Cumbria Coal Mine Decision: Implications for Scope 3 Emissions in Western Australia

The recent United Kingdom decision in Friends of the Earth v SoS for Levelling Up, Housing & Communities & others; South Lakeland Action on Climate Change v SoSLUHC & others (Friends of the Earth)1 that approval of a coal mine was unlawful without consideration of the environmental impacts from the subsequent burning of the coal produced is one of great significance to the future development of fossil fuel resources.

The High Court case was between environmental organisation Friends of the Earth (FoE) and, West Cumbria Mining (WCM), the UK Government, and the local Cumbria County Council. It concerned planning approval for a coal mine on the Cumbria coast in the north-west of England.

The decision

The UK’s Secretary of State for Levelling Up, Housing and Communities ‘called in’ the application for the coal mine in 2021, acquiring the local council’s ability as the local planning authority to determine the application. In late 2022, the Secretary of State decided to approve the coal mine.

FoE’s challenge to the coal mine was largely based on the principles set out in the previous Supreme Court decision in R (on the application of Finch on behalf of the Weald Action Group) v Surrey County Council and others (Finch).2 In that case, with reference to the combustion of oil produced from a well in Surrey, the Court held that “it is known with certainty that the extraction of oil [from the well] would initiate a causal chain that would lead to the combustion of the oil and release of greenhouse gases into the atmosphere.”3

The Supreme Court in Finch found that a decision to approve an oil well was unlawful because the relevant application had failed to assess the effect on climate of the combustion of the oil to be produced, and that the reasons for disregarding this effect were flawed.4

In the present case, in light of Finch, the UK Government submitted to the quashing of the decision to approve the mine, leaving only WCM to defend all grounds of the challenge.

Substitution argument

WCM led a substitution argument that on the basis that if WCM were to leave the coal in the ground, the same quantity of coal would be produced elsewhere in the world, and as such there was no net increase in global scope three emissions from the proposed mine. This argument was made on a ‘perfect substitution’ basis as a result of the alleged nature of coal market (i.e. the displaced coal in other countries as a result of the Whitehaven mine would stay in the ground).

While not to be considered a legal burden, the Court noted that the practical effect of the relevant planning policies required WCM to “produce evidence to satisfy a criterion, or to

show that a particular beneficial or harmful effect will or will not occur”.5 In this case WCM had to show:6

a) a very high degree of substitution not far short of perfect substitution, and, if that was shown; and

b) that there would be no other demand for US coal substituted by that Whitehaven coal.

Neither of the above were made out in WCM’s case, and the Secretary of State’s reasoning that it was unnecessary to resolve the substitution issue was legally flawed.7 The Secretary of State could not find that the proposed development would not lead to a net increase in GHG emissions due to their either finding that there would be only partial substitution, or their failure to reach any consistent conclusion on the issue.8

Scope 3 Emissions in Western Australia

Scope 3 emissions (i.e. emission resulting from the use of fossil fuels by external parties but which can be attributed to the place of the fossil fuel production) are not reportable in Australia under the National Greenhouse and Energy Reporting Scheme (NGER). Notably, scope 3 emissions can represent over 90% of a company’s greenhouse emissions.

Previously, the Environmental Protection Authority (EPA) has been able to consider whether reasonable measures have been taken to reduce scope three emissions, such as through proponents entering into agreements with third parties.9 The EPA also expected proponents to provide an estimate of scope three emissions, including a summary of where these emissions will likely occur.10

In October 2024, the State Government tabled an updated Greenhouse Gas Emissions Policy for Major Projects (Policy). The updated Policy expressly states that ‘major projects’ should not be assessed in relation to greenhouse gas emissions under Part IV of the Environment Protection Act 1986 (WA).11 On this basis projects that have emissions of over 100,000 tonnes per annum of carbon dioxide equivalent will be exempt from the EPA’s Pt IV assessment.12 This decision is made on the basis that such projects “will be subjected to alternative regulatory measures”, and thus “the State will no longer apply conditions to reduce net greenhouse gas emissions”.13

The above “alternative regulatory measures” is reference to the NGER’s Safeguard Mechanism. As scope 3 emissions are not considered under the NGER, there is a possibility that the State’s decision to remove consideration of greenhouse gas emissions from large projects in WA has effectively removed scope 3 emissions from being appropriately addressed in the State through conditions on any such approval.

Perhaps conversely, the Policy notes that the EPA is required to identify and consider key environmental factors as part of its statutory assessment functions, and that there is no need to assess emissions dealt with by other regulatory measures.14 As scope 3 emissions are not dealt with by the Safeguard Mechanism, it could be consistent with the statutory framework and the Policy (at least in part) for the EPA to consider emissions from major projects to the extent that they are scope 3 emissions. Any recommendations for conditions to be placed to address a project’s scope 3 condition should in this case be seriously considered by the State, notwithstanding its’ approach in the Policy to not apply conditions to reduce net greenhouse gas emissions.

The decisions in Finch and Friends of the Earth serve as strong precedent that the EPA should in fact consider scope 3 emissions, and suggest that the State would have an obligation to consider such emissions in the case where they were not being addressed by Commonwealth legislation.

Elsewhere in Australia, the New South Wales Land and Environment Court has held that scope three emissions are clearly relevant to the consideration of a project’s environmental impacts, and broadly considerations of the public interest.15 As the only state where greenhouse gas emissions have continued to climb, WA should be wary of removing its ability to regulate with respect to such emissions, especially if the overarching regulation it seeks to rely on does not address the entirety of the emissions resulting from major projects.