By Bruce Beaubouef, Managing Editor

A Scottish court has overturned the UK Government’s approvals for two North Sea oil and gas projects, marking a victory for environmental groups and necessitating a fresh review by the government.

In a landmark decision, the Court of Session in Edinburgh ruled that the UK Government’s approval of Shell’s Jackdaw project and Equinor’s Rosebank project was unlawful, as reported by Reuters and the New York Times.

The court found that the decision-making process failed to account for the downstream emissions associated with the use of the extracted oil and gas.

In a written ruling, Judge Andrew Stewart said: “The public interest in authorities acting lawfully and the private interest of members of the public in climate change outweigh the private interest of the developers.”

The ruling allows Shell, Equinor and Ithaca Energy to continue work on the Jackdaw and Rosebank projects, respectively. However, they are barred from extracting oil and gas until the government reassesses the approvals.

The court’s decision follows a UK Supreme Court ruling last year which mandated that planning authorities consider the full climate impact of fossil fuel projects, including the burning of extracted fuels.

In response to this precedent, the UK Government chose not to contest the legal challenges brought by Greenpeace and Uplift.

The UK government has indicated that it is revising environmental guidelines and that the companies may reapply under the new regulations.

Setting those parameters will be no easy task. New projects are needed to sustain an industry that is still a major employer and supplier of fuel. But if the guidelines are seen as generous to the oil industry, they are likely to prompt more litigation.

Ithaca Energy, a minority partner in Rosebank, argued in the case that suspension of the project “would affect the international perception of the UK, including its reputation for inward investment.”

But Judge Stewart did not seem to be persuaded by that argument. “The public interest in authorities’ acting lawfully and the private interest of members of the public in climate change outweigh the private interest of the developers,” he said in his ruling.

Shell is developing the Jackdaw gas field, which expected to supply fuel for 1.4 million homes. Equinor and Ithaca Energy are working on the Rosebank oil and gas field. All three companies stressed that the projects are crucial to Britain’s energy security, with delays causing significant financial losses and job cuts.

The Rosebank and Jackdaw projects are seen as tests for the flagging British oil industry because of their size and because Shell and Equinor are two of Europe’s largest energy companies. Jackdaw was expected to begin producing in 2026, while Rosebank was scheduled to come online in either 2026 or 2027.

The oil companies welcomed the judge’s concession that allowed them to proceed with some work, but Shell issued a reminder of how much was at stake.

“We have spent more than £800 million since the regulator approved Jackdaw in 2022,” Shell said in a statement. “Swift action is needed from the government so that we and other North Sea operators can make decisions about vital UK energy infrastructure.”

Equinor reportedly said that it was pleased with the outcome “which allows us to continue with progressing the Rosebank project while we await new consents.”

Equinor said it had already lined up £2.2 billion in contracts for Rosebank, a large oil field with an estimated 300 million barrels of oil and gas. The energy giant said it planned to invest £10 billion in Britain in the next few years, with much of that going to the wind and carbon capture industries that the British government was promoting.

LONDON, March 26 (Reuters) – Britain’s decision to issue more than two dozen oil and gas exploration licences was challenged at London’s High Court on Wednesday, with campaigners saying the government failed to consider the impact on climate change and risk of accidents.

Marine conservation organisation Oceana UK is bringing the case over 28 licences granted in May 2024 under Britain’s previous government, which it also argues did not properly assess the risk to protected marine life.

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But Britain’s energy department – which did not defend similar cases after a 2024 Supreme Court ruling – is opposing the case, saying the licences only allow early exploration and further assessments will be carried out before oil or gas is produced.

Oceana’s case is the latest challenge over fossil fuels to reach court, as environmental campaigners increasingly turn to the law to try and tackle climate change, with mixed success.

The licences were issued as part of the North Sea Transition Authority’s latest oil and gas licensing round and grant their holders the right to search for fossil fuels.

An exploration licence does not necessarily lead to production, though Oceana’s lawyers said in court filings that they provide “a clear pathway towards extracting oil and gas”.

Its lawyer Zoe Leventhal said the wider impact should be considered at the licensing stage, when the authorities can assess “all the sites across all the areas at the same time”.

Britain’s Department for Energy Security and Net Zero, however, argued it was not possible to know the impact on climate change before the scale of any production was known.

The government’s lawyer Beth Grogan argued in court filings that the licences were for “purely exploratory activities … and will not inevitably lead to consent for production or the burning of hydrocarbons”.

Oceana’s case comes after the British government dropped its defence in other challenges after the Supreme Court ruled planning authorities must consider the impact of burning, rather than just extracting, fossil fuels when approving projects.

This included the approval of two vast North Sea oil and gas fields, which was overturned by a Scottish court in January, casting doubt on the future of new fossil fuel projects.

But Prime Minister Keir Starmer last month indicated he would not stand in the way of one those projects, saying that “oil and gas is part of the future mix for decades to come”.

Reporting by Sam Tobin; editing by David Evans

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Court overturns Shell and Equinor’s North Sea oil and gas field licenses

A Scottish court has overturned the licenses granted by British authorities to Shell and Equinor to develop two oil and gas fields in the North Sea, prompting a delay in their exploitation and requiring new environmental assessments.

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The Court of Session in Scotland has overturned the licenses granted by British authorities to oil giants Shell and Equinor to develop two North Sea projects. The ruling came after Greenpeace and the Uplift organization contested the licenses, arguing that the approvals were granted unlawfully because they did not account for the indirect greenhouse gas emissions generated by the projects. The two companies will now need to submit new applications and reassess the environmental impact of their projects.

THE AFFECTED PROJECTS

The Jackdaw gas field, located 250 km off the Scottish coast, was granted its approval in 2022. Shell, the owner of the project, had invested £800 million in its development and planned to begin production this year. On the other hand, Equinor, operating the Rosebank oil field, had seen its project approved in 2023. This field is considered the largest untapped oil reserve in the UK, with reserves estimated at 300 million barrels of oil. Drilling was scheduled to start between 2026 and 2030.

REACTIONS FROM SECTOR STAKEHOLDERS

Shell expressed disappointment, highlighting that Jackdaw would be an essential contributor to the UK’s gas supply, capable of heating 1.4 million homes. The company called for swift action to allow operators to continue developing their North Sea projects. Equinor, for its part, welcomed the court’s decision, noting that the annulment would allow the company to continue working on the Rosebank project while awaiting new approvals and re-evaluating greenhouse gas emissions according to updated environmental guidelines.

POLITICAL AND LEGISLATIVE IMPLICATIONS

This ruling comes amid shifting political dynamics in the UK. The recently elected Labour government announced in August that it would not defend these projects in court. The Ministry of Energy Security and Net Zero has indicated it will revise its environmental guidelines in response to the Supreme Court ruling. Prime Minister Keir Starmer also reaffirmed the UK’s commitment to reducing greenhouse gas emissions by 81% by 2035 compared to 1990 levels.

North Sea oil and gas licences quashed as judge brands them ‘unlawful’

Campaigners against the Rosebank oil field, pictured outside the Commons, have welcomed today’s decision. Picture: Alamy

By Gina Davidson

Two oil fields in the North Sea have had their licences to drill stopped by Scotland’s highest court.

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Consent for the Jackdaw and Rosebank fields – given by Rishi Sunak’s government – has been branded unlawful by the Court of Session in Edinburgh.

The ruling states that permission was granted without taking into account the climate impact of burning the fuel the fields would produce.

As a result no drilling can go ahead until new consents are granted by the new Labour UK government, which is yet to produce its own environmental guidelines for oil and gas.

Greenpeace and Uplift brought the legal challenge over the previous Conservative government’s decisions to give approval to the Rosebank oil field north west of Shetland and the Jackdaw gas field off Aberdeen.

They argued the UK Government and North Sea Transition Authority (NSTA) had acted unlawfully when granting consent as environmental impact assessments did not take into account downstream emissions resulting from the burning of the extracted fuels.

In his judgement Lord Ericht said the decision to grant consent was unlawful, and ruled the consent should be “reduced” (quashed) and reconsidered.

In his published opinion, he said: “Having considered all the circumstances of the case and the various public and private interests, I have reached the conclusion that the balance lies in favour of granting reduction.

“The public interest in authorities acting lawfully and the private interest of members of the public in climate change outweigh the private interest of the developers.

“The factors advanced by Shell, Equinor and Ithaca in respect of their private interest do not justify the departure on equitable grounds from the normal remedy of reduction of an unlawful decision.

“The decisions will be reduced, and can be taken again, this time taking into account downstream emissions.”

He said there was a public interest in having the decision “remade on a lawful basis” because of the effects of climate change.

“The effect of the burning of fossil fuels on climate change and the lives of individual persons is now well recognised in law,” he said.

The former UK government had approved Shell’s proposals to develop the Jackdaw field in 2022, and cleared Equinor and Ithaca Energy’s plans to drill in the Rosebank field in September 2023.

The new Labour government did not fight the legal challenge, but the companies involved did defend their right to drill.

Today Lord Ericht ordered that the licences be suspended pending the Secretary of State’s re-consideration of the matter, which he said would give the companies “options” on how to proceed in the interim.

However, he said no oil or gas should be extracted before a new decision on consent is made.

Philip Evans, senior campaigner at Greenpeace UK, said: “This is a historic win – the age of governments approving new drilling sites by ignoring their climate impacts is over.

“The courts have agreed with what climate campaigners have said all along: Rosebank and Jackdaw are unlawful, and their full climate impacts must now be properly considered.

“Fossil fuels are an economic dead end. Now that the ball is back in the government’s court, ministers have the opportunity to sort out the legal mess left by their predecessors.”

Tessa Khan, executive director of Uplift, said: “This is a significant win which means that Rosebank cannot go ahead without accounting for its enormous climate harm.

“The continued burning of oil and gas is why we are seeing more extreme weather like Storm Eowyn and flooding that have claimed lives and caused hundreds of millions of pounds in damage and clean-up costs, not to mention the devastation it’s causing in other countries.

“Most people are now joining the dots with endless oil and gas drilling and are worried about the future.”

A Shell spokesperson called for swift action from the Government in response to the ruling.

The spokesperson said: “Today’s ruling rightly allows work to progress on this nationally important energy project while new consents are sought.

“We have spent more than £800 million since the regulator approved Jackdaw in 2022. Swift action is needed from the Government so that we and other North Sea operators can make decisions about vital UK energy infrastructure.

“When operational, Jackdaw would provide enough fuel to heat 1.4 million UK homes, at a time when older gas fields are reaching the end of their production and the UK is reliant on imported gas to meet its energy needs.”

An Equinor spokesperson said: “We welcome today’s ruling and are pleased with the outcome which allows us to continue with progressing the Rosebank project while we await new consents.

“Rosebank is critical for the UK’s economic growth, with an estimated 77% (£6.6bn) of total direct investment benefiting UK businesses.

“Equinor and its Rosebank JV partner, Ithaca, have already committed over £2.2bn on developing Rosebank – awarding vital contracts across the supply chain and employing personnel to deliver the work.”

Ithaca has been approached for comment.

A Department for Energy Security and Net Zero spokesperson said: “The government has already consulted on revised environmental guidance to take into account emissions from burning extracted oil and gas to provide stability for industry, support investment, protect jobs and deliver economic growth.

“We will respond to this consultation as soon as possible and developers will be able to apply for consents under this revised regime.

“Our priority is to deliver a fair, orderly and prosperous transition in the North Sea in line with our climate and legal obligations, which drives towards our clean energy future of energy security, lower bills, and good, long-term jobs.”

Scottish Greens MSP Mark Ruskell said the decision was welcome, but that the current UK government must now revisit all licences granted by its predecessor.

He said: “I’m delighted at the decision because it respects the climate science. The companies developing oil and gas should have done this work early on – and the previous Westminster government should have demanded it.

“Of course the oil and gas extracted will be burned, and of course it will have a massive impact on our environment. So not to have done the work to assess that impact was irresponsible.

“Now the Westminster government should look back at the decisions made by the previous government about oil and gas licenses and open them up to review as well.”

However Scottish Conservative energy spokesman Douglas Lumsden MSP said: “This decision is a hammer blow for the North Sea oil and gas industry, which is so crucial for our economy and energy security.

“Labour abandoned tens of thousands of highly skilled workers by refusing to defend this case. They must now belatedly show some common sense and back the sector.

“The majority of Scots support continued oil and gas production in the North Sea because they recognise it supports jobs and that, without it, we’d be more reliant on importing fossil fuels from abroad with a far greater carbon footprint.

“Labour’s reckless hostility to the industry – which is shared by the SNP, Greens and the Liberal Democrats – saw BP recently announce thousands of job losses.

“The Scottish Conservatives are the only party at Holyrood standing up for North Sea oil and gas and the North East communities that rely upon it.”

A Scottish Government spokesperson said it was “taking the time to carefully consider the court rulings announced today” and added: “Decisions on offshore oil and gas licensing and consenting are currently reserved to the UK Government.

“We have been consistently clear that the UK Government should approach these decisions on a rigorously evidence-led, case by case, basis – with robust climate compatibility and energy security being key considerations.”

A UK court ruled that two North Sea oil and gas fields must re-apply for environmental permits while allowing the developments to continue, setting up a crucial test of whether the new Labour government will prioritize economic growth or climate action.

The Court of Session in Edinburgh quashed the approvals for the Rosebank and Jackdaw projects — led by Equinor ASA and Shell Plc, respectively — which were unlawful because they hadn’t considered the climate impact of burning oil and gas pumped from the fields, according to a statement from the court on Thursday.

The fate of these projects has big implications for the UK North Sea, an aging oil and gas province where major new developments are dwindling. While the ruling was a victory for Greenpeace and Uplift, environmental groups that brought the legal action, it left open the possibility that the two fields could one day still come into production.

A UK court ruled that two North Sea oil and gas fields must re-apply for environmental permits while allowing the developments to continue. Image by Nigel Harris via iStock

Image by Nigel Harris via iStock A UK court ruled that two North Sea oil and gas fields must re-apply for environmental permits while allowing the developments to continue. A UK court ruled that two North Sea oil and gas fields must re-apply for environmental permits while allowing the developments to continue.

Shell and Equinor can continue working on the projects while the government considers their new environmental applications, although they will not be allowed to pump any oil and gas before a final decision is reached, according to the ruling.

It was unclear how long this decision could take. The UK government is still discussing how exactly to assess so-called Scope 3 emissions from burning a field’s oil and gas, a process that must be completed before the environmental impact assessments for Rosebank and Jackdaw can be reconsidered, according to the court ruling.

“The government has already consulted on revised environmental guidance to take into account emissions from burning extracted oil and gas,” said a spokesperson for the Department of Energy Security and Net Zero. “We will respond to this consultation as soon as possible and developers will be able to apply for consents under this revised regime.”

In the meantime, both Shell and Equinor said they intend to proceed with the developments.

“We have spent more than £800 million ($995 million) since the regulator approved Jackdaw in 2022,” Shell said in a statement. “Swift action is needed from the government so that we and other North Sea operators can make decisions about vital UK energy infrastructure.”

Rosebank, located about 130 kilometers (81 miles) northwest of Scotland’s Shetland Islands, has estimated total recoverable resources of about 300 million barrels of oil. Intended daily production of 70,000 barrels of oil and 21 million cubic feet of gas would make it one of the largest fields in the UK — but a minnow in a world where demand exceeds 100 million barrels a day of crude.

Equinor said in a statement that it planned to submit an assessment of the project’s emissions “in full compliance with the government’s new environmental guidance.” The Norwegian energy giant and partner Ithaca Energy Plc have committed to spending over £2.2 billion on Rosebank.

Last month, Shell and Equinor agreed to combine their North Sea operations into a single entity.

Net Zero Pledges

Greenpeace and Uplift have argued that any new fields would be incompatible with the country’s climate commitments.

“The age of governments approving new drilling sites by ignoring their climate impacts is over,” Philip Evans, senior campaigner at Greenpeace UK, said in a statement. The government “should use this moment to set out a new path for the North Sea, reaffirming their commitment to no new oil and gas, and prioritizing clean energy.”

Permits for the two fields were granted under the previous Conservative government, but came into question after the UK Supreme Court ruled that environmental impact assessments for oil and gas production facilities must consider the climate impact of burning the fuel produced.

When Greenpeace and Uplift challenged the legality of those permits, the UK’s new Labour government, under pressure to reduce carbon emissions and meet net zero targets, did not contest the case. Equinor and Shell also didn’t dispute that the environmental approval was unlawful, but argued in court that they went through the permitting process in good faith and that freezing the developments while they re-applied would threaten the projects’ commercial viability.

If the projects don’t happen, “the UK will lose out on potential jobs and tax revenues, while net emissions for the country will also be higher as we import more hydrocarbons,” said RBC analyst Biraj Borkhataria.

Whether or not to grant fresh environmental approvals for Rosebank and Jackdaw could be a controversial process. The Labour government has been courting CEOs in its quest to attract new investment and boost economic growth, and blocking two major developments on which hundreds of millions of pounds have already been spent would run counter to that effort.

Yet ministers have also made bold pledges about expanding clean energy and achieving net zero emissions. Splits are already emerging within the cabinet of Prime Minister Keir Starmer and the wider Labour Party over the expansion of Heathrow airport, a long-delayed infrastructure project that also raises concerns around air pollution and greenhouse gases.