A Scottish court has ruled the government approval of two new oil and gas projects in the North Sea unlawful, casting doubt on the future of the UK's hydrocarbon industry. The ruling halts ambitions for the Rosebank and Jackdaw projects, led by Equinor and Shell, respectively.
The legal battle, ignited shortly after these projects received the green light from the last Tory government, reflects deepening tensions over climate policy and energy production. Climate activists rapidly filed lawsuits, raising concerns about the environmental impacts of these projects—and they won.
The Scottish Court of Session ruled the approvals failed to fully account for the detrimental impact of burning oil and gas on climate change. It mandated more thorough assessments to determine the effects of these projects before any drilling could commence.
This ruling marks a significant moment, especially since it follows the acknowledgement by the previous UK government last year—that it had not considered the Scope 3 emissions, which relate to emissions released when oil and gas products are used. These emissions complicate efforts to track and reduce carbon footprints and have emerged as one of the most contentious aspects of the climate policy debate.
Last June, momentum built when the UK Supreme Court ruled on another related case. This so-called Finch ruling involved Surrey County Council, where it was determined the council had not factored Scope 3 emissions from local oil field production expansion, thereby setting precedent for future cases. The Supreme Court judges clearly stated, "It is not merely likely but inevitable... and the combustion will produce greenhouse gas emissions." This statement has ushered broader scrutiny on fossil fuel approvals and their inevitable consequences.
While the UK still has substantial oil reserves, new policies and court rulings suggest it may pivot toward imported hydrocarbons, which are seen as less politically fraught—even if they contribute just as much to greenhouse gas emissions at combustion. Critics argue this shift merely externalizes the problem.
Shell and Equinor, undeterred by the ruling, have signaled their intent to continue their projects. Shell's CEO Wael Sawan emphasized the necessity of Jackdaw's gas field, stating, "We are developing key national infrastructure... It is not an ‘or’, it has to be an ‘and’,” urging the government to support their energy transition ambitions alongside renewable initiatives.
Equinor also expressed its commitment to working closely with regulators to progress the Rosebank project. Both companies still retain the ability to conduct work on these fields, but are halted from production until they can navigate the new assessments required by the court ruling.
The prospect of gaining approval looks slim, as Shell's intentions to challenge the ruling may not yield favorable outcomes, particularly with the same court involved. Given the recent Supreme Court position against unconsidered fossil fuel projects, Shell’s legal team faces significant hurdles.
Although climate activists hail the ruling as progress, the broader implication is dire for UK residents who might see continued spikes in energy bills. Current volatility within global oil and gas markets exacerbates the situation—a scenario where securing domestic energy could have buffered against rapid price increases is missed due to this ruling.
The court's decision, reflecting growing judicial concern for climate impacts, signifies potentially low tides for oil and gas exploration within the UK. With governments pursuing more aggressive renewable energy initiatives, the era of hoping for hydrocarbon resurgence appears to be waning.
Whether the UK can renew its energy independence moves forward against the backdrop of these legal challenges remains uncertain. For now, the courts have sharpened the priorities: any development related to fossil fuels will undergo stricter scrutiny, paving the way for potentially transformative shifts within the energy sector.