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A UK high court has thrown out a climate activists’ case  against that country’s oil and gas regulator OGA, rejecting their claim that the OGA’s actions amount to a type of unlawful subsidy of the fossil-fuel sector.

The ruling on Tuesday is a setback for climate activists who are taking increasingly to the courts to force a reduction in oil and gas production to control global warming.

Activists including a former oil refinery worker targeted the OGA’s assessment of applications for oil and gas field developments on a pretax basis.

They said that in some years when oil and gas prices were low the government returned money to producers instead of benefiting from tax receipts. This, they argue, is in conflict with both the government’s long-standing policy of “maximising economic recovery” of oil and gas in the British North Sea, meaning that oil and gas extraction there should make commercial sense, and with Britain’s 2050 net zero emissions goal.

In her judgment, judge Sara Cockerill said: “I reject the contention that the strategy is unlawful because the definition of ‘economically recoverable’ was irrational. It follows that the claimants' claim fails and is dismissed.”

Britain’s Treasury received about £248m from oil and gas production in 2020/2021. According to official figures, that was 71% less than in the year before due to a plunge in oil and gas prices during the pandemic.

The Paid to Pollute campaigners highlight tax years such as 2016/2017 when an oil price slump meant the government returned £400m to oil producers, rather than benefiting from net receipts.

“We welcome the judgment,” said an OGA spokesperson. “We remain firmly focused on regulating and influencing the oil, gas and carbon storage industries to both secure energy supply and support the transition to net zero.” 

OGA lawyer Kate Gallafent had said in court in December that benefits of oil and gas extractions were “a lot wider” than tax revenue, pointing to energy security and jobs.

The climate campaigners had no immediate comment on the ruling.



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