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January 18, 2022

UK high court rejects legal challenge to North Sea oil and gas

The claimants intend to appeal the decision, which allows the Oil and Gas Authority to pursue exploration without considering tax flows.

By Scarlett Evans

The UK’s high court has today passed its judgement regarding a legal challenge brought against the government’s support for the fossil fuel industry, with the court rejecting these claims. 

Court proceedings began in December, with three environmental campaigners alleging that the government had been unlawfully subsidising the oil and gas industry through tax incentives. The campaigners – climate activist Mikaela Loach, SNP Common Weal organiser Kairin van Sweeden, and oil refinery worker Jeremy Cox – also claimed that the state-owned Oil and Gas Authority’s (OGA) failure to regulate tax breaks for the oil and gas industry is counter to the nation’s net zero by 2050 pledge. 

The court ruled against this claim, saying that the OGA has a responsibility to help the UK achieve maximum economic recovery (MER) in its oil and gas sector, with the parameters of this process being defined by the OGA itself. As such, the judge ruled that this process does not require consideration of tax breaks. 

The campaigners are planning to appeal the decision, and are reportedly seeking advice on the next steps to do so.  

 “This judgement 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,” said Jeremy Cox in a statement.  

“We still believe that, in doing so, the OGA has acted unlawfully by ignoring tax subsidies when approving new fossil fuel projects and we are seeking legal advice on an appeal. MER is plainly incompatible with the UK’s net-zero commitment, the nationally determined contribution, and ‘keeping 1.5 alive’.” 

“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,” said Rowan Smith, the solicitor representing the claimants.  

“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.”  

Smith concluded: “We are advising our clients on the potential for making an application to the Court of Appeal.”  

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