Court of Appeal dismisses climate challenge to development of large-scale gas plant in North Yorkshire

Introduction

The Court of Appeal has upheld the Secretary of State’s (SoS’) decision to grant a DCO for two gas-fired generating units at the Drax Power Station in North Yorkshire, despite ClientEarth claiming that the decision was inconsistent with the UK’s climate commitments. 

ClientEarth brought the appeal following the earlier High Court decision of Mr Justice Holgate to dismiss its claim for judicial review of the SoS’ decision to issue the Drax Power (Generating Stations) Order 2019 (S.I. 2019 No. 1315). 

Drax made the application for the DCO in May 2018.  In July 2018, the SoS appointed a panel to conduct the examination of the application and to report on the conclusions and provide a recommendation. ClientEarth objected to the development and took part in the examination. The examining authority’s report recommended that consent be withheld. In its view, the proposed development would not accord with energy national policy statements and would undermine the UK Government’s commitment to reduce greenhouse gas (GHG) emissions, as required under the Climate Change Act 2008.

The Court of Appeal’s decision provides helpful clarity on the interpretation of the Overarching National Policy Statement (NPS) for Energy (EN-1) and the National Policy Statement for Fossil Fuel Electricity Generating Infrastructure (EN-2). It is a significant decision which will impact future energy projects, particularly fossil fuel-based developments, providing confirmation on how ‘need’ should be assessed and balanced against adverse GHG emissions.
ClientEarth brought the appeal on three grounds, arguing that the SoS had:

1. Misinterpreted EN-1 on the approach to assessing an energy nationally significant infrastructure project’s (NSIP’s) contribution to satisfying the need for the type of infrastructure proposed;
2. Misinterpreted EN-1 on the approach to GHG emissions; and/or
3. Misapplied Section 104(7) of the Planning Act 2008 (the Planning Act).

Ground One: The Interpretation of paragraph 3.2.3 of EN-1

The main argument raised by ClientEarth was on the correct interpretation of paragraph 3.2.3 of EN-1 which provides as follows: “This Part […] shows why the Government considers that the need for such infrastructure will often be urgent. The IPC should therefore give substantial weight to considerations of need. The weight which is attributed to considerations of need in any given case should be proportionate to the anticipated extent of a project’s actual contribution to satisfying the need for a particular type of infrastructure”

ClientEarth argued that paragraph 3.2.3 required a quantitative assessment of need to be undertaken by the SoS when considering an application for a DCO for a proposed development.

The Court of Appeal disagreed, finding that paragraph 3.2.3 “must be read in the context set by the other passages of EN-1” including paragraph 3.1.1 which states that the UK needs all types of energy infrastructure “in order to achieve energy security while at the same time dramatically reducing GHG”.

The Court held that when reading the final two sentences of paragraph 3.2.3 against the wider context of the policies on need, the meaning of paragraph 3.2.3 was clear. The Court determined:

1. “Substantial weight” should be given to “considerations of need”;
2. The weight due to those considerations in any given case is not immutably fixed but should be “proportionate to the anticipated extent of the project’s actual contribution to satisfying the need” for the relevant type of infrastructure;
3. The SoS must consider what weight would be “proportionate” to the “anticipated extent” of the development’s “actual contribution” to satisfying the need for infrastructure of that type and this would involve looking towards the future; and
4. There is no single or prescribed methodology that the SoS must apply when considering what weight would be “proportionate” and EN-1 does not prescribe an assessment to be approached on a quantitative basis.

Applying the above principles, the Court of Appeal found that the SoS did, upon the facts, proceed on the correct interpretation of need under EN-1.

Ground 2: The Interpretation of paragraph 5.2.2 of EN-1

The second argument raised by ClientEarth was that the Secretary of State had misinterpreted paragraph 5.2.2 of EN-1 which states:

“CO2 emissions are a significant adverse impact from some types of energy infrastructure which cannot be totally avoided (even with full deployment of CCS technology). However, given the characteristics of these and other technologies, as noted in Part 3 of this NPS, and the range of non-planning policies aimed at decarbonising electricity generation such as EU ETS (see Section 2.2 above), Government has determined that CO2 emissions are not reasons to prohibit the consenting of projects which use these technologies or to impose more restrictions on them in the planning policy framework than are set out in the energy NPSs (e.g. the CCR and, for coal, CCS requirements).”

ClientEarth claimed that the SoS had erred in interpreting paragraph 5.2.2 by concluding that the GHG were irrelevant or had no weight. 

The Court of Appeal dismissed ClientEarth’s argument on the basis that the SoS had acknowledged “the significant adverse impact of the proposed Development on the amount of greenhouse gases that will be emitted to atmosphere”, but recognised that that should not “displace the presumption [set out in EN-1] in favour of granting consent”. 

The Court of Appeal also found that EN-1 makes clear that the fact that a proposed development will emit CO2 is not an automatic “reason[s] to prohibit the consenting of projects”.

Ground 3: S.104(7) of the Planning Act

Finally, ClientEarth argued that the SoS had failed to discharge its obligation under Section 104(7) of the Planning Act, which requires it to weigh the “adverse impact” of the proposed development against its “benefits”. They claimed that instead, the SoS simply reiterated her assessment under Section 104(3) of the Planning Act which required her to consider the application in accordance with any relevant NPS.

The Court of Appeal held that the SoS had acted lawfully by giving due weight to the need for gas supply infrastructure as recognised in the EN-1, and setting that against any harm the development may cause in accordance with the requirements of Section 104(7) of the Planning Act.

ClientEarth has confirmed that it will not appeal the Court of Appeal’s decision.

Commentary

The Court of Appeal’s decision will be welcomed by the industry for clarifying the correct approach to the interpretation of EN-1 and how the assessment of the ‘need’ for new energy infrastructure should be balanced against its environmental impacts. 

ClientEarth argued that a quantitative assessment was required to calculate a project’s particular contribution to satisfying the need for new energy infrastructure. The Court of Appeal disagreed, finding instead that the decision maker should give substantial weight to considerations of ‘need’ and that this should be proportionate to that project’s anticipated contribution to meeting need. However, there is no prescribed method for undertaking this exercise and it does not require a quantitative assessment. 

The Court of Appeal also confirmed that EN-1 does not require a decision maker to discount CO2 emissions when assessing the planning balance. That balancing exercise between the project’s benefits and its emissions must still be undertaken. EN-1 rather provides that where necessary infrastructure will also produce GHGs, this fact is not a reason in and of itself to deny consent. 

Since the Court of Appeal’s decision, reports in the media suggest that Drax may not pursue this project. 

The authors would like to acknowledge the contribution to this article by Madeline Hallwright