With the new Labour government hitting the ground running with major energy and planning related policy announcements, we are examining some of the most important recent cases in the ESG and climate fields in a series of blogs.

R (on the application of Finch on behalf of the Weald Action Group) (Appellant) v Surrey County Council and others (Respondents)

The Supreme Court has recently handed down a landmark decision in the environmental law sphere, reflecting a significant step in the area of environmental impact assessments for proposed developments.

The case and its background

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. An environmental impact assessment (EIA), which is compulsory for this type of development, was carried out and planning permission was granted in 2019.

However, a local campaigner, Sarah Finch, applied for a judicial review of the decision to grant planning permission for the development. She argued that the EIA should have considered not just the emissions stemming from the construction of the wells, but also those arising from when the oil extracted is used as fuel – commonly referred to as downstream emissions.

Where an EIA is required for a project, the regulations require the identification, description and assessment of the likely “direct and indirect significant effects” of the project on the environment, including (among other factors) the impact on climate.

Based on the regulations, the Court held, by a majority of three to two, that the emissions that will occur when the oil extracted is burned as fuel are within the scope of the EIA required for the project. There was an “inevitable” link between the oil extraction project and the burning of the oil that would release greenhouse gases into the atmosphere, meaning that the emissions that would eventually occur are “effects of the project”. The Council’s decision to grant planning permission for the project was therefore unlawful.

Implications of the ruling

It's important to note that the Court did not rule that Surrey County Council should reject the proposal for new oil wells, simply that downstream emissions should have been accounted for in the EIA as an “effect of the project”.

The Court found that whether the burning of the oil was to be taken into account by the EIA as a downstream indirect effect of the project to be a question of causation. It found that it was known with certainty that, if the project goes ahead, all the oil extracted from the ground (3.3 million barrels over 20 years, in this case) will inevitably be burned, thereby releasing greenhouse gases into the earth’s atmosphere in a quantity which can be readily estimated.

The Court, on the agreed facts, determined that only one answer can reasonably be given: the emissions that will occur on combustion of the oil produced are “effects of the project”. It also reminded us that there is no geographical limit on the scope of the environmental effects of a project – the location of the downstream emissions was not relevant.

The Court did not specifically clarify the relevant test for causation. However, it did state that recognising that combustion emissions are effects of producing crude oil does not open the floodgates on what would constitute “indirect effects” of other projects.

There are valid and lawful reasons for an authority not to consider all downstream indirect effects of a project, such as the downstream effect being unquantifiable. Therefore, provided this can be done rationally, there are still potential limits to the downstream emissions that need to be taken into account in the context of an EIA. However, developers should ensure they are comfortable that the EIA covers downstream indirect effects of a project, provided that a causal link can be established between the project and those effects, particularly where there is an inevitability to them and they are quantifiable.

The Supreme Court’s majority judgment may have found it “plain” that the combustion of oil is an indirect effect of an oil production project for the purposes of EIA. However, the case went before two other courts who dismissed Sarah Finch’s claim, before the Supreme Court reached this conclusion by a three-to-two majority.

In the wider context of the trend towards climate change related challenges, rather than claims being taken directly against companies operating in the energy or industrial sectors, this case provides an example of the courts’ approach to proceedings brought against public decision-makers when they are considering applications where climate-related risks are to be weighed in the balance. We will be covering climate change litigation more thoroughly in the next blog in this series.

Get expert advice

Navigating EIAs can be complex, and this case demonstrates the increasing scope which may need to be considered when completing an EIA. If you have any queries on how this decision may impact upcoming projects, please contact our planning and environment team who will be able to assist you.

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