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Campaigners consider appeal as court rules on challenge to Oil and Gas Authority emissions strategy

Environmental campaigners have been vindicated in bringing a challenge to the Oil and Gas Authority’s (OGA) Net Zero Strategy, with the judgment confirming that it is possible for oil companies (including foreign based ones) to profit from the UK’s tax regime, something which the OGA had previously denied. 

Posted on 18 January 2022

The three campaigners had claimed that, because the strategy ignored tax breaks to drilling companies, the OGA could not lawfully conclude whether or not production that results is economic for the UK as a whole, in breach of the legislation.

It was argued that the strategy leads to increased greenhouse gas emissions that would not otherwise happen, and conflicts with the UK’s legal duty to achieve net zero emissions by 2050.
 
The OGA has a responsibility to achieve Maximum Economic Recovery (MER) of oil and gas in the UK, and the judge ruled that the question of what MER means is up to the OGA, not the Court, and the definition does not require consideration of tax flows. That ruling effectively allows the OGA, when deciding on new North Sea developments, to ignore in law how payments from taxpayers encourage increased fossil fuel production. The campaigners are seeking advice on appealing that legal conclusion. 
 
The campaigners who made the judicial review claim are: Mikaela Loach, a climate activist and medical student; Kairin van Sweeden, an SNP Common Weal organiser and daughter of a Scottish oil worker; and Jeremy Cox, who previously worked in the downstream oil industry and then as a project management consultant, before retiring.
 
The three claimants are supported by Uplift, which coordinates Paid 2 Pollute, a campaign supported by environmental groups including Greenpeace UK, Friends of the Earth Scotland and 350.org.
 
Jeremy Cox said:
 
“This judgment exposes the absurdity of North Sea oil and gas, where those in government responsible for tackling climate change are able to ignore how taxpayer money is used to prop up the industry.  We still believe that, in doing so, the Oil & Gas Authority has acted unlawfully by ignoring tax subsidies when approving new fossil fuel projects and we are seeking legal advice on an appeal. That said, things are rapidly changing, with the Business and Energy Secretary recently announcing that all fossil fuel licensing rounds will be subject to a Climate Compatibility Checkpoint (CCC). Whatever the outcome of our case, the Government has to revisit the principle of MER, otherwise the check will be pointless. MER is plainly incompatible with CCC, as well as with the UK’s Net Zero commitment, the nationally determined contribution and ‘keeping 1.5 alive’.”
 
Rowan Smith, Leigh Day solicitor representing the claimants, said:
 
“We consider that the Court’s conclusion that it is not its role to interpret the meaning of MER as a statutory term, runs contrary to established principle.  We also consider that, in reaching its findings, the Court appears to have misconstrued the claimants’ case.  It was not about how taxes are set, rather it was the OGA’s failure to consider the effects of taxation as part of its MER assessment, which rendered the strategy unlawful.   We are advising our clients on the potential for making an application to the Court of Appeal.”

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