Climate activists have taken the UK Government to high court over its alleged unlawful subsidising of the fossil fuel industry through tax incentives, with proceedings beginning on Wednesday.
The judicial review was brought against two defendants, the Oil and Gas Authority (OGA) and the secretary of state for business, energy and industrial strategy .
The plaintiffs – climate activist Mikaela Loach, thinktank director Kairin van Sweeden, and former oil refinery worker Jeremy Cox – say that the current strategy pursued by the OGA fails to regulate tax breaks for oil and gas companies. Such a use of public money to fund oil and gas production is, the campaigners argue, at odds with the nation’s climate targets, as well as being uneconomical for the nation as a whole.
“The exclusion of tax … is simply impermissible in the context of a proper understanding of economic recovery,” the campaigners’ lawyer, David Wolfe, told the court.
Wolfe also said that tax breaks had left the government with “net negative tax revenues” in two out of the past six years, arguing that this could prove encouraging to producers to continue extraction activities.
The activists, who are working as part of the Paid to Pollute campaign, say that fossil fuel companies have received billions in tax relief over the years – with one example being the 2016/2017 year when the government returned £400m to producers – receiving more than they are paying.
The government has disputed these claims, saying that returning tax is lawful if projects prove unprofitable, and citing pandemic-related delays and price slumps as reasons for such tax relief.
Kate Gallafent QC, speaking on behalf of the government, also said that the OGA is not responsible for Scope 3 emissions as part of its climate targets, and therefore not liable for the tax break’s environmental impact.
Cases such as these are becoming increasingly common, with climate activists turning to legal interventions as nations toe the line between economic expansion and adhering to increasingly stringent net-zero targets.
Uncertainty over the investment future of the oil and gas industry has spiked following Shell’s recent decision to pull out of the Cambo oil field, citing a lack of economic incentive, and stirring sentiment that the tide may be turning on investments into further extractions.
The case is set to continue.