Counting the Carbon: Isle of Man Fossil Fuel Projects after Finch

Whilst the world has listened to the decarbonising announcements at the COP 29 global climate change conference in Baku, Azerbaijan, the UK Government admitted in court that the Rosebank oil field, the country’s largest untapped oil field, had been given permission to proceed unlawfully.

The UK Government’s admission came as a result of the UK Supreme Court judgment in Finch v Surrey County Council in June 2024. The Court found that a planning application for a Surrey oil well was unlawfully approved as it had failed to assess the effect on climate of the combustion of the oil to be produced. The judgment had the consequence of bringing into question the approval of other UK fossil fuel projects which had failed to consider the downstream emissions of greenhouse gasses in the decision.

In this article, litigation advocate Andrew Langan-Newton explores the impact the Supreme Court’s judgment could have on applications for fossil fuel extraction projects in the Isle of Man.

The Finch judgment

In Finch, a community action group brought a judicial review claim (known as a doleance claim in the Isle of Man) against the local authority’s approval of a planning application to retain and expand an existing onshore oil well for the production of oil over a 25-year period.

The claim was brought on the basis that the decision to approve the application did not comply with the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 (the 2017 Regulations) because it failed to assess the emissions that would result from the downstream combustion of the oil to be produced.

The claim was rejected by the High Court and the Court of Appeal, before the UK Supreme Court reversed the earlier judgments. It decided that downstream emissions (sometimes referred to as ‘scope 3’ emissions but not so expressly in the 2017 Regulations) should have properly been assessed as part of the application’s environmental impact assessment (EIA) as being “indirect significant effects” on the climate of the project (being the relevant terminology under the 2017 Regulations).

In making its decision, the Supreme Court emphasised that an approval of a project required full knowledge of the environmental consequences, so it could “have been properly assessed so that public debate could take place on an informed basis.” The Court explained that that was a key democratic function of the EIA process, which had not been fulfilled in that case.

Impact of Finch in the Isle of Man

The courts of the Isle of Man are not bound to follow judgments of the UK Supreme Court; however, they are considered to be very persuasive and generally followed unless there is an Isle of Man law, judgment, or custom to the contrary. The Finch judgment will therefore be highly persuasive if the Isle of Man has EIA regulations equivalent to the 2017 Regulations in the UK.

Unless subject to exemptions, any “development of land” requires planning approval under the Town and Country Planning Act 1999 (the 1999 Act). In determining planning applications, decisions are informed by the terms of the Isle of Man Strategic Plan 2016 (the Strategic Plan) and relevant area plans.

Under the Strategic Plan, it is proposed that an EIA is always required in respect of “Surface industrial installations for the extraction of materials”. It is separately indicated that an EIA is required in circumstances of “significant environmental effects”. It would appear therefore that an EIA will be required for the surface extraction of fossil fuels in the Isle of Man.

As to the terms of an Isle of Man EIA and whether it aligns with the 2017 Regulations, the Strategic Plan states that in the absence of a relevant Planning Policy Statement,  planning applications will be determined in accordance with the current practice on EIAs from England & Wales. This would point to the relevance and application of the 2017 Regulations to fossil fuel extraction planning applications in the Isle of Man, rendering them subject to the requirement to calculate the downstream / scope 3 emissions determined in Finch.

The position in respect of offshore fossil fuel projects is more complicated.

The 1999 Act does not generally extend to the territorial seas of the Isle of Man. Rather, the Marine Infrastructure Maritime Act 2016 (MIMA) is expressed as governing a list of “controlled marine activities” such as “gas drilling”. In October 2024, secondary legislation brought many of the provisions of MIMA into legal force as well as applicable EIA regulations. These regulations reflected the same wording of the relevant provisions of the 2017 Regulations, namely the assessment of “indirect significant effects” to the “climate”.

However, whilst MIMA is expressed as extending to “gas drilling” and to the “exploration for and exploitation of natural gas and petroleum”, these provisions were expressly not brought into force in October 2024. Therefore, the MIMA EIA regulations will not currently have application to such activities (until such time as they have been brought into force).

The regulatory architecture prior to MIMA was governed by the Petroleum Act 1986 and the UK’s Petroleum Act 1998 (so far as it has been extended to the Isle of Man). Accordingly, in respect of offshore drilling / fossil fuel extraction, an Isle of Man court’s consideration of the Finch judgment’s relevance to an EIA would depend on whether EIA regulations, such as the Submarine Pipelines (Assessment of Environmental Effects) Regulations 2001, applied and had wording similar to the 2017 Regulations.

If you have any questions on the issues raised in this article, please contact Andrew Langan-Newton.