judgment

R (oao Cox & Others) v Oil and Gas Authority & Others (“Paid to Pollute case”) - judgment

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On May 12, 2021, three climate activists, Jeremy Cox, Mikaela Loach and Karin Van Sweeden (the “Claimants”)  brought a legal challenge in relation to the adoption of the Government’s new Oil and Gas Strategy (the “Strategy”). Their claim was defended by the Oil and Gas Authority (“OGA”) and the Secretary of State for Business Energy and Industrial Strategy (“SoS”; Kwasi Kwarteng). The strategy was laid before Parliament in December 2020, came into force in February 2021, and gives the OGA a dual mandate to both “secure that the maximum value of economically recoverable petroleum is recovered from the strata beneath relevant UK waters” and, in doing so, “to take appropriate steps to assist the Secretary of State in meeting the net zero target.” The strategy sets out plans to support ongoing efforts to exploit North Sea oil and gas reserves. Under the Petroleum Act 1998, the Strategy needs to ensure the maximization of the “economic recovery of UK petroleum."

On January 18, 2022 the High Court gave judgment, rejecting the Claimants’ two grounds of challenge and dismissing their claim.
The first of the two grounds alleged error of law and/or frustration of statutory purpose. The Claimants argued that by ignoring the effect of government-backed financial support, the Strategy has stretched the definition of "economically recoverable" too wide, such that activities that are not truly "economic" for the UK are nonetheless still sought to be maximized through the Strategy. According to the claimants, this endangers the UK’s ability to meet Net Zero, as required under the Climate Change Act 2008. The main issue was therefore whether the OGA's definition of "economically recoverable" in its Strategy was consistent with the statutory term "maximizing the economic recovery of UK petroleum” or whether it frustrates the statutory purpose.


The High Court began its consideration of this ground by considering the court’s role, concluding that the court will afford ‘considerable deference’ to the OGA’s expert view as regulator, and that Parliament, when enacting the legislation, did not intend for the court (rather than the expert regulator) to determine the best method of economic assessment. In any event the High Court agreed with the OGA’s interpretation of the legislative provisions. (Judgment, paragraphs 55 to 114.)

The second ground alleged the OGA’s approach was irrational given the UK Government’s net zero target under the Climate Change Act 2008 and statements made by the OGA in relation to that target. The High Court rejected the Claimants’ arguments. The OGA’s approach to the legislation was permissible, as per the Court’s findings under ground one. The question of how to balance various objectives is a matter for the regulator, not the court. The OGA, in consulting on and adopting the Strategy, ‘manifestly had considerable regard to UK domestic action on climate change’. The Claimants’ arguments had ‘no basis in the statute’ and ‘[contradicted] the whole concept of maximizing economic recovery’. (Judgment, paragraphs 115 to 138.)

R (oao Cox & Others) v Oil and Gas Authority & Others (“Paid to Pollute case”)

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

This sector involves the wholesale and retail selling of goods.

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

A target to reduce the prevalence of a greenhouse gas over a specific time frame

Coal is a combustible sedimentary rock formed from carbonised plant matter, rich in carbon and hydrocarbons, and occurring in several main types including hard coal and brown coal.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

Activities that involve planning, designing and building infrastructure, residential, and commercial structures.

This sector includes firms and individuals offering specialised expertise in fields such as law, accounting, consulting, science and engineering.

This sector provides communication services, software development, and IT solutions.

A tax advantage is an economic benefit applied to certain accounts or investments that are, by law, tax-reduced, tax-deferred, or tax-free. This can apply to investments in areas such as green energy projects or the agricultural sector, where tax advantages can help manage financial risks.

The activities of industries that transforms raw materials into finished goods through industrial processes.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

A commitment to balance GHG emissions with removal by a certain point in time, effectively reducing the net emissions to zero

Activities of industries that extract natural resources, such as mining, oil, and gas, for commercial use.

Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

The release of heat-trapping gases, primarily from human activities such as burning fossil fuels, agriculture and industry.

This sector involves activities to move goods and people, alongside the storage of products.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

R (oao Cox & Others) v Oil and Gas Authority & Others (“Paid to Pollute case”) - judgment

Target

Policy instrument

Fossil fuel

Greenhouse gas

Economic sector

Finance