The High Court has thrown out a case brought by climate activists against OGA, the UK’s oil and gas authority.
The judiciary has rejected the argument brought forward by three environmental campaigners that the government had been unlawfully subsiding the oil and gas industry through tax incentives.
The claimants are: Mikaela Loach, a climate activist and medical student at the University of Edinburgh; Kairin van Sweeden, an SNP Common Weal organiser and daughter of a Scottish oil worker; Jeremy Cox, a former oil refinery worker.
The three activists further argued that the state-owned regulator’s failure to clamp down on 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, and stated that OGA has a responsibility to help the UK achieve maximum economic recovery in its oil and gas sector, with the parameters of this process being defined by the OGA itself.
The ruling, seen by Reuters, is a setback for climate activists who are increasingly taking to the courts to force a reduction in oil and gas production in order to control global warming.
In this case, activists targeted OGA’s assessment of applications for oil and gas field developments on a pre-tax basis.
It argued that if oil and gas prices were low, the government actually returned money to producers rather than benefiting from tax receipts.
They believed this was in conflict with the government’s long-standing policy of “maximising economic recovery” of oil and gas in the British North Sea, which means that oil and gas extraction there should make commercial sense, alongside the UK’s 2050 net zero emissions goal.
In the reported documents, Judge Sara Cockerill said: “I reject the contention that the strategy is unlawful because the definition of ‘economically recoverable’ was irrational. It follows that the claimants’ claim fails and is dismissed.”
“We welcome the judgment. We remain firmly focused on regulating and influencing the oil, gas and carbon storage industries to both secure energy supply and support the transition to net zero,” added an OGA spokesman said in a statement.
The Treasury received around £248m from oil and gas production in 2020/21, a drop of 71 per cent on the previous year, according to official data, due to a plunge in oil and gas prices during the pandemic.
In a joint statement the claimants said: “Today the High Court ruled against us, but accepted that OGA can ignore the billions of pounds in public money that prop up oil and gas companies when deciding whether or not to approve oil and gas extraction. The court also accepted that oil and gas companies may receive more pay-outs in public money than they pay in tax. While the court did not think this is unlawful, we think this is completely unacceptable in a time of bumper profits for oil and gas companies and during a climate emergency.”
OGA has rejected the suggestion the judge position vindicated the claimant’s arguments.
The authority pointed to a passage in the approved judgement with explicitly rejected the claim compoanies are enjoying tax revenues from the taxpayer.
In paragraph 105 of the verdict, it said: “Companies are not receiving tax revenues from the UK taxpayer but receiving a partial repayment of the tax that the company has paid in the past. Whilst in any given year a particular company may receive a rebate, it will never receive more by way of rebate than has been paid by way of tax.”