Shell overturns Dutch court order to slash emissions faster

THE HAGUE: Shell Plc won an appeal at a Dutch court overturning a historic 2021 ruling that ordered it to reduce its emissions faster than originally planned, in a significant setback to groups seeking climate justice through courts.

Shell has a duty to slash its emissions but it’s already doing so and there is no way to work out precisely what percentage reduction should apply to oil and gas companies, judges said in a verdict in The Hague on Tuesday.

A lower court earlier ruled that Shell must reduce emissions by 45% by 2030 from 2019 levels, in a case brought by local environmental group Milieudefensie.

The oil and gas producer argued in its appeal that court-mandated emissions targets have no legal basis and would be an ineffective and counterproductive way of achieving its 2050 net zero target.

The court supported this position. "It is not possible to determine what percentage Shell must adhere to,” the judges said in their verdict. "Some sectors are more difficult to make sustainable than others.”

The case can be appealed to the Dutch Supreme Court.

The ruling comes as world leaders descend on Baku in Azerbaijan for the United Nations COP29 climate summit at a crucial moment for the global fight against climate change.

Carbon dioxide emissions hit a record last year and countries are running out of time to prevent global warming from reaching catastrophic levels.

The re-election of Donald Trump also threatens 2030 green targets, as he has vowed to undo many of the US’ climate policies and withdraw from global cooperation.

The Dutch court case may serve as a bellwether, with potential ripple effects on future decisions across the region.

Last year, a dozen Italian citizens along with Greenpeace Italy and ReCommon filed a lawsuit against Eni SpA, claiming damages for the company’s contribution to climate change and demanding faster emissions cuts.

In 2021, the Dutch court ordered Shell to reduce three types of carbon emissions. Scope 1, which come direct from their own operations, scope 2, which come from the energy they use, and scope 3, from their supply chain and customers.

The vast majority of Shell’s emissions, around 90%, fall into the third category. The court had imposed a "significant best efforts” obligation for scopes 2 and 3.

The higher court on Tuesday rejected reduction enforcement for all three scopes.

"This hurts,” Donald Pols, Milieudefensie’s director, said after the verdict. "It could have been a very important step but the battle has not yet been settled.”

Pols said there are some "bright spots” in the ruling, such as the fact that the court said Shell has an individual responsibility to reduce its emissions and that exploration of new oil and gas fields are at odds with the Paris climate agreement.

"The Court unequivocally underscored that protection against climate change is a human right and that not just states, but also companies such as Shell are under an obligation to protect human rights,” Pols said.

The organisation will make a decision on whether to appeal or start a new case based on the implications of the ruling, Pols said.

Legal challenges to fossil fuel projects on climate grounds will continue, with Shell among several companies facing a attempt to revoke their licences to develop oil and gas fields in the UK North Sea at the Court of Session in Edinburgh on Tuesday.

The Dutch case will likely take years to ultimately resolve given the avenues to appeal, Shell chief executive officer Wael Sawan told analysts last month.

The company has argued that it is down to the government to take action against climate change, not the courts.

"Our target to become a net zero emissions energy business by 2050 remains at the heart of Shell’s strategy and is transforming our business,” Sawan said after the decision.

"A court ruling would not reduce overall customer demand for products such as petrol and diesel for cars, or for gas to heat and power homes and businesses.”