In June, the Supreme Court handed down judgement in the case of R (Finch) V Surrey County Council. The case was a question of whether local councils had to consider ‘downstream emissions’ when making decisions about whether to approve planning applications. The ruling in favour of Finch has significant implications for lawyers, developers and for businesses alike.
Background
The case arose when Finch brought a claim against Surrey County Council for having authorised an oil project which would have harmful environmental consequences. The oil project in question was set to generate 3.3 million tonnes of oil which, when burnt for energy, would release enormous quantities of deadly greenhouse gases into the atmosphere. The project would have adverse consequences for both planet and people, but it passed the council’s Environmental Impact Assessment and was given the go-ahead. Finch argued that this should not have been the case.
The reason for the project passing the Environmental Impact Assessment, despite its obvious enormous detrimental environmental impact, was because the EIA did not consider the significant quantities of greenhouse gases released from burning the oil, and therefore the environmental impact assessment showed the project as significantly less harmful to the environment than it was. The emissions from burning the oil are classed as ‘scope three’ emissions; emissions which are ‘indirect’ and occur in the value chain of the company. The debate which unfolded was therefore a nuanced consideration of the scope and responsibility of environmental impact assessments, and of local councils and developers – whether they should account for ‘scope three’ emissions when assessing the environmental impact and viability of proposed projects.
The Case
The developer maintained their decision was based on a consideration of the planning authority’s responsibility and control. They argued that oil refinement processes are regulated elsewhere, and that the planning authority can assume that these regimes will operate effectively to avoid or mitigate the scope for material environmental harm, and therefore it was not for the planning authority to take on this responsibility. Finch complained that the Council did not comply with the obligations imposed by the EIA Directive and the 2017 Regulations because it failed to account for emissions which would necessarily be produced by the project. The Court therefore had to determine whether downstream emissions constituted material which should have been assessed during the EIA.
To do this, they looked to 2022’s National Trust for Ireland v Kilkenny Cheese ltd case as a precedent. Kilkenny also considered the scope of an environmental impact assessment in granting planning permission for an environmentally harmful operation (here farming cows), to determine whether indirect emissions should count. In this case, which also considered the scope of an environmental impact assessment in granting planning permission for a carbon intensive operation (here farming cows to take dairy products), the Court recognised that indirect effects of a project “where the causal connection between certain off-site activities and the operation and construction of the project itself is demonstrably strong and unbreakable” should be measured and assessed.
However, in the case of Kilkenny, the Court concluded “that these effects are so remote from the present project that they cannot realistically be regarded as falling within the scope of Article 3(1)” [of the Climate Action and Low Carbon Development Act 2021, which governs Irish courts]. When applied to the case of Finch v Surrey, it was agreed that the emissions from burning the oil were in fact so inextricably intertwined with the oil drilling so as to be an ‘inevitability’. The causal connection between the off-site activities and the respective emissions generated, and the operation of the project itself, was thus demonstrably stronger than in the case of Kilkenny Cheese. As such the court was able to apply the Kilkenny precedent, thereby making Surrey an example of a case where downstream, scope 3 emissions should have been included in the EIA.
Impact
The decision in Finch could have a significant impact on people and the planet. First, it demonstrates how the law can prevent ecocide even when it has not yet become a crime (Vanuatu, Fiji and Samoa have just this week submitted a proposal to the International Criminal Court to amend the Rome Statute to include ecocide as an international crime). One of the reasons it has been difficult to hold carbon majors to account for their emissions later down the line (at the damages and deaths stage) is because it is so challenging to prove a causal link between emissions and outcome; it has so far proven impossible to prove causation between a specific emission and a specific consequence. This is because once emissions from one individual source are released into the atmosphere, they all mix with those emissions from other sources, and it becomes very difficult to match up any one specific consequence with any one specific polluter. Finch is therefore significant for demonstrating the ways in which existing laws can be used preventatively, lining up companies and councils with their impacts and responsibilities in the first instance. This ruling recently led the Secretary of State to support a Friends of the Earth claim to quash a controversial coal mine in Whitehaven for its downstream impacts. Moreover, if this ruling will be applied retrospectively, there could be significant implications for existing and agreed fossil fuel infrastructure; in the case of the recently issued North Sea oil and gas licences, for example.
For developers, there is now pressure to undertake more extensive assessments than a project’s immediate impact to meet environmental responsibilities. Seen alongside legislation clamping down on companies’ responsibilities, such as the Corporate Due Diligence Directive, obligations and penalties are coming down increasingly heavily upon developers, lawyers, governments and companies. It has never been so important to ensure environmental compliance, from any point of view, and our actions today may be judged by the ever-evolving laws of tomorrow.