30 January 2024

Is the Norwegian Paradox Coming to an End?

Being a Petrostate in a World on Fire

A wind of change is sweeping in the last stronghold of European petrostates: Norway. The recent decision rendered on January 18, 2024, by the District Court of Oslo in the North Sea Fields Case might testify the demise of the Norwegian paradox, referring to Norway’s dual role as a climate leader internationally while maintaining a significant reliance on fossil fuels domestically. Despite advocating for climate action on the global stage, Norway remains the largest per capita exporter of CO2 emissions, due to its substantial petroleum industry. While this decision won’t end Norway’s petrostate policies, it certainly marks the court’s active engagement with Environmental Impact Assessments (EIAs) as a tool for democracy and the rule of law.

The North Sea Fields Case

On June 29, 2023, Greenpeace Nordic and Nature&Youth challenged the legality of three administrative decisions by the Norwegian Energy Ministry approving the plans for development and operation (so-called PDOs) for the Breidablikk, Yggdrasil, and Tyrving oil and gas fields in the North Sea. The challenge was based on the absence of combustion (Scope 3) emissions from the produced oil and gas in the impact assessments. Further, the impact assessments were conducted by the respective field operators and licensees without a third-party control involved. The three fields constitute a combined reserve of approximately 875 million barrels of oil equivalent. Breidablikk was put into production in mid-October 2023, before time.

The plaintiffs grounded their challenge on various procedural grounds, asserting that the Energy Ministry’s violations of procedural rules resulted in factual errors and thus an erroneous foundation in the PDOs’ decision-making process. Specifically, the procedure employed by the Energy Ministry to approve the PDOs overlooked the reckoning of and accounting for Scope 3 emissions in the Environmental Impact Assessments (EIAs). While the Petroleum Act and Regulations do not explicitly mandate such consideration and inclusion, the plaintiffs contended these obligations could be inferred from Section 112 of the Norwegian Constitution, specifically the provision related to citizens’ entitlement to be informed about the state of the natural environment and the effects of any planned or executed encroachment on nature, and the EU EIA Directive.

Furthermore, the plaintiffs contended that the PDOs were unlawful because the exclusion of Scope 3 emissions from the decision-making process violated the European Convention on Human Rights (ECHR), in particular the right to life (Article 2 ECHR) and to private and family life (Article 8 ECHR), both independently and in conjunction with a discriminatory impact on future generations (Article 14 ECHR). Indeed, another basis for the challenge was the failure to investigate and assess the long-term consequences of the petroleum developments for current and future children in Norway, violating Section 104, second paragraph, of the Norwegian Constitution and Article 3 of the UN Convention on the Rights of the Child, both enshrining the best interests of the child.

In addition, the challenge cast doubt on the emissions forecasts underpinning the approval decision, for contradicting environmental law principles, as stipulated in Norway’s Biodiversity Act governing all public decision-making actions (Section 9).

Overall, the Plaintiffs maintained that scope 3 emissions should have been assessed before the issuance of the three administrative decisions. The Ministry considered it sufficient that Scope 3 emissions had been assessed at a more general level by the Ministry, and that there was no requirement for them to be included in the EIAs.

The Ruling

In a historical ruling, the Oslo District Court deemed all three administrative decisions related to the PDOs in the North Sea unlawful. It based its decision on the legal requirement to subject Scope 3 emissions to an impact assessment, found in Section 4-2 of the Petroleum Act and Section 22a of the Petroleum Regulations, interpreted alongside Section 112 of the Norwegian Constitution. The absence of such an assessment in the challenged decisions contradicts the precedent set by the 2020 Norwegian Supreme Court’s decision in the first Norwegian Climate Case, where environmental organizations had maintained the Ministry violated the Norwegian Constitution while issuing ten oil and gas licenses for deep-sea extraction in the Barents Sea.

The Supreme Court had found that the licenses could not be reviewed, as they were based on a legitimate parliamentary decision. However, it also ruled that, at later stages of the field development, the combustion of Norwegian-produced oil or gas abroad shall be included in the impact assessment under Section 112 of the Norwegian Constitution when this also causes damage in Norway. Moreover, the Court held that the authorities may have a right and duty to reject a PDO application if the situation at the production stage has become such that it would be contrary to Section 112 of the Norwegian Constitution to approve the extraction. Further, the Court offered a paradigmatic interpretation of the EU EIA Directive whereby governmental authorities are obligated to ensure that all emissions, including combustion emissions, are explicitly covered in the Environmental Impact Assessment (EIA). The court pointed to the obligation to include direct and indirect effects (Article 3, paragraph 1, EIA Directive), cumulative emissions, as well as “double materiality”, namely the impact of the project onto the climate, and the impact of climate change onto the project (Annex IV, point 5).

While the Energy Ministry had indeed modified the PDO approval rules in response to the Supreme Court’s decision, it is evident that these changes were insufficient.

The Reasoning

Unlike the first Norwegian Climate Case, court review was more intensive here because the rules at issue were procedural, rather than substantive, and competence was bestowed on the Ministry, instead on the Parliament. This allowed for heightened judicial scrutiny. To explain why the building and operation activities in the three fields would cause damage in Norway and abroad, the Court largely cited the Intergovernmental Panel on Climate Change, Sixth Assessment Report, scientific literature, Norwegian policy documents, and expert testimony. Experts reported the magnitude of emissions from the sites, with Yggdrasil’s warming contribution to the earth’s climate alone being equivalent to 185 times Norway’s current total annual energy production. Importantly, based on expert testimony presented in court, the decision incorporated the finding that cumulative emissions from the three petroleum fields would contribute to a 0.00023-degree Celsius increase in global warming.

The Court also scrutinized the Ministry’s assessment that the fields in question would result in a net reduction of global emissions. This evaluation relied on a report by consultancy Rystad Energy, commissioned by the Ministry, suggesting that increased production from the Norwegian shelf would decrease global greenhouse gas emissions. However, only eight working days had been allocated for public comments on the report, and the Ministry neither considered nor apparently evaluated these comments, despite criticism from various independent experts. After hearing experts from both sides, the Oslo District Court concluded that the Ministry demonstrated limited willingness and ability to ensure transparency, adversarial proceedings, and consideration of opposing viewpoints.

Additionally, the Oslo District Court highlighted a conflict of interests issue. The challenged decisions by the Ministry were based on a further report authored by Rystad Energy two years earlier, then commissioned by the private sector, specifically the Norwegian Oil and Gas Association, in a peculiar sequence of events not unlike previous controversial episodes on oil and gas licensing.

Regarding the human rights-based challenges, the Court found no legal obligation to consider the best interests of children in each individual decision regarding the PDO of petroleum activities. The decisions thus do not violate Section 104 of the Norwegian Constitution and Articles 3 and 12 of the UN Convention on the Rights of the Child. Nor did it find the decisions to contravene Articles 2, 8, and 14 of the ECHR, pending a challenge to the mentioned Supreme Court’s decision before the ECtHR.

The Ruling’s Impact

The Court granted the application for a temporary injunction, preventing the state from making other decisions requiring valid PDO approval for Breidablikk, Yggdrasil, and Tyrving until the validity of the decisions is conclusively determined on appeal. The state was also instructed to reimburse the plaintiffs’ legal costs. This favorably contrasts with the substantial sums that environmental NGOs often find themselves obligated to pay in Norway in environmental disputes, even as they contribute to clarifying the law. The decision thereby aids in reducing barriers to access to justice, addressing the prohibitively expensive costs of accessing courts in Norway, seemingly at odds with the obligations set in the Aarhus Convention.

Although the Briedablikk field will continue production until its PDO expires, the immediate effects of the decision are apparent. Future administrative practices, as well as all approvals granted after the 2020 Supreme Court’s decision, will have to align with the Supreme Court’s ruling, until a prospective appellate judgement governs the matter differently. Additionally, the ruling could hold relevance for pending cases before other domestic and regional courts, notably the mentioned pending application against Norway concerning petroleum licenses before the ECtHR in matters concerning the right to environment, environmental judicial review, and/or EIA requirements. Importantly, the North Sea Fields decision heightens judicial dialogue on complex climate matters. Even though it downplayed the impact of comparative law in the hierarchy of legal sources in Norway, the court referred to decisions abroad, notably in the United States and Australia, where courts mandated the inclusion of extraterritorial emissions in EIAs.

Although the decision is subject to appeal, its import is historical. It marks the first occasion in Norway where the extraterritoriality of emissions is thoroughly considered for the approval of PDOs, and environmental organizations have succeeded in a court case by securing victories on both principled and remedial levels. It is also the first time that a first instance Court considered all evidence in a complex climate case and interlinks between several levels of governance, notably Norwegian and EU law. The Court’s choice to highlight the problematic conflicts of interests as well as the reliance on the same reports and consultants between the Norwegian Energy Ministry and the interest organization for Norwegian oil and gas is equally novel and promises expectations of enhanced transparency and diligence in identifying and using reliable evidence for administrative decisions.

Conclusive Remarks

While this decision may not signal the demise of Norway’s petrostate policies, it certainly marks the court’s active engagement with Environmental Impact Assessments (EIAs) as a tool for democracy and the rule of law. The court explicitly highlighted the significance of impact assessments in ensuring an informed and accurate foundation for decision-making. Impact assessments play a crucial role in amplifying diverse voices, evaluating opposing perspectives, and providing a transparent and accessible basis for decision-making. This is seen as a vital safeguard for democratic participation in decisions that impact the environment, in accordance with the Constitution (page 24 of the decision).

The decision also evidences that lower courts are operationalizing the Supreme Court’s interpretation, particularly regarding Section 112 of the Constitution and EU EIA law. Nonetheless, the government is denying the immediate effect of the ruling and some legal voices have emphasized the decision’s limited effects, with proposed solutions for the Norwegian state to comply with the ruling within a two-month timeframe. However, adhering to the ruling requires more than procedural adjustments and will demand an attentive analysis of gross emissions, as well as a “hard look” at whether any net emission analysis is at all feasible. Such quick reactions align with a trait underpinning Norwegian legal culture, which recognizes a significant level of deference for the state and the principle of raison d’état, even in climate cases. Truly, only time will reveal the appropriateness and role of the courts as legal “fireguards” in a world on fire.

The Oslo District Court’s legal decision arguably signifies a step forward in mobilizing the law to enhance state compliance with constitutional, lower-level legislation, and EU law. Overall, the Oslo District Court’s decision represents a courageous and much-needed constitutional renewal for Norway, where strong judicial review was established second in history after the United States. Furthermore, it aligns with the procedural turn in judicial review, a trend since the early 2010s where procedural arguments, grounded in investigations, consultation inputs, facts, science, and procedure, are increasingly intertwined with constitutional and administrative reviews. This procedural turn, first hinted at in the United States, is applicable to both domestic and regional courts and spans constitutional and administrative review contexts.

In the broader context of a “reflexive approach” characterizing several contexts, which involves striking a balance among law, policies, and scientific expertise, this type of review is particularly apt for addressing such intensely scientific and multilevel governance problems as climate change.

SUGGESTED CITATION  Colombo, Esmeralda: Is the Norwegian Paradox Coming to an End?: Being a Petrostate in a World on Fire, VerfBlog, 2024/1/30, https://verfassungsblog.de/is-the-norwegian-paradox-coming-to-an-end/, DOI: 10.59704/eb0141e7ef1625c8.

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