in the EIA Directive to describe “measures envisaged to avoid, prevent or reduce and, if possible, offset significant adverse effects on the environment” (see para 104 above) implies that the potentially significant environmental impacts of a development should be described together with the measures expected to avoid or reduce them. The public is thereby able to understand the assumption made and to comment on it.
110. In any case it does not appear that there are any separate pollution control or other non-planning regimes which could be relied on to avoid or reduce the combustion emissions which would be indirect effects of the project proposed here. No such regimes have been identified in these proceedings. Indeed, it follows from the agreed fact that it is inevitable that oil produced from the well site will be refined and will eventually undergo combustion, which will produce GHG emissions, that the combustion emissions are unavoidable if the project proceeds and no pollution control regime could be relied on to prevent or reduce them.”
In reaching these conclusions, and holding Surrey CC’s decision as unlawful, the decisions of the Court of Session (Inner House) in Greenpeace Ltd v Advocate General 2021 SLT 1303 and the Irish Supreme Court in An Taisce – The National Trust for Ireland v An Bord Pleanála (Kilkenny Cheese Ltd, notice Party) [2022] 2 IR 173, both of which had agreed with Holgate J’s judgment in Finch, were criticised and not followed. However, the decision of the Oslo District Court in Greenpeace Nordic v The State of Norway (represented by the Ministry of Petroleum and Energy), Case No 23-099330TVI-TOSL/05 was referred to with approval.
In a strong dissenting judgment, Lord Sales (with whom Lord Richards agreed) gave detailed reasons relating to the legislation and its purpose for disagreeing and endorsed the judgment of Holgate J. in the High Court as well as the judgments of the Court of Session in Greenpeace Ltd v Advocate General and the Irish Supreme Court in Kilkenny Cheese Ltd. Lord Sales considered that the legislative provisions focussed on the immediate effects of the project itself and considered the Commission Guidance in the context of the EIA Directive amendments:
“237. The text of the amendment Directive as proposed by the Commission in the 2012 Proposal was slightly modified in the 2014 Directive, as adopted. However, it clearly continued to reflect the policy objectives specified in the 2012 Proposal and the 2012 Impact Assessment. Recital (7) referred to the greater prominence of certain environmental issues, including climate change, which had become more important in policy making and should constitute “important elements in assessment and decision-making processes”. Recital (13) stated: “Climate change will continue to cause damage to the environment and compromise economic development. In this regard, it is appropriate to assess the impact of projects on climate (for example greenhouse gas emissions) and their vulnerability to climate change”. Neither the recitals to the 2014 Directive nor the text it introduced into the EIA Directive indicate that it was intended that all downstream or scope 3 greenhouse gas emissions should be included within the concept of “indirect effects” of projects for the purposes of the EIA Directive. As the 2012 Impact Assessment explained, authorities across Member States had not previously regarded them as “indirect effects” of projects “on … climate” within article 3(1) of the EIA Directive (according to the then version of the text of that provision, before the addition of the word “significant” by amendment by the 2014 Directive). The 2013 Guidance only referred to a limited class of emissions as “indirect effects” of projects. If it had been intended that the entirety of the very wide class of scope 3 emissions should also be so regarded, the amendments effected by the 2014 Directive would have made that clear. That would have been necessary in order to ensure a uniform and harmonised approach across Member States in relation to such a fundamental point. It would have constituted a major change of direction and focus for the EIA regime. Instead, as explained further below, the text of the EIA Directive as so amended focused on greenhouse gas emissions arising from the construction and operation of a project itself, together with possible measures for minimising and mitigating such emissions.
238. In 2017 the Commission issued new guidance entitled “Environmental Impact Assessment of Projects: Guidance on the preparation of the Environmental Impact Assessment Report (Directive 2011/92/EU as amended by 2014/52/EU)”. Under the heading “Legislative requirements and key considerations” the guidance states (p 38) that under Annex IV to the EIA Directive “the emphasis is placed on two distinct aspects of the climate change issue - climate change mitigation: this considers the impact the Project will have on climate change, through greenhouse gas emissions primarily, [and] climate change adaptation: this considers the vulnerability of the Project to future changes in the climate, and its capacity to adapt to the impacts of climate change, which may be uncertain”. So far as the former is concerned, therefore, the emphasis is on what can be done in the course of the planning consent procedure to modify the project to mitigate its effects in terms of greenhouse gas emissions. In relation to this, under the heading “Climate change mitigation: project impacts on climate change”, the guidance states (p 39) that the EIA should include an assessment of the direct greenhouse gas emissions of the project over its lifetime, “eg from on-site combustion of fossil fuels or energy use”, and of emissions “generated or avoided as a result of other activities encouraged by the Project (indirect impacts) eg transport infrastructure: increased or avoided carbon emissions associated with energy use for the operation of the Project; [and] commercial development: carbon emissions due to consumer trips to the commercial zone where the Project is located.” This confirms the Commission’s understanding that the relevant “indirect effects” of a project in relation to greenhouse gas emissions are those relating to the operation of the project itself. There is no reference to all downstream or scope 3 emissions, as one would have expected in this guidance if the Commission regarded these as falling within the scope of the EIA Directive. Instead, at p 38, the guidance referred back to the 2013 Guidance, which as noted above only referred to far more limited aspects of greenhouse gas emissions.”
Taking a firmly contrary position to the majority, Lord Sales considered other legislation which regulated oil and emissions. and pointed out that decisions concerning the use of oil and GHGs were outside the scope of local authority powers and considered that it would be “constitutionally inappropriate for a local planning authority to assume practical decision-making authority based on its own views regarding scope 3 or downstream emissions”:
“252. The EIA Directive contemplates that decisions on the grant of planning consent will often be taken by local or regional authorities, rather than national authorities: see article 2(2) and the review in the 2012 Impact Assessment (paras 234-235 above). The procedures and rules laid down in the Directive are intended to be appropriate for decision-making at local or regional level by such authorities.
253. This is an important point. As explained above, scope 3 or downstream greenhouse gas emissions are addressed by central governments at the level of national policy. That is the general position for all Member States, and the UK. Decisions regarding the distribution of greenhouse gas emissions between different sectors of the economy, the striking of a balance between promotion of national economic objectives and reduction of greenhouse gas emissions in various sectors and the rate of transition sector by sector towards the achievement of the 2050 net zero target are all matters of national policy to be determined by central Government.
254. The same is true for debates with other states regarding the methodology for accounting for scope 3 greenhouse gas emissions, where these emissions may well occur in states other than the state where emissions which are closely associated with an originator activity arise (such as scope 1 and, typically, scope 2 emissions). For example, oil extracted at the Site may be transported to be refined in another state, and the fuel so produced may be transported to be used by motor vehicles in other states. Which states should have responsibility pursuant to the Paris Agreement and other international initiatives for accounting in terms of their national carbon figures for greenhouse gas emissions arising from the production chain running from extraction of minerals through refinement (in this case) or the manufacture of products, to the end use of the refined fuel or manufactured products, and the methodology to be used to identify and allocate such emissions, are matters for international discussion and agreement between states.
255. These are all “big picture” issues which a local planning authority such as the Council is simply not in a position to address in any sensible way.
256. Further, it would be constitutionally inappropriate for a local planning authority to assume practical decision-making authority based on its own views regarding scope 3 or downstream emissions and how these should be addressed in a manner which would potentially be in conflict with central Government decision-making and its ability to set national policy. This is true in relation to the UK and in relation to EU Member States as a whole, especially in light of the international and EU frameworks set out above according to which carbon budgets and carbon reduction policies are set at the national level. The EIA Directive as amended by the 2014 Directive was not intended to cut across this basic decision-making architecture in relation to meeting the challenge of climate change.
257. The information to be provided in the EIA process pursuant to the EIA Directive is intended to inform the decision whether to grant development consent for a project, and if so on what conditions, in a way that enables the decision-making authority - typically a local authority - to engage in practical decision-making within the remit of its own competence under existing procedures for development consent (see article 2(2) of the EIA Directive, para 220 above). In doing that it should decide whether a particular project is in accordance with national policy (for which purpose the NPPF and nPPG have been promulgated by the central Government) and consider whether there are appropriate adjustments which can be made to the project to mitigate its environmental impacts, including to reduce the direct and indirect greenhouse gas emissions associated with it. The EIA process is intended to furnish information to enable the planning authority to exercise its judgment about such matters, not to create some general databank about possible downstream or scope 3 effects which could not bear on what the planning authority has to do. As was observed in the judgment of the CJEU in Brussels Hoofdstedelijk Gewest v Vlaams Gewest (Case C-275/09) [2011] Env LR 26 (“Brussels Airport”) at para 25, article 2(1) of the 1985 Directive (now in the EIA Directive) “does not … require that any project likely to have a significant effect on the environment be made subject to the environmental impact assessment provided for in that Directive, but only those referred to in Annexes I and II to that Directive”.
258. The fact that the EIA Directive is directed towards regulating practical decision-making in this way is generally apparent from the scheme of the Directive and the exercise of judgment by a planning authority which it contemplates, and is also clear from recital (22) (para 216 above) which explains that the Directive does not apply in relation to specific acts of national legislation because the objective of supplying information relevant to the decision is “achieved through the legislative process”. It is no part of the object of the EIA Directive to generate information which does not have a direct and practical bearing on the matters to be decided by the decision-making authority. It is difficult to see what, in practical terms, a local planning authority is supposed to do with general information about downstream or scope 3 emissions other than to say that in its opinion they are so great that the project ought not to proceed at all and to refuse planning consent on that basis. But that would constitute unjustified disruption of the proper decision-making hierarchy contemplated by the EIA Directive, since in effect it would involve the local planning authority second guessing or supplanting the decision-making authority of the national Government regarding the appropriate reaction to the existence of downstream or scope 3 greenhouse gas emissions.”
He added that the Appellant’s approach to EIA would lead to “incoherence”:
“262. Also, to construe the EIA Directive as requiring this would lead to incoherence. The decision-making processes by authorities deciding on each separate project are not integrated, and so would have a tendency to cut across each other on a potentially determinative issue as is alleged to arise here if each authority made its own assessment of the extent and significance of the same set of greenhouse gas emissions for the project on which it had to decide; all the more so where the projects might be in different Member States. The authority carrying out an EIA in relation to the refinery project, which clearly has the authority under the EIA Directive to determine such matters, might decide that the direct and indirect greenhouse gas emissions of the refinery could be limited or mitigated in an acceptable way (including by having regard to whatever national policy was applicable in that Member State). But the authority carrying out an EIA in relation to the oil well might reach different conclusions about that (and might not give weight to the national policy of the different Member State of the refinery). The EIA Directive has no mechanism for resolving this sort of difference of view, nor for allocating decision-making authority in relation to such matters, other than by maintaining a focus on the particular project in question and greenhouse gas emissions associated with that project.
263. On the other hand, the relevant refinery might already exist, so that no EIA obligation arises in relation to it under the EIA Directive. In such a case it is difficult to see why the EIA in relation to the oil well should extend to cover the greenhouse gas emissions associated with the operation of a refinery which is not subject to the EIA regime. It would be odd to construe the Directive as imposing indirectly, by the back door, an obligation on the authority considering an EIA for the oil well project (ie a different project, possibly in a different Member State) to assess the greenhouse gas emissions of a refinery outside the regime altogether as part of that authority’s EIA responsibilities in respect of the oil well project.”
He concluded:
“327. It follows from the discussion above that I consider that Holgate J was right to approach the issue regarding the application of the EIA Directive in this case as a matter determined directly by a proper interpretation of the Directive as a matter of law, rather than as determined by an assessment of whether the Council was rational or not in deciding that the downstream greenhouse gas emissions relied on by the appellant were not “indirect effects” of the oil well project at the Site. If the Council had assessed, to the contrary, that they were “indirect effects” of that project, requiring consideration as part of the EIA, it would have erred in law. On a fundamental issue like this, there was only one proper answer that could lawfully and rationally be given when applying the EIA Directive according to its terms. This was the approach which Mr Richard Moules KC, for the Secretary of State, endorsed at the hearing in this court. I agree with his submission”
Almost as a footnote to his dissenting conclusions, Lord Sales sounded a word of warning about the use of EIA as urged by the Appellant and accepted by the majority:
“332. In relation to the attempt in Kilkenny Cheese and in the present case to enlist the EIA Directive in the worthy cause of combating climate change, by seeking to press it into service in relation to requiring EIA in respect of downstream or scope 3 greenhouse gas emissions, it is relevant to bear in mind the cautionary words of Lord Bingham of Cornhill in Brown v Stott [2003] 1 AC 681, 703, quoting from Hamlet in relation to the European Convention on Human Rights:
“The Convention is concerned with rights and freedoms which are of real importance in a modern democracy governed by the rule of law. It does not, as is sometimes mistakenly thought, offer relief from ‘The heart-ache and the thousand natural shocks That flesh is heir to.’”.
As Lord Bingham pointed out, that Convention had to be interpreted according to its terms, not in an effort to produce a remedy for every problem which might be identified in a particular situation. So, in the present context, the EIA Directive, interpreted according to its terms, has a valuable role to play in relation to mitigating greenhouse gas emissions associated with projects for which planning permission is sought, but it should not be given an artificially wide interpretation to bring all downstream and scope 3 emissions within its ambit as well. That has not been stipulated in the text of the EIA Directive, is not in line with its purpose and would distort its intended scheme.
333. In Brussels Airport, the CJEU observed (para 29) that “a purposive interpretation of the Directive [in that case the 1985 Directive, now the EIA Directive] cannot … disregard the clearly expressed intention of the legislature”. In my view, in the present case both the clearly expressed intention in the text of the EIA Directive and a purposive interpretation of that Directive point to the same result.”
The judgment may be accessed here.
The press coverage on the case may be found on Planning, BBC News, The Telegraph, The Planner and The Times.
David Elvin KC and Matthew Fraser appeared on behalf of the developer, Horse Hill Developments (UK Oil and Gas).
Richard Moules KC and Nick Grant appeared on behalf of the Secretary of State.
Paul Brown KC provided written submissions on behalf of the Friends of the Earth.
