Judicial activism will not solve climate change
24 June 2024
SUGGESTED
Economic Theory
23 June 2024
Economic Theory
25 June 2024
On June 20 2024, the UK Supreme Court ruled by a 3 to 2 majority to uphold the appeal of climate activists against Surrey Council (a local authority) on the granting of planning consent in 2019 to expand oil production at an existing site in Horse Hill near Horley. The ruling means the project cannot proceed, at least not without fresh consents, which in themselves will then be subject to further activist lawfare. The operating company, UK Oil & Gas plc is considering its options, but has also moved on, treating the UK as a future hydrogen market, rather than an attractive location to invest in fossil fuels. In that regard, the activists may have won twice.
The case is complex, but boils down to points of law as they concern environmental impact assessments (EIA). These have been a feature of planning regulations since 1985, rooted in (retained) EU law, and require developments meeting regulated criteria (such as large oil and gas sites) to report the significant ‘direct and indirect effects of a project’ on, among other things, ‘soil, water, air, climate and landscape’.
What this means over time has changed, notably including stronger language on climate change, but has never included end-use or scope 3 emissions (for example, if the oil is refined to road fuel) as an essential feature. This omission has now been rendered unlawful.
When all of this started, the developer was required to report on the direct impact of their project on emissions (for example, from construction works and traffic), which is normal for any large project. It provided a figure of 141k tCO2 for the production of around 3.3 million tonnes of oil over 20 years. The Council did initially say that consumption emissions data would also be required, but did not enforce this view. They instead noted under their own models that it would be 10.5m tCO2, nearly 75-times as much. Much weight has been attached to this significant difference.
When I reviewed this case a year ago, I suggested ruling in favour of the activists ‘would be absurd. Holding a producer to account for the downstream climate impact makes no sense’. It is self-evident that indirect impacts from planned activities must be reasonably connected to a project to be relevant to a development decision. For example, effluent from a chicken farm might indirectly pollute a river. Similarly, noise from an airport might damage community amenity. But the chicken farmer is not responsible for discarded nugget boxes, nor the airport the type of engine used by visiting aircraft. These are matters for different authorities and rules, generally at a national level.
The recent court decision attempts to persuade us otherwise by making oil extraction a special case. It is claimed that it is an agreed fact that: ‘…it is inevitable that oil produced from the site will be refined and, as an end product, will eventually undergo combustion, and that that combustion will produce GHG emissions’. But whatever was agreed in the context of this case, it is taught as early as GCSE chemistry that crude oil has at least two major purposes: fuels (which are combusted) and feedstocks for petrochemicals (such as lubricants and polymers, which generally are not).
The extractor is neither responsible for where refined products land, their further processing, nor their end-of-life, which may involve being recycled, reused, remanufactured or renewed. Matters for which the minority opinion correctly notes other planning applications and associated EIAs would have considered in relation to their climate impact. Most of the judgment then is rooted in an assumption of a fact which is false.
If that fact falls, while the case law stands, this implies that scope 3 emissions for any application of any kind could now be required based on modelled assumptions. The judgment attempts to avert this costly implication by noting differences between steel and oil. Steel can be used to build wind turbines and eco homes, not just drilling rigs. The steelmaker will not know which.
But that is not a relevant difference. What will now stop Nimby opponents of battery factories or electric vehicle plants overturning their permits on the basis of a failure to consider the ecological impact of every component they produce? The Net Zero transition is a transformation of the global economy from one based on fossil fuels to minerals. Meaning a reliance on a different type of extractive industry largely gone from these shores. The justices may have just given activists carte blanche to disrupt planning decisions based on concerns over child cobalt miners in Congo.
A second problem is with the attribution of significance to either set of emissions data, direct or indirect. The contribution to global warming of any one oil drilling site, however large, to global warming is near zero. It is estimated that, as a species, we have emitted 1.8trn tCO2 from human activities globally since 1750 (or the start of the Industrial Revolution). This has contributed to 1-1.5°C of global warming, and emissions are still increasing annually at 37bn tCO2, of which the UK’s contribution is under 1%.
From this we can deduce that the future contribution of Horse Hill to global warming is 0.0006% or around 1/10,000th of a degree Celsius. It is hard to fathom how this constitutes significance in the context of legislation designed to discourage developers dumping sewage and chemical waste into local fields and streams. A future court may test this reasoning.
The third error is a failure to understand that it is consumption not production that drives emissions. Using decisions about the latter to regulate the former is misplaced. To justify it, within the ruling it is suggested on the basis of one UN study that each tonne of oil left in the ground leads to a reduction in production by 0.2-0.6 barrels worldwide.
But this is nonsense. Both consumption and production decisions are dynamic and driven by prices, not virtue-signalling. The medium-term consequence of a successful curtailment of Western supply by judicial activism would be a price spike enabling profitable investment elsewhere. Each $10 increase in the cost of a barrel of oil makes previously marginal projects viable. For example, the Arctic, or deep sea, or Canadian tar sands and other horrors with far worse risks of environmental damage than a heavily-regulated hole in Surrey. It is then entirely unpredictable what the climate consequences of drilling or not drilling in one location might be. Bar noting that blocking development also blocks any positive benefits from growth, including reinvestment in, for example, in this company’s Net Zero hydrogen plans. It’s a denial of trade-offs.
The majority opinion in this case also regrettably does appear to have been political. The opening line to the judgment is a vapid moral appeal that could have been written for the appellants’ crowdfunder: ‘Anyone interested in the future of our planet is aware…’. This creates a suspicion that much of the rest is outcome-based evidence making, rather than a testament to judicial wisdom.
But are we overstating the problem? The ruling adds just another reporting requirement to Britain’s already voluminous planning and permitting codes. Those reports tick a box, which in turn will be largely ignored by decision-makers. Most councillors on planning do little more than read officers’ recommendations, not full applications. All the while, most officers will not be offering sea levels in the Maldives in 2100 being one grain of sand higher as a pressing concern for Horley in 2025.
But the strangling effects of expanding the administrative state means this does matter. The UK exited the EU in part to free itself from mindless red tape, and the associated costs that damage growth.
Clearly that is not happening, and it cannot happen in the context of judicial activism and Parliamentary indifference to making bad laws open to such abuse. This judgment makes no difference to the pace of climate change, but does further damage the UK’s ability to benefit from our own resources. At the same time, it sets a precedent that will empower many more decisions like it. The Injustice League rides again, and leaves this country looking ridiculous.
This article was first published on CapX.
The case is complex, but boils down to points of law as they concern environmental impact assessments (EIA). These have been a feature of planning regulations since 1985, rooted in (retained) EU law, and require developments meeting regulated criteria (such as large oil and gas sites) to report the significant ‘direct and indirect effects of a project’ on, among other things, ‘soil, water, air, climate and landscape’.
What this means over time has changed, notably including stronger language on climate change, but has never included end-use or scope 3 emissions (for example, if the oil is refined to road fuel) as an essential feature. This omission has now been rendered unlawful.
When all of this started, the developer was required to report on the direct impact of their project on emissions (for example, from construction works and traffic), which is normal for any large project. It provided a figure of 141k tCO2 for the production of around 3.3 million tonnes of oil over 20 years. The Council did initially say that consumption emissions data would also be required, but did not enforce this view. They instead noted under their own models that it would be 10.5m tCO2, nearly 75-times as much. Much weight has been attached to this significant difference.
When I reviewed this case a year ago, I suggested ruling in favour of the activists ‘would be absurd. Holding a producer to account for the downstream climate impact makes no sense’. It is self-evident that indirect impacts from planned activities must be reasonably connected to a project to be relevant to a development decision. For example, effluent from a chicken farm might indirectly pollute a river. Similarly, noise from an airport might damage community amenity. But the chicken farmer is not responsible for discarded nugget boxes, nor the airport the type of engine used by visiting aircraft. These are matters for different authorities and rules, generally at a national level.
The recent court decision attempts to persuade us otherwise by making oil extraction a special case. It is claimed that it is an agreed fact that: ‘…it is inevitable that oil produced from the site will be refined and, as an end product, will eventually undergo combustion, and that that combustion will produce GHG emissions’. But whatever was agreed in the context of this case, it is taught as early as GCSE chemistry that crude oil has at least two major purposes: fuels (which are combusted) and feedstocks for petrochemicals (such as lubricants and polymers, which generally are not).
The extractor is neither responsible for where refined products land, their further processing, nor their end-of-life, which may involve being recycled, reused, remanufactured or renewed. Matters for which the minority opinion correctly notes other planning applications and associated EIAs would have considered in relation to their climate impact. Most of the judgment then is rooted in an assumption of a fact which is false.
If that fact falls, while the case law stands, this implies that scope 3 emissions for any application of any kind could now be required based on modelled assumptions. The judgment attempts to avert this costly implication by noting differences between steel and oil. Steel can be used to build wind turbines and eco homes, not just drilling rigs. The steelmaker will not know which.
But that is not a relevant difference. What will now stop Nimby opponents of battery factories or electric vehicle plants overturning their permits on the basis of a failure to consider the ecological impact of every component they produce? The Net Zero transition is a transformation of the global economy from one based on fossil fuels to minerals. Meaning a reliance on a different type of extractive industry largely gone from these shores. The justices may have just given activists carte blanche to disrupt planning decisions based on concerns over child cobalt miners in Congo.
A second problem is with the attribution of significance to either set of emissions data, direct or indirect. The contribution to global warming of any one oil drilling site, however large, to global warming is near zero. It is estimated that, as a species, we have emitted 1.8trn tCO2 from human activities globally since 1750 (or the start of the Industrial Revolution). This has contributed to 1-1.5°C of global warming, and emissions are still increasing annually at 37bn tCO2, of which the UK’s contribution is under 1%.
From this we can deduce that the future contribution of Horse Hill to global warming is 0.0006% or around 1/10,000th of a degree Celsius. It is hard to fathom how this constitutes significance in the context of legislation designed to discourage developers dumping sewage and chemical waste into local fields and streams. A future court may test this reasoning.
The third error is a failure to understand that it is consumption not production that drives emissions. Using decisions about the latter to regulate the former is misplaced. To justify it, within the ruling it is suggested on the basis of one UN study that each tonne of oil left in the ground leads to a reduction in production by 0.2-0.6 barrels worldwide.
But this is nonsense. Both consumption and production decisions are dynamic and driven by prices, not virtue-signalling. The medium-term consequence of a successful curtailment of Western supply by judicial activism would be a price spike enabling profitable investment elsewhere. Each $10 increase in the cost of a barrel of oil makes previously marginal projects viable. For example, the Arctic, or deep sea, or Canadian tar sands and other horrors with far worse risks of environmental damage than a heavily-regulated hole in Surrey. It is then entirely unpredictable what the climate consequences of drilling or not drilling in one location might be. Bar noting that blocking development also blocks any positive benefits from growth, including reinvestment in, for example, in this company’s Net Zero hydrogen plans. It’s a denial of trade-offs.
The majority opinion in this case also regrettably does appear to have been political. The opening line to the judgment is a vapid moral appeal that could have been written for the appellants’ crowdfunder: ‘Anyone interested in the future of our planet is aware…’. This creates a suspicion that much of the rest is outcome-based evidence making, rather than a testament to judicial wisdom.
But are we overstating the problem? The ruling adds just another reporting requirement to Britain’s already voluminous planning and permitting codes. Those reports tick a box, which in turn will be largely ignored by decision-makers. Most councillors on planning do little more than read officers’ recommendations, not full applications. All the while, most officers will not be offering sea levels in the Maldives in 2100 being one grain of sand higher as a pressing concern for Horley in 2025.
But the strangling effects of expanding the administrative state means this does matter. The UK exited the EU in part to free itself from mindless red tape, and the associated costs that damage growth.
Clearly that is not happening, and it cannot happen in the context of judicial activism and Parliamentary indifference to making bad laws open to such abuse. This judgment makes no difference to the pace of climate change, but does further damage the UK’s ability to benefit from our own resources. At the same time, it sets a precedent that will empower many more decisions like it. The Injustice League rides again, and leaves this country looking ridiculous.
This article was first published on CapX.
2 thoughts on “Judicial activism will not solve climate change”
Leave a Reply
SHARE
The fact that the image at the top is artificially generated removes any possible credibility you have.
The premise of this article is that the oil may be used for plastic and other petrochemical production. I’m sure if the proposed development had a contractual guarantee that it would not operate and extract oil unless used for this purpose, then the scope 3 emissions would be very different. We also need to remember that petrochemical production produces emissions (and other types of pollution) which need to be phased-down also, but again we don’t have a clear policy landscape and plan to achieve this either.
Another premise is that governments have demand-side measures in place for phasing down fossil fuel use in road, air transport, domestic heating, industry etc. But this is clearly not the case: oil & gas demand is set to grow over the next 5 years and energy companies are lobbying for e.g. expansion of roads, airports, homes with gas boilers, continuation of other high-carbon industries, and delays to e.g. bans on combustion engine car sale bans and gas boilers.
Years ago now, the other (more credible and authoritative) IEA has been incredibly clear that we need to ensure NO NEW OIL & GAS production if we’re to have any chance whatsoever of meeting out climate targets: https://www.theguardian.com/environment/2021/may/18/no-new-investment-in-fossil-fuels-demands-top-energy-economist.
As a wealthier, higher-emitting country, the UK has also pledged under the Paris Agreement of 2015 to go further and faster than other less-wealthy and lower-emitting countries.
So opening a new oil well is clearly totally contradictory to the physics and maths of what is required and what the UK Government has committed to doing.
You seem to be concerned that this might cause more rigour to be applied to low-carbon technologies: that sounds like a good thing to me? More admin and checks means more jobs as part of the low-carbon transition, and we need to ensure that any alternatives are as genuinely low-impact as possible. This is straightforward as yes EVs or wind turbines have some environmental impact, but they are an order of magnitude less impactful that fossil fuel extraction and use – and doing the sums and presenting that evidence is relatively straight forward.