What the ICJ’s climate ruling could mean for the UK

ICJ climate ruling creates legal pressure on UK fossil fuel licensing

The International Court of Justice issued a unanimous advisory opinion on July 23, 2025, establishing that states have a legal duty under customary international law to prevent significant harm to the climate system. The 140-page ruling applies to all countries, regardless of whether they have signed specific climate treaties like the Paris Agreement. For the UK, this decision raises serious questions about the legal status of North Sea oil and gas projects currently in the approval pipeline.

The court explicitly confirmed that licensing, producing, subsidizing, and consuming fossil fuels can constitute breaches of international obligations. Importantly, the ICJ specified that cessation of internationally wrongful acts might require a state to revoke administrative or legislative measures, including oil and gas licenses. This creates a direct legal pathway that could force governments to cancel existing approvals.

Policy Exchange argues that the ruling could compel the UK to halt North Sea drilling plans. The timing coincides with domestic legal challenges that have already disrupted major projects, creating a convergence of international law and domestic climate policy that makes new fossil fuel extraction increasingly difficult to justify.

Scottish court decisions have already blocked major projects

In January 2025, a Scottish court declared the approvals for Shell’s Jackdaw and Equinor’s Rosebank projects unlawful. The ruling centered on the exclusion of Scope 3 emissions from the environmental assessments. Scope 3 emissions refer to the carbon released when extracted fuels are eventually burned by end users, which typically accounts for the vast majority of a project’s total climate impact.

Following this decision, the UK Department for Energy Security and Net Zero issued stricter environmental rules on June 19, 2025. New projects must now account for downstream emissions in their assessments. This requirement was excluded from previous approvals, creating what Policy Exchange describes as an “aura of unlawfulness” around projects approved under the old framework.

Energy Minister Ed Miliband is expected to make final decisions on Jackdaw and Rosebank during autumn 2025, applying the new guidelines. Both projects will require reassessment under the updated rules. The combination of the ICJ opinion and domestic legal requirements creates substantial uncertainty about whether these approvals can proceed at all.

The court cases reflect a broader shift in how environmental law treats fossil fuel projects. Previously, assessments focused primarily on emissions from extraction and processing. However, the new approach acknowledges that the full climate impact occurs when fuels are burned, making it far harder to justify new licensing on environmental grounds.

North Sea production offers minimal energy security benefits

Analysis consistently shows that proposed North Sea drilling would have minimal impact on UK energy security. According to Policy Exchange, new licenses would supply gas for only a few weeks per year between 2040 and 2050. Oil production would last roughly five years. Moreover, new licenses typically take up to 28 years to produce, meaning they provide no short-term energy security benefit during periods of market volatility.

The UK Climate Change Committee has concluded that new North Sea fields are not justified by energy security needs. The committee stated that maximizing production globally would cause the world to miss Paris Agreement targets by a large margin. This assessment carries significant weight because the committee provides independent statutory advice to Parliament on climate policy.

Most North Sea oil is sold on international markets rather than reserved for UK consumption. Similarly, gas production faces global pricing pressures that limit its ability to reduce domestic energy bills. Therefore, the energy security argument for new licensing is weakened by the reality of how these commodities are traded and priced.

In March 2026, the UK Energy Research Centre stated that drilling will not reduce bills or deliver energy security. This conclusion reflects economic modeling showing that small increases in domestic production have negligible effects on consumer prices, which are determined by global market dynamics rather than local supply volumes.

Economic case for new drilling is increasingly weak

An analysis by Uplift and WWF Norway found that the Rosebank field could lead to £258 million in net losses for the UK. The calculation accounts for low long-term oil prices, high development costs, and the economic damage caused by climate impacts. When these factors are combined, the project’s economic rationale collapses.

This economic assessment challenges the traditional view that oil and gas projects automatically generate revenue and jobs. Instead, it suggests that some projects may become net liabilities when climate costs and market realities are properly accounted for. Consequently, the economic case for new licensing becomes harder to defend even without considering legal obligations.

The shift in economic viability reflects several trends. First, renewable energy costs have fallen dramatically, making clean alternatives more competitive. Second, long-term oil and gas prices face downward pressure as global demand begins to decline in response to climate policies. Third, the physical risks of climate change are creating measurable economic costs that must be factored into project assessments.

Investment patterns are changing in response to these economic realities. Major financial institutions are increasingly reluctant to fund fossil fuel projects facing potential stranded asset risks. This makes it harder and more expensive for developers to raise capital, further undermining the commercial case for new extraction.

What the ICJ ruling means in practice

The advisory opinion establishes several key legal principles. First, the obligation to prevent significant climate harm is a duty under customary international law, binding on all states. Second, fossil fuel activities including licensing can breach this obligation. Third, remedies for breaches include cessation, meaning states must stop the activity causing harm, and non-repetition, preventing future violations.

Importantly, the ICJ clarified that emissions themselves are not the internationally wrongful act. Rather, the breach occurs when states fail to take all possible measures to prevent harm. This distinction matters because it focuses legal responsibility on government policy decisions rather than the physical act of emitting greenhouse gases. Therefore, licensing decisions become the key point of legal vulnerability.

The ruling creates strong arguments for climate-vulnerable nations in multilateral negotiations. Small island states and other countries facing severe climate impacts now have clearer legal grounds to demand action from major emitters. Additionally, the opinion is expected to trigger increased climate litigation against states and corporations in both domestic and international courts.

For the UK specifically, the ruling reinforces the legal basis for the Labour government’s commitment to ban new oil and gas exploration licenses in the North Sea. The government can now cite international legal obligations alongside domestic climate targets when justifying this policy shift. This dual justification makes the policy more defensible against industry challenges.

Key points for UK businesses and decision makers

• The ICJ ruled unanimously that states have a binding duty under customary international law to prevent significant climate harm, applicable regardless of treaty membership.
• Fossil fuel licensing, production, subsidization, and consumption can constitute breaches of this obligation, with cessation potentially requiring the revocation of existing licenses.
• Scottish courts have already declared approvals for Jackdaw and Rosebank unlawful due to the exclusion of Scope 3 emissions from environmental assessments.
• New North Sea projects would supply gas for only a few weeks annually between 2040 and 2050, with oil production lasting approximately five years, while taking up to 28 years to come online.
• Economic analysis shows Rosebank could generate £258 million in net losses for the UK when accounting for long-term prices and climate costs.
• The UK Climate Change Committee has concluded that new North Sea fields are not justified by energy security needs and would undermine Paris Agreement commitments.
• The ruling is expected to accelerate climate litigation against states and corporations while strengthening the UK government’s legal position for banning new North Sea licenses.

How this affects procurement and supply chains

Businesses in the oil and gas supply chain face growing uncertainty about future revenue streams. Companies providing equipment, services, or support to North Sea extraction projects should assess their exposure to potential license revocations. Diversification into renewable energy sectors may become necessary as the legal environment shifts.

Public sector procurement is particularly affected. Organizations subject to Procurement Policy Note 06/21 must demonstrate net-zero commitments from suppliers. As the legal framework around fossil fuels tightens, procurement decisions involving oil and gas companies may face additional scrutiny. Consequently, buyers need to understand how supplier relationships align with emerging legal obligations.

The ICJ ruling may influence how carbon is accounted for in supply chains. If Scope 3 emissions become standard in project assessments, businesses will face pressure to track and report downstream impacts more comprehensively. This affects industries beyond extraction, including transportation, manufacturing, and energy-intensive sectors. Therefore, companies should review their carbon accounting practices now.

Investment treaties create additional pressure. The opinion may trigger investor-state claims if companies believe their assets are being expropriated or devalued by climate policies. However, the concept of “climate carve-outs” in investment agreements is gaining traction, which could limit such claims. UK businesses with international operations should monitor how these legal dynamics develop.

For businesses planning major capital investments, the ruling introduces regulatory risk that must be factored into financial modeling. Projects with multi-decade timelines face particular uncertainty if they depend on fossil fuel infrastructure or licenses that could be revoked. Meanwhile, investments in renewable energy, low-carbon hydrogen, and carbon capture technologies become relatively more attractive as legal risks diminish.

What happens at COP30 and beyond

COP30 takes place in Belém, Brazil, in November 2025. The ICJ ruling is expected to significantly influence negotiations, particularly around nationally determined contributions (NDCs) and climate finance. Vulnerable nations will use the opinion to demand stronger commitments from major emitters, arguing that international law now requires more aggressive action.

The ruling provides legal backing for calls to phase out fossil fuel subsidies. Countries can no longer argue that subsidy decisions are purely matters of domestic policy if they breach international obligations to prevent climate harm. This could accelerate subsidy reform across multiple jurisdictions, affecting oil and gas economics globally.

Climate finance discussions will also be affected. Developed countries face stronger legal arguments that they must provide adequate support to help developing nations transition away from fossil fuels and adapt to climate impacts. The concept of reparations mentioned in the ICJ opinion may influence how finance mechanisms are structured and scaled.

Legal experts anticipate that the opinion will be cited in climate cases worldwide. Domestic courts may use the ICJ’s reasoning to strengthen environmental protections and block fossil fuel projects. International tribunals may also apply the principles when adjudicating disputes between states or between investors and states. Therefore, the ruling’s influence will extend far beyond the immediate UK context.

Policy direction for the UK’s energy transition

The UK government’s commitment to ban new oil and gas exploration licenses aligns with the ICJ’s legal framework. This policy shift moves focus toward offshore wind, low-carbon hydrogen, and carbon capture and storage. These emerging industries offer job creation potential while avoiding the legal risks associated with fossil fuel expansion.

The North Sea Transition Authority now faces pressure to align licensing decisions with international legal obligations. Its role may evolve from facilitating extraction to managing a controlled decline while maximizing economic value from existing fields. This transition requires careful planning to support workers and communities dependent on oil and gas employment.

Scotland’s devolved powers create additional complexity. While energy policy is reserved to Westminster, environmental assessments and planning decisions involve Scottish authorities. The January 2025 Scottish court ruling demonstrates that devolved institutions can effectively block projects even when the UK government supports them. Consequently, policy coherence across jurisdictions becomes essential.

Green jobs and skills development will be crucial for a successful transition. Workers in fossil fuel industries need retraining opportunities and clear pathways into renewable sectors. The SBS Academy provides training programs that help businesses and workers adapt to net-zero requirements, supporting the workforce transition that the ICJ ruling makes more urgent.

Support for businesses navigating climate compliance

Companies facing tightening climate regulations need robust carbon reporting systems. The shift toward including Scope 3 emissions in project assessments means businesses must track their full carbon footprint more comprehensively. Our compliance services help organizations establish accurate carbon reporting that meets evolving regulatory standards.

Supply chain sustainability has become a competitive advantage as well as a compliance requirement. Businesses that can demonstrate comprehensive emissions tracking and reduction plans will find it easier to win tenders, particularly in the public sector. Moreover, as legal obligations tighten, companies with established systems will adapt more quickly than those starting from scratch.

The ICJ ruling reinforces the importance of aligning business strategy with net-zero pathways. Organizations should review their long-term plans to ensure they are not overly exposed to assets or activities that may face legal challenges or regulatory prohibition. Structured net-zero programs provide frameworks for managing this transition systematically.

Professional advice becomes more valuable as the legal landscape grows complex. Businesses need to understand how international law, domestic regulations, and procurement requirements interact. We help UK SMEs navigate this complexity, ensuring they meet compliance obligations while identifying opportunities in the emerging green economy.

Where to find authoritative information

The full text of the ICJ advisory opinion is available through the International Court of Justice website, providing detailed legal reasoning and specific findings on state obligations.

The UK Climate Change Committee publishes regular assessments of North Sea oil and gas policy, available on the CCC website, offering independent analysis of how fossil fuel extraction aligns with net-zero targets.

The Department for Energy Security and Net Zero provides guidance on environmental assessments for fossil fuel projects, including requirements for Scope 3 emissions accounting, at gov.uk.

Legal developments around Jackdaw and Rosebank can be tracked through Scottish court records and parliamentary debates, which are publicly accessible through official government channels.

For businesses specifically concerned about procurement requirements, Procurement Policy Note 06/21 outlines how carbon reduction plans affect public sector contract awards.