Combustion Emissions are “effects” of Oil and Gas Extraction Projects under the EIA Directive – the EFTA Court Judgement

In its judgement of 21 May 2025, the EFTA Court ruled that “greenhouse gas emissions that will be released from the combustion of petroleum and natural gas extracted as part of a project listed in point 14 of Annex I to the EIA Directive, and then sold to third parties, constitute “effects” of that project within the meaning of the Directive” (para. 99).

This is a major milestone for development consent procedures aimed at authorising projects for oil and gas extraction. Gas emissions that are to be released from end user consumption of the extracted oil or gas for which development consent is sought are environmental effects of the project.

The amount of such emissions should be included in the information presented by the developer in the environmental report, to ensure proper assessment and effective public participation.  

Background

The request for an advisory opinion, which is similar with the preliminary rulings of the CJEU (without the binding effect, but followed in practice), came from a Norwegian court.

The proceedings before the Norwegian court concerned the validity of the Ministry of Energy decisions to approve three petroleum projects (i.e. the oil field Breidablikk, the oil field Tyrving and the oil and natural gas project Yggdrasil in the North Sea).

The environmental impact assessment (“EIA”) that was carried for Tyrving and Yggdrasil (Breidablikk being exempted) did not assess the climate impact from greenhouse gas emissions (“GHG”) arising from the later combustion of the oil and gas extracted from the project and sold to third parties to be used elsewhere. This  is the key legal disagreement between the parties in the dispute where the request was raised.

The estimated gross emissions from combustion were 11.3 million tonnes CO₂ for the oil field Tyrving and 365 million tonnes CO₂ for Yggdrasil.

Greenpeace Nordic and Nature and Youth Norway filed for a preliminary injunction and the advisory opinion was asked by the appeal court in that case.

The request before the EFTA Court concerned the interpretation of Article 3(1) of the Directive 2011/92/EU of the European Parliament and of the Council of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment, as amended by Directive 2014/52/EU of the European Parliament and of the Council of 16 April 2014 (“EIA Directive”).

The EIA Directive was incorporated into the EEA Agreement, being referenced in Annex XX (Environment) of the EEA Agreement, hence the jurisdiction of the EFTA Court to interpret this EIA Directive.

The key legal issue was whether such combustion emissions (of petroleum or natural gas extracted as part of a project listed in point 14 of Annex I to the EIA Directive) are an “effect” of the projects under Article 3(1) of the EIA Directive that should have been included in the environmental impact assessment, since the environmental impact assessments carried out did not assess the impact on the climate from GHG arising from combustion of the petroleum and natural gas extracted from the project and sold to third parties.

Judgement of the Court – preliminary remarks

First, the EFTA Court noted the principles underlying the EIA Directive, requiring in essence for the effects on environment to be fully assessed at the earliest possible stage, “the objective being to prevent the creation of pollution or nuisances at source rather than subsequently trying to counteract their effects” (para. 47), the logic underlying the EIA Directive being “the prevention of environmental damage” (para. 49). Such approach is “commensurate with the precautionary principle and the principles that preventive action should be taken, environmental damage should, as a priority, be rectified at source” (para. 50).

Also, the EIA must be conducted on the basis of appropriate information being supplied by the developer, given that “any review of the legality of decisions, acts or omissions falling within the scope of the EIA Directive seeks, in accordance with the objectives of the Aarhus Convention, to involve members of the public concerned” (para. 53) and that the public concerned shall be given early and effective opportunities to participate in the environmental decision-making procedure (para. 56).

In a nutshell, full disclosure at the earliest possible stage of the environmental effects is essential for effective public participation.  

Second, as to the scope of the required assessment under Article 3(1) EIA Directive, the EFTA Court underlined that the examination of the direct and indirect effects “must be carried out in full, and in a comprehensive manner, before development consent for the project in question is granted” (para. 57), and that the factors likely to be significantly affected by the project may include the climate, e.g. GHG emissions (para. 59).

Projects consisting of extraction of petroleum and natural gas for commercial purposes where the amount extracted exceeds 500 tonnes/day in the case of petroleum and 500 000 cubic meters/day in the case of gas fall under point 14 Annex I of the EIA Directive, presenting an inherent risk of significant effects on the environment.

The Court also recalled that the scope of the EIA Directive is wide and its purpose very broad (para. 62), and that the list of factors in Article 3(1) of the EIA Directive shows that “the environmental impact whose assessment the EIA Directive is designed to enable is not only the impact of the works envisaged but also, and above all, the impact of the project to be carried out” (para. 63).

Judgement of the Court – on the questions  

After setting out the grounds for interpretation, as briefly indicated above, the Court recalled that “combating climate change is an objective of fundamental importance given its adverse effects and the severity of its consequences, including the grave risk of their irreversibility and its impact on fundamental rights” (para. 67).

The EFTA Court addressed the three main objections of the Norwegian Government:

• EFTA ruling: assessment must take place at extraction phase

First, the Norwegian government argued that GHG emissions arising from the combustion of the petroleum and natural gas resulting from the project could partially fall under other environmental assessment obligations relating to other projects listed in Annex I of the EIA Directive.

The Court considered that the obligation to carry out the assessment at the extraction stage is not impaired, even if there might be some overlap between the assessments, i.e. even if a subsequent EIA may assess the same effects at a later juncture, such as refinement stage (paras. 71, 72). This obligation remains regardless of whether the extracted petroleum or gas is exported abroad, which is consistent with the principle that an EIA in respect of a project must be carried out as soon as possible to prevent the creation of pollution, and the principle of ensuring effective public participation at an early stage.

Importantly, the Court stressed that:

“the environmental impact assessment prior to the extraction of petroleum and natural gas represents the last point at which the public can voice their views and concerns that greenhouse gas emissions that are likely to result from such products will ultimately reach the atmosphere and whether to avoid this by refraining from exploiting the deposits” (para. 76)

Moreover, the Court outlined that the information concerning the likely impact of the project on the climate is particularly relevant information for the authority to determine, if appropriate, whether any limits should be placed on the quantities extracted, and for ensuring effective public participation in this respect (paras. 79, 80).

Finally, the Court observed that the wording of the Directive does not require the “effects” to have consequences with close temporal or geographical proximity to the installation or scheme (paras. 83, 84).

• EFTA ruling: GHG emissions from combustion are likely and significant effects on the environment

Second, the Norwegian Government argued that certain amount of crude oil is not burned at all, but used for other industrial purposes.

The Court did not endorse this defence either holding that “the fact that the petroleum and natural gas extracted from a project such as that at issue in the main proceedings might be put to a variety of uses does not entail that its effects on the climate are not susceptible of examination in the context of an environmental impact assessment” (para. 87).

The fact that the precise extent of GHG emissions may be unknown does not preclude their inclusion in the EIA, as the likely uses can be readily identified by developers preparing the report under Article 5(1) of the EIA Directive. The Court considered not to be unduly burdensome for developers to provide a reasoned estimate of the GHG emissions that are likely to result from the subsequent combustion of the petroleum and natural gas extracted in the course of a project:

“[..] Such an approach might be appropriate, in particular, where the developer is not responsible for determining the ultimate end use of such products, for example, in cases where such products are exported and sold to third parties” (para. 89)

In what concerns the effects of combustion being significand, in addition to being likely, the Court recalled that according to Article 2(1) of the EIA Directive, an EIA must be carried where there is a probability or a risk that a project will have significant effects on the environment. Projects listed in Annex I of the EIA Directive are always likely to have a significant effect on the environment. The effects of the projects listed in point 14 of Annex I are defined by the extraction and the amount of the extraction, therefore:

“the fact that the size threshold is essentially connected to the products, rather than the development project itself, and that the quantity of products extracted determines whether an EIA is required in such a project suggests that the emissions from those products will be significant” (para. 93)

• EFTA ruling: the EIA should be limited in scope to the effects of the project itself, without regard to speculative analysis of knock-on effects on other projects elsewhere

Third, the Norwegian Government argued that it may be difficult in practice to determine the significance of GHG emissions in net – as opposed to gross – terms, as natural gas often serves as an alternative to other energy forms that produce considerably more emissions, such as coal.

The Court considered that the EIA should be limited in scope to the effects of the project itself, as distinct from other alternative projects, whether existing or speculative (para. 95).

The Court referred also to Commission v Spain, C227-01 and Abraham and Others, C-2/07 for the proposition that “the likely significant effects of the project on the environment resulting from the impact of the project itself on the climate represent the relevant standard, without regard to speculative analyses of knock-on effects on other projects elsewhere” (para. 96), and recital 16 of Directive 2011/92/EU, as effective public participation would be undermined “if an interpretation of the EIA Directive were adopted that allowed the developer to omit information concerning high levels of greenhouse gas emissions occurring as a result of the combustion of petroleum and natural gas extracted during a project, purely on the basis that due to a “net” analysis, the amounts emitted by the project would not meet the threshold of significance” (para. 97).

Comment

The EIA Directive was amended in 2014. One of the main changes was to explicitly include climate change as an aspect to consider in the EIA.

In 2020, the Governments UN Secretary General, António Guterres urged Governments around the world to declare a state of climate emergency until the world has reached net zero CO₂ emissions and a large number of countries did so.

The ultimate goal pursued at international and national level is stabilization of GHG emissions at a level that would prevent dangerous anthropogenic interference with the climate system as per the Paris Agreement, which seeks to limit the average global temperature increase to 1.5°C, and well below 2°C.

The environmental impact assessment of new projects is made in this context. If there is any doubt, the provisions of the EIA Directive must be interpreted to prevent pollution and to require the full assessment of all likely significant effects at the source.

In the context of oil and gas projects, this means that information on CO₂ emissions from combustion should be made available by the developer at the earliest possible stage, for proper assessment of the effects of the project and effective public participation, regardless of where and who would actually burn the extracted product.

Importantly, when addressing the second and third question, the EFTA Court emphasized that “[i]n this regard, the Court recalls that purely economic considerations cannot be regarded as overriding public interest” (para. 118).

The EFTA Judgement comes shortly after the recent landmark decision in Finch, which concerned a challenge to a development consent for an onshore oil and gas project. The UK Supreme Court held that the assessment of the emissions from the combustion of extracted product must be included in an EIA.