Legal challenge launched over UK support for North Sea oil and gas

Three environmental campaigners have launched a legal challenge against the UK government over its support for the production of North Sea oil and gas that is only economic because of subsidies, the Paid to Pollute campaign has announced.

On behalf of the campaigners, law firm Leigh Day has applied to the High Court for judicial review of the state-owned Oil and Gas Authority’s (OGA) new strategy, which includes a legal duty to “maximise economic recovery”.

The campaigners argue that the OGA's interpretation of this duty fails to consider the tax breaks that make the UK “the most profitable country in the world for oil companies to develop big offshore fields”.

Rowan Smith, a public lawyer at Leigh Day, said: “Our clients’ case is that the OGA’s new strategy encourages companies to produce oil and gas without considering the economic repercussions of that on the public purse and the UK as a whole.

“This means that, in some circumstances, such production is not ‘economic’ for the UK as a whole, but the OGA is still seeking to maximise it.

“The case argues that is unlawful, having regard to the terms of the OGA’s legal duty, and also irrational, because it will result in increased levels of oil and gas production, in conflict with the UK’s legal duty to achieve net-zero emissions by 2050.”

Every year oil and gas companies receive subsidies worth hundreds of millions of pounds through reliefs on decommissioning offshore installations, and reduced tax rates and allowances, and in 2015/16 and 2016/17, the government gave more money to oil companies than it received in taxes.

The new OGA strategy came into force in February 2021, a few weeks before the government announced that it would continue to allow oil and gas companies to explore the North Sea for new reserves.

The legal claim names as defendants both the OGA and the Business Secretary Kwasi Kwarteng, who is responsible to parliament for the OGA and sets its policy.

One claimant Mikaela Loach, a climate activist and medical student at the University of Edinburgh, said: “Much of the UK’s oil and gas production is only economic because of public handouts.

“The government is paying companies billions in public money to extract every last drop of oil from the North Sea when it should be focusing on decarbonising the UK economy, meeting its international climate obligations, and setting an example to the world as host of the UN climate summit in November.”

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