On 20th June, the United Kingdom Supreme Court (“Court”) delivered a landmark judgment in the R v. Surrey County Council. The case concerned whether the mandatory requirement of Environmental Impact Assessment (“EIA”) of new oil wells includes the downstream activities or Scope 3 emissions within its fold. By a 3:2 majority, the Court overruled the lower court order to hold that the EIA for oil extraction from oil wells will include downstream activities or Scope 3 emissions effectively, meaning that the environmental clearance (“EC”) will take into account Scope 3 emissions. This order expands the environmental jurisprudence of EIA, which will directly affect many Oil Manufacturing Companies (“OMCs”) and allied industries involved in the process.
Scope 3 Emissions part of EIA
The EIA is a management tool for ensuring optimal usage of natural resources for sustainable development. The basic principle underlying the EIA is that development consent for public and private projects likely to affect the environment shall be given after ascertaining both the beneficial and the adverse effects of such projects. The EIA also helps to set up mechanisms to mitigate the adverse effects of such a project. Such mechanisms vary across jurisdictions and are directly proportional to the detrimental impact of a project. Thus, any expansion of EIA’s ambit will proportionately impact industries’ obligations to obtain EC.
The rationale for the inclusion of the Green House Gas (“GHG”) emissions or Scope 3 emissions in the EIA, especially for oil refinery projects, was that a direct causal link could be established between the extraction of the oil and the intended result of the value chain, i.e., combustion. The Court opined that this might not be true for other industries like iron, steel, or copper, wherein innumerable end usage is possible and it is difficult to ascertain the Scope 3 emissions, i.e., difficulty quantifying the downstream emissions. The relevant paragraph of the judgement is reproduced below to illustrate the same:
“Oil is a very different commodity from, say, iron or steel, which have many possible uses and can be incorporated into many different types of end product used for all sorts of different purposes….manufacture of the steel is far from being sufficient to bring about those effects. Such effects will depend on innumerable decisions made “downstream” about how the steel is used and how products made from the steel are used.” [para 121]
The Court’s order expanded the effect of EIA beyond a country’s jurisdiction. It observed that it is immaterial where the extracted oil is utilised, as an inexorable direct causal link to its end use is established. This is a significant shift from the traditional understanding of measuring the environmental impact of a project to being site-specific or jurisdiction-specific. Although this observation is limited to oil extraction, the principle has potential for wider application, albeit in a modified form, to activities impacting global climate or biodiversity, while undertaking EIA for projects. For instance, in projects or industries wherein the ‘inevitable causation’ approach can be applied to their activities from development to effect, such companies’ liability will increase under EIA. Thus, EIA has been given a transboundary application mandating industries to adapt their practices in conformity with global implications. The Convention on EIA in a transboundary context, as adopted in 1991, already provided a framework of how domestic EIA legislative frameworks shall assess and consider the ‘transboundary impact’ while granting EC.
India’s EIA resembles the UK’s EIA framework and is based on universally accepted common law principles applicable in both jurisdictions. Thus, the broad interpretation of the EIA by the Court will also shape India’s environmental law jurisprudence and can influence the behaviour of fossil fuel industries or other carbon-intensive industries wherein the causal link is established.
India needs a better EIA framework
The formal structure of India’s EIA was granted in 1994 via a notification under the Environment Protection Act, 1986. Before 1994, EC was an administrative decision that may or may not consider the environmental impact of a project. It was granted a more structured statutory authority in 2006. Broadly, EIA is an 8-step process: coping, screening, impact analysis, mitigation, reporting, reviewing of EIA, decision making, and post-monitoring.
India’s EIA framework suffers from structural shortcomings and has been criticised for not conforming to the changed reality of environmental governance. For instance, under impact analysis, alternatives are always considered from a binary perspective of “with project” and “without project”, without consideration of other aspects or the nature of projects.
Another deficiency of the current EIA is the lack of contextual factors regarding the application of the proposed practices in specific settings and the verification of links between processes and desired outcomes. This hampers the mitigation stage and other aspects, like public participation, an essential facet of EIA, as enumerated in Principle 10 of the Rio Declaration, 1992, which has emphasised access to information and public participation as tools for sustainable development. The lack of objective information by the project proponents in their project declaration further hampers the determination of contexts and links.
Globalised Sustainability
There’s an urgency for more globalised business practices and project declarations, as enumerated under EIA. For instance, the International Financial Reporting Standards (“IFRS”) Foundation has developed international standards for disclosing information related to sustainability. Sustainability is broadly defined and includes business activities’ direct and indirect effects on the environment. Two standards, S1 and S2, have been issued by the IFRS. The IFRS S1 deals with the general disclosure of sustainability-related financial information, and IFRS S2 deals with the disclosure of climate-related information. Thus, S2 is broader than S1 and includes all three types of emissions, including Scope 3.
Thus, such compliance measures, in addition to the Court’s emphasis on the direct linkage between the activities and effects, will assist in establishing an objective connection, allowing for more informed public participation in the EIA process. Additionally, expanding the EIA to Scope 3 emissions, not restricted by geographical boundaries, allows for a more comprehensive assessment of transboundary mitigation strategies. The changing global climate realities and development of corresponding rights of communities also necessitate the adoption of social impact as part of EIA. Such a ruling by the Court is pushing towards these nuanced environmental realities.
Filed Under
About the Authors
Shashank is a Research Fellow at Vidhi. He works with the Climate and Ecosystem team wherein he focuses on legal and policy issues related to current government measures around climate and environment. Prior to joining Vidhi, Shashank worked as a LAMP (Legislative Assistant to Member of Parliament) Fellow with a Lok Sabha MP wherein he worked on environment, disability and tech related matters. He also drafted two Private Members' Bill for the MP which were introduced in Lok Sabha. Shashank was also a Javed Abidi Fellow at NCPEDP wherein he worked on issues related to inclusivity and accessibility. His work as a Javed Abidi fellow primarily focused on the exclusion of disabled people from the political landscape. He likes to write on multiple policy related issues and his articles have regularly featured across platforms. Shashank graduated from Dr Ram Manohar Lohia National Law University with BA LLB (IP hons) in 2021
