DOWNSTREAM SCOPE 3 EMISSIONS – SUPPLEMENTARY GUIDANCE FROM THE DEPARTMENT FOR ENERGY AND SECURITY & NET ZERO

In June 2024, the Supreme Court in R (on the application of Finch on behalf of the Weald Action Group) (Appellant) v Surrey County Council and others (Respondents) [2024] UKSC 20 (‘Finch’) found that a decision to grant planning permission for an onshore oil development project at a site in Surrey was unlawful in circumstances where downstream greenhouse gas (‘GHG’) emissions from the combustion of the oil produced were not assessed in the Environmental Impact Assessment (the ‘EIA’).

The Supreme Court’s judgment, which we considered in our article here, found that GHG emissions from downstream processes of extracted oil fall within the scope of the EIA process under English law and should have been assessed in the Environmental Statement (the ‘ES’). The GHG Corporate Accounting and Reporting Standard (the ‘GHG Protocol’) sets out three categories of GHG emissions which are to be assessed by developers and planning authorities – scope 1 concerns direct GHG emissions from sources that are owned or controlled by the reporting company, whilst scope 2 and 3 concern indirect GHG emissions.

The legal framework for EIAs in oil and gas projects:

In the UK, development proposals which are likely to have a significant effect on the environment are required to undergo EIAs in advance of being granted planning permission. Onshore oil and gas production is subject to the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 – amongst other factors, these require developers to ascertain the climate impact of project proposals including GHG emissions.

Offshore oil and gas production falls within the remit of the Offshore Petroleum Regulator for Environment and Decommissioning (‘OPRED’), which requires developers to follow the EIA process under the Offshore Oil and Gas Exploration Production, Unloading and Storage (Environmental Impact Assessment) Regulations 2020 (the ‘Offshore EIA Regulations).

New government guidance on scope 3 emissions:

On 19 June 2025, the Department for Energy Security & Net Zero (‘DESNZ’) published ‘Environmental Impact Assessment (EIA) – Assessing effects of downstream scope 3 emissions on climate’ (the ‘Guidance’). DESNZ noted that ‘climate change is a global problem and the concentrations of GHGs in the atmosphere contribute to this global effect’.

To that end, the Guidance seeks to apply the findings in Finch, providing much needed clarification on how downstream scope 3 emissions should be assessed in EIAs for offshore oil and gas projects.

The Guidance notes however that it ‘is not intended to provide a definitive statement of the law or to constitute legal advice, nor does it address all aspects of the Offshore EIA Regulations or the judgment’ in Finch – its goal is to assist developers by offering non-prescriptive guidance on how to approach the assessment of scope 3 emissions.

The Guidance, which applies equally to new projects seeking planning approval and existing projects seeking further approvals under existing development and production consents, confirms that, in light of Finch, ‘OPRED’s firm position is that at a minimum, an ES should include an assessment of the downstream emissions that will arise from the use of hydrocarbons extracted as a result of the project’. Scope 3 emissions from downstream activities associated with the production of hydrocarbons, which are typically generated when the hydrocarbons produced by a project are eventually combusted by end users, over the lifetime of the project must therefore be considered.

Methodology for assessing scope 3 emissions:

The Guidance recommends that developers should follow recognised methodologies, including but not limited to that issued by the Institute of Environmental Management and Assessment (the ‘IEMA’), when assessing the GHG emissions associated with their projects.

To quantify the environmental effects of scope 3 emissions, assessments must be based on the highest expected volume of hydrocarbons to be extracted over the project’s lifetime, i.e. regardless of the extent to which ‘substitution’ may occur.

The starting point for estimating these emissions should be a rebuttable presumption that all produced hydrocarbons over the lifetime of a project will eventually be combusted, although it is open for a developer to present scenarios for the non-combustion use of hydrocarbons and / or sufficient evidence to rebut the presumption of full combustion.

This must in turn be multiplied by a conversion factor taken from the ‘most recently published Government conversion factors for company reporting of greenhouse gas emissions (DENSNZ, 2025), or other suitable sources’.

Assessment requirements for developers:

The Guidance further notes that developers should:

• explain the methodology adopted and the conversion factors used to estimate the scope 3 emissions, including assumptions or uncertainties;
• consider the global effect of GHG emissions and take into account the cumulative effects of other existing and planned projects, whilst simultaneously ensuring that they have considered available mitigating measures to ‘avoid, prevent, reduce or offset likely significant adverse effects on the environment’; and
• describe the reasonable alternatives studied for a proposed project / how the selected options compares with the environmental effects of the reasonable alternatives considered.

Closing remarks:

The Guidance serves to remind developers that it is for them ‘and their competent experts to assess the effects of a project on the environment in the first instance, and to set out that assessment in an ES’.

Whilst the Guidance sets out how this could / should be done, it is non-prescriptive and acknowledges that there may be alternative approaches either now or in the future as scientific understanding develops. It provides some clarity post-Finch but recognises that the ‘[s]ignificance of environmental effects will always be considered by OPRED on a case-by-case basis, taking into account the information provided in the ES and subsequent EIA process’. As such, uncertainty remains; nevertheless, developers are encouraged to consider / engage with the Guidance when assessing the impact on scope 3 emissions. Whilst this could result in increased cost at the outset, it should mean that planning consent is more likely to be granted and / or limited to the extent to which such planning consent can be challenged in the courts.

Should you require any assistance with the issues raised in this article, including in respect of any current or future projects, please contact the authors. For more information on ESG-related developments and other decisions, please visit our website or sign up to our mailing list for future updates.