These challenges concern the legality of the following decisions, all of which relate to the licensing of North Sea oil.
• On Sep. 7, 2022, the UK government adopted its non-statutory Offshore Energy Plan (“the Plan”). This Plan was the subject of a strategic environmental assessment (“SEA”), known as “OESEA4”.
• On Sep. 8, 2022, the government approved the design of its “Climate Compatibility Checkpoint” (“the Checkpoint”). The stated aim of this policy was to ensure that, before a new North Sea oil and gas licensing round is offered, “the compatibility of future licensing with the UK’s climate objectives is evaluated”. In approving the design of this policy, a proposed test was omitted. That test would have considered whether end-use emissions from the combustion of UK oil are expected to fall in line with the 1.5°C temperature target, if further licensing rounds are approved.
• On Sep.16, 2022, the government decided that a further licensing round was compatible with the UK’s climate objectives. That was informed by departmental analysis by reference to the Checkpoint.
• On Oct. 4, 2022, the Oil and Gas Authority (“OGA”) invited applications for offshore oil and gas licenses under section 3 of the Petroleum Act 1998, in what is known as the 33rd Offshore Oil and Gas Licensing Round. The OGA is a company wholly owned by the UK government which, since March 2022, has traded under the name “The North Sea Transition Authority”.
These decisions were challenged in public law claims issued in December 2022 by environmental charities Greenpeace and Uplift. In April 2023 both claims were granted permission to proceed to trial. In July 2023 they were heard. In October 2023 the High Court dismissed both claims, rejecting all the grounds of challenge:
• The decision in OESEA4 not to assess end-use emissions from further oil and gas licensing rounds was rational. There was no breach of the relevant SEA regulations. Whilst the leading case of R(Finch) v Surrey County Council [2022] EWCA Civ 187 concerned environmental impact assessment, not SEA, the factual context and the two regimes were sufficiently analogous that important parts of the Finch analysis were applicable. Here the Plan only set the framework for licensing oil and gas exploration and production in the North Sea. It did not set the framework for downstream development such as refinement and storage. The end-use emissions from uses of the extracted oil and gas were not therefore “likely significant effects” of the Plan under the SEA regulations. Further, it was lawful for the government to conclude there was an insufficient causal connection between new oil and gas licensing and end-use emissions, and to decline to assess such emissions on that basis also. (Judgment, paragraphs 89 to 116.)
• The government did not fail to properly to assess “reasonable alternatives” under the SEA regulations. That failure was said by the claimants to have resulted from a failure to properly assess the alternative of not proceeding with further licensing. However, to the extent this entailed arguments about market substitution, these did not arise given end-use emissions were not assessed. As to assessments of production emissions, these were matters of judgement. Nor was it unlawful for the government to have concluded that imports would have a higher emissions intensity than UK-produced hydrocarbons. (Judgment, paragraphs 117 to 136.)
• The reasons for omitting the end-use emissions test from the Checkpoint were lawful and rational. It was also rational for the government to rely on the Checkpoint when adopting the Plan and deciding the new licensing round was compatible with the UK’s climate objectives. The Checkpoint is not a statutory plan or policy. It is an informative, non-binding document to assist ministers in deciding whether to support or not support a further licensing round. It was a matter of judgement for the Secretary of State as to whether he considered there to be an appropriate test or benchmark for taking scope 3 emissions into account on a decision whether or not to support a new licensing round. (Judgment, paragraphs 137 to 150.)
• The failure to publish reasons for deciding a new licensing round would be compatible with the Checkpoint and the UK’s climate objectives was not unlawful. There was no common law duty to give reasons. (Judgment, paragraphs 151 to 158.)
• Further grounds of challenge related to the OGA’s decision to carry out the 33rd licensing round necessarily failed, given the findings above (judgment, paragraphs 58 and 159).
It is not known whether the claimants intend to appeal to the Court of Appeal.
Greenpeace Ltd v (1) Secretary of State for Business, Energy and Industrial Strategy and (2) the Oil and Gas Authority; and Uplift v (1) SSBEIS and (2) the OGA (North Sea oil and gas licensing)
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Summary:
At Issue: The lawfulness of a further licensing round for North Sea oil and gas, and of related policy, including in respect of whether end use emissions are direct effects for the purposes of strategic environmental assessment.