Future drilling in the North Sea is facing another obstacle after the UK's Supreme Court ruled that emissions from burning fossil fuels must be considered when approving new sites.
Legal experts say the decision could influence the way in which new fossil fuel projects are assessed in the UK, forcing planning officials and energy companies to justify emissions generated by oil and gas.
Ashley Kelty, an oil and gas market analyst at Panmure Gordon, said: “This ruling is utter lunacy and is indicative of the ignorance around net zero and the practical implications."
The court ruled on Thursday that emissions from burning fossil fuels must be considered when approving new drilling sites.
It is the latest development in the case brought by Sarah Finch, a Surrey resident who challenged the local council’s decision to allow the expansion of an oil site at Horse Hill in 2019.
Ms Finch, acting on behalf of Weald Action Group, argued that the environmental impact assessment had only considered emissions from the extraction of oil – and wrongly ignored those produced when the oil was burned.
The Supreme Court has sided with her, handing down a decision that has huge implications for the entire UK oil and gas industry.
Tom Cummins, partner at law firm Ashurst, said: “Oil and gas companies will be working through the judgment to assess to what extent it affects future projects in the UK, and existing challenges before the courts, which had been stayed pending the Supreme Court’s decision.”
Mr Kelty added: “I fear for UK energy security as Labour are far more likely to follow stupid measures such as this and actively endeavour to shut down the North Sea.”
Ms Finch triumphed at the Supreme Court after her case was dismissed by the High Court and the Court of Appeal.
Lawyers for the council claimed Ms Finch’s approach was “misguided” and that the environmental assessment considered the impact of “direct” greenhouse gas releases.
In its decision on Thursday, Supreme Court justices ruled three-to-two in favour of allowing her appeal. In doing so, they also overturned the decision to grant planning permission for the Horse Hill drilling site.
In his judgement, Lord Leggatt said “it seems to me plain” that emissions created by burning oil extracted at the site “are effects of the project”, and as a result “it follows that the council’s decision was unlawful”.
Stephen Sanderson, the chief executive of UK oil and gas plc - the company behind the Horse Hill project said the court's ruling was "perplexing".