The UK government is set to introduce new environmental guidance for oil and gas companies operating in the North Sea in response to a pivotal Supreme Court ruling. This ruling mandates that regulators must account for Scope 3 emissions—those associated with the end use of products—in the approval process for future projects.
In June, the Supreme Court determined that a local council had unlawfully approved an onshore oil drilling project. The ruling emphasized that planners should have considered the emissions resulting from the combustion of the oil produced. The judgment noted, “It is an agreed fact that, if the project goes ahead, it is not merely likely but inevitable that the oil produced from the well site will be refined and, as an end product, will eventually undergo combustion, and that that combustion will produce greenhouse gas emissions.”
In response to this landmark decision, the Labour government announced on Thursday its intention to develop new environmental guidance for the oil and gas sector. The government aims to provide industry stability, support investment, protect jobs, and foster economic growth while meeting climate commitments as the North Sea transitions to cleaner energy sources.
Energy Minister Michael Shanks commented, “We will consult at pace on new guidance that takes into account the Supreme Court’s ruling on Environmental Impact Assessments, to enable the industry to plan, secure jobs, and invest in our economy.”
However, the government also revealed it would not challenge the judicial reviews initiated against the development consent for the Jackdaw and Rosebank oil and gas fields. These ongoing legal challenges, brought by climate groups Greenpeace and Uplift, add further uncertainty to projects that had already received consent.
Earlier this week, Equinor, the operator of the Rosebank field, stated that it is awaiting clarity on the UK tax regime from the Labour government before making strategic decisions and committing to investments in the North Sea.
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