The District Court of Oslo, Norway, recently handed down a ruling on fossil fuels that is a wake-up call for anyone concerned about climate change. The ruling requires energy companies to take into account the industry’s total carbon footprint, which could change the way oil and gas exploration and production licenses are awarded in Norway and inspire similar legal challenges in other countries. The court ruled that three oil production licenses, held by companies such as Equinor and Aker BP, were invalid mainly because they failed to take into account “downstream” emissions, i.e. emissions resulting from the combustion of oil extracted from the North Sea.
This case represents a significant victory for environmental campaigners who have sought to make oil and gas companies take responsibility for the emissions resulting from the combustion of their products. Despite similar legal challenges elsewhere, this approach has often been rejected in recent years.
Oil and gas companies applying for exploration and production licenses are generally required to produce an Environmental Impact Assessment (EIA) for each proposed project, which must now take into account its impact on climate. However, this obligation was generally interpreted as covering only exploration and production emissions, and not those resulting from the combustion of extracted hydrocarbons.
The Oslo court’s decision marks a turning point in requiring downstream emissions to be taken into account before permits are granted, calling into question the approach hitherto adopted by regulators and courts in hydrocarbon-producing countries such as Norway and the UK. Although this decision applies only to Norway, it could inspire similar arguments in climate disputes elsewhere, forcing governments to reassess how the exploitation and burning of new oil and gas fields actually affects climate change.
