Court puts stop to unlawful development green lights! Rosebank & Jackdaw oilfields ruling
February 2025On 29 January 2025, the Outer House of the Court of Session in Scotland handed down its decision on two judicial reviews brought by environmental campaigners Greenpeace and anti-fossil fuel group Uplift. They had challenged the offshore oil and gas development licences granted by the Secretary of State and the Oil and Gas Authority (the ‘OGA’)[1] to Equinor UK Ltd (‘Equinor’) and Aberdeen-based Ithaca SP E&P Ltd (‘Ithaca’) for the Rosebank oilfield (‘Rosebank’), and to Shell for the Jackdaw oilfield (‘Jackdaw’), both off the coast of Scotland (the ‘Judgment’)[2].
Background
Located c.80 miles north-west of Shetland in the North Atlantic, Rosebank is the largest known undeveloped oil and gas field in UK waters and is estimated to contain c.300 million-c.500 million barrels of oil. Permission for the development of Rosebank was granted by the former Conservative government and the OGA in August 2023 amid widespread criticism due to its impact on climate change.
Jackdaw, east of Aberdeen in the North Sea, was likewise approved by the previous Conservative-led government and the OGA in mid-2002 in a bid to boost domestic energy output following Russia’s invasion of Ukraine. Shell estimate that, at its peak, Jackdaw is expected to produce c.6.5% of the UK’s gas production and provide enough fuel to heat 1.4 million homes in the UK.
Works at Jackdaw were expected to be completed in the first half of 2026, with production commencing later that year. The first production of oil at Rosebank was expected in 2026-2027.
The Legal Landscape
Article 2(1) of the Parliament and Council Directive 2011/92/EU as amended by Directive 2014/52/EU (the ‘Directive’) requires member states to ‘adopt all measures necessary to ensure that, before consent is given, projects likely to have significant effects on the environment […] are made subject to a requirement for development consent and an assessment with regard to their effects’ on the environment.
Article 3(1) of the Directive requires that ‘the environmental impact assessment shall identify, describe and assess in an appropriate manner […] the direct and indirect effects of a project’ on the basis of various factors, including climate.
The Directive has been transposed into UK law through a series of statutory instruments applicable to various projects in respect of which, under the Directive, development consent and Environmental Impact Assessments (‘EIAs’) are required. Insofar as offshore oil and gas is concerned, the Directive has been transposed into UK law previously by the Offshore Petroleum Production and Pipe-lines (Assessment of Environmental Effects) Regulations 1999 and currently by the Offshore Oil and Gas Exploration, Production, Unloading and Storage (Environmental Impact Assessment) Regulations 2020 (the ‘Regulations’).
Regulation 4(1) of the Regulations provides that a developer must not commence a project in respect of offshore oil and gas without: (i) the Secretary of State’s agreement to the grant of consent by the OGA; and (ii) the consent of the OGA. Further, Regulation 4(3) of the Regulations provides that ‘The Secretary of State must not agree to the grant of consent for a project unless – (a) an environmental impact assessment has been carried out’ or one is otherwise not required.
The Judicial Review Challenges
Greenpeace and Uplift challenged the decisions of the Secretary of State and the OGA on various grounds, most significantly that, as part of the original consenting process, the Secretary of State and the OGA acted unlawfully as the EIAs did not assess the effect of downstream / Scope 3 emissions[3], i.e. the effect on the climate resulting from the combustion of the extracted fuels. Greenpeace submitted that ‘as a result of Jackdaw and Rosebank there will be approximately 32,000 additional heat related deaths until 2100, with that figure being purely from heat-related deaths and not from other climate impacts’[4].
Greenpeace and Uplift argued that the decisions should be reduced, i.e. quashed, and made again on a proper and lawful basis taking into account downstream emissions as required by R (on the application of Finch on behalf of the Weald Action Group) (Appellant) v Surrey County Council and others (Respondents) [2024] UKSC 20. We previously reported on Finch here, although it should be noted that Finch concerned onshore oil and gas, such that the relevant legislation was the Town and Country Planning (Environmental Impact Assessment) Regulations 2017.
Judgment
In an important ruling, the Outer House determined that the EIAs carried out as part of the development consent processes for both Rosebank and Jackdaw failed to consider the environmental impacts of the downstream emissions.
Lord Ericht found that the decision of the Supreme Court in Finch was binding on the Outer House and so the judicial review challenges must succeed. Lord Ericht held that, in respect of both Jackdaw and Rosebank, both the Secretary of State’s agreement to the OGA’s grant of consent and the grant of the consent of by the OGA were unlawful because the respective EIAs failed to assess the impact of the oil or gas combustion produced on the climate.
Lord Ericht concluded that there was a public interest in having the decision ‘remade on a lawful basis’[5] because of the effects of climate change – and that this outweighed the interests of the developers[6].
The Secretary of State and the OGA were thus directed to undertake more detailed assessments of the applications for development, taking into account the downstream emissions. In the meantime, the Outer House confirmed that work on developing the oilfields could continue, although no oil can be extracted until the Secretary of State and the OGA have granted new development consents.
This follows a recent trend of similar decisions, including the landmark decision in Finch, which effectively set a precedent for considering a range of emissions in EIAs for developments. In Finch, the Supreme Court ruled that this included the downstream emissions from combusting the oil products produced, not only the impact of emissions from expanding or constructing the oil well. It should also be noted that the development consent decisions for Rosebank and Jackdaw pre-dated the decision in Finch, although the Outer House considered that this did not justify refusal of reduction.
What’s next?
Environmental groups, including ClientEarth, have hailed the decision as a victory and part of a wider trend within the UK[7]. Nevertheless, Equinor, Ithaca, and Shell have all expressed an intention to continue working with the UK government to secure the necessary approvals. Prime Minister Keir Starmer has confirmed that the Labour government will not revoke existing licences and, following the Judgment, he backs development of Rosebank and Jackdaw. That said, after the previous Conservative government said that it would issue hundreds of new licences for oil and gas exploration in the North Sea, the Labour government has previously indicated that no new licences would be granted.
Either way, the Judgment marks a pivotal moment in the ongoing debate surrounding the UK’s energy policy and environmental responsibility. Whilst the development of both oilfields is seen as crucial for the UK’s energy security, the clear message is that the environmental risks, particularly in terms of climate change, cannot be overlooked.
We previously suggested that the decision in Finch could lead to a fertile ground for future disputes before the courts, including what projects are caught, what qualifies as a downstream effect and how this is to be properly measured. It appears that the Labour government has heeded this warning, acknowledging the need for clarification on the issue of downstream emissions – in October 2024, the government launched a consultation on ‘supplementary EIA guidance for offshore oil and gas projects’ and in particular how to assess Scope 3 emissions in new oil and gas projects, which it aims to conclude in the coming months. The government has invited stakeholders’ comments on the draft supplementary guidance, which can be found here.
This follows a consultation on a proposed new system of ‘Environmental Outcomes Reports’ (‘EORs’) to replace the current EU-derived environmental assessment processes of Strategic Environmental Assessment (‘SEAs’) and EIAs launched under the previous Conservative government. SEAs require the assessment of plans and programmes that set a framework for development likely to have a significant environmental impact. EORs are written reports which assess: (i) the extent to which the proposed relevant consent or proposed relevant plan would, or is likely to, impact on the delivery of specified environmental outcomes; and (ii) any proposals for increasing the extent to which a specified environmental outcome is delivered, although it remains to be seen how different EORs are in reality to the existing regime. In light of Chancellor Rachel Reeves’ bid to cut so-called environmental red tape to speed up planning application approval and boost economic growth, the Treasury has indicated that EIAs have ‘strayed from their original purpose of supporting decision making and have become voluminous and costly documents that too often support legal challenges rather than the environment.’
Conclusion
In the meantime, it is recommended that consultants advising on project feasibility and programme, as well as EIAs or associated assessments, take into consideration the latest decisions and the recent trends when considering and applying the requirements of the applicable Regulations. Further, it is possible that we will see developer clients seeking to rely more heavily upon consultants’ assessments as part of future planning and consenting processes; consultants should therefore be alive to the risks of developer clients seeking recovery of additional costs or delays arising as a result of such processes. Consultants should also bear in mind and address where possible: (i) the risk of future scrutiny and protests in respect of projects; (ii) the potential impact on their employees; and (iii) the potential resulting reputational damage, for example via internal corporate or project governance processes and as part of ongoing health and safety, security, or wider risk assessments on projects of this nature.
If you require support in light of the Judgment, or regarding how best to protect your position / interests on future projects or contracts at any stage, please contact Nathan Modell, Michael Salau, or Ben Spannuth. For more information on ESG-related developments and other decisions, please visit our website or sign up to our mailing list for future updates.
[1] The OGA is now known as the North Sea Transition Authority.
[3] The Greenhouse Gas Protocol defines Scope 3 emissions as follows: ‘Scope 1 emissions are direct emissions from owned or controlled sources. Scope 2 emissions are indirect emissions from the generation of purchased energy. Scope 3 emissions are all indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions’.
[4] Decision, paragraph 19
[5] Decision, paragraph 114
[6] Decision, paragraphs 151 & 152
[7] Press release ‘Court rules consent to drill Rosebank oil field was approved unlawfully – thanks to a judicial review case brought by UK NGOs Uplift and Greenpeace’ | ClientEarth
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