Climate change litigation update: downstream greenhouse gas emissions

Climate change litigation continues to heat up both in Aotearoa and overseas. Courts have had to grapple with whether to take into account “Scope 3”, downstream, consequential or indirect greenhouse gas (GHG) emissions when assessing the environmental impacts of an activity. A recent UK Supreme Court decision has implications for consideration of downstream GHG emissions in environmental effects assessment in New Zealand. Should New Zealand Courts adopt the same approach, it would result in the inclusion of downstream GHG emissions in adverse effects assessment. A coal mines adverse effects would include the adverse climate change impacts of burning the coal (even overseas).

The landmark UK Supreme Court decision in R (Finch) v Surrey County Council (2024) UKSC 20 (Finch) held that downstream GHG emissions were relevant to the environmental impact assessment of a fossil fuel extraction activity. The UK Supreme Court reversed the Court of Appeal's findings and set a new precedent for effects assessment of fossil fuel extraction activities. The UK Supreme Court held that assessment of effects on the environment should occur at the start of the chain, stating that the “whole purpose” of extracting fossil fuels is to burn them, which emits GHGs of a quantifiable amount being an inevitable downstream effect to be assessed. The New Zealand legal position is no longer aligned with that of the UK. Recent New Zealand decisions are consistent with and refer to the Court of Appeal decision in Finch which was overturned (see Te Korowai O Ngāruahine Trust v Hiringa Energy Ltd [2022] NZHC 2810 at [304]).

Recent amendments to the Resource Management Act 1991 via the Resource Management Amendment Act 2020 (in effect from November 2022) have cleared the way for assessing the impacts of GHG emissions in resource consent decisions. Even with this legislative change, the issue of whether downstream GHG emissions are environmental effects of a specific activity that must be considered under the RMA remains a live issue.

New Zealand higher courts have recently decided a number of “end use” cases which address when an adverse effect “down the chain” from the activity for which resource consent is required will be relevant to the environmental effects assessment under the RMA. The Finch decision might influence the position in New Zealand law in terms of downstream effects assessment. One to watch is the yet to be released Supreme Court decision in the appeal against the Court of Appeal's decision in Te Rūnanga o Ngāti Awa v Bay of Plenty Regional Council [2022] NZCA 598, which concerns whether the downstream effects of disposal of plastic bottles are relevant to a resource consent for a water take for water bottling. The current New Zealand approach of having regard to downstream effects of an activity subject to limits of “nexus and remoteness” will be tested.

With the climate change amendments to the RMA opening the door to consideration of the adverse effects of GHG emissions in an RMA context, the persuasive reasoning in Finch may lead to a shift in the New Zealand legal position on downstream GHG emissions – with significant implications for the assessment of adverse effects of fossil fuel extraction activities. This is an evolving area which may come to a head with the introduction of the Fast-track Approvals Bill which could include fossil fuel extraction activities in the listed projects.

Read the full article on pages 20-22 of the Resource Management Law Journal.