Dutch court underlines firm’s climate responsibility but rejects legally binding reduction requirement

Shell has won its appeal against a ruling in 2021 by a Dutch court that would have forced it to cut its global carbon dioxide emissions by 45% by 2030, in line with the 2015 Paris climate change agreement. The ruling – the first of its kind – would have applied to Shell’s suppliers and customers operations as well as its own.

Donald Pols, chief executive at Milieudefensie (Friends of the Earth Netherlands) speaking outside court

Source: © Jeroen Jumelet/ANP/AFP/Getty Images

The original case was brought by campaign group Milieudefensie (Friends of the Earth Netherlands) in an effort to stimulate stronger action by oil and gas producers in reducing emissions - both from their own activities and their customers and supply chains

The Dutch court of appeal said that, while Shell does have a responsibility in achieving the targets of the Paris agreement, it could not be bound by a 45% (or any other) reduction standard as this measure doesn’t to apply to every country and every business sector individually. However, the court said that ‘companies like Shell, which contribute significantly to the climate problem and have it within their power to contribute to combating it, have an obligation to limit CO2 emissions in order to counter dangerous climate change’.

After the ruling, Shell, which had argued that company emissions were up to politicians not the courts, and that any ruling wouldn’t reduce consumer demand for oil and gas products, said ‘smart policies from governments, along with investment and action across all sectors, will drive the progress towards net-zero emissions that we all want to see.’

Shell has also been in court in Scotland this week, alongside Norwegian oil company Equinor, as environmental protestors challenge decisions to allow development of the Jackdaw and Rosebank oil and gas fields. Across the globe, investment in oil and gas exploration is up, and there’s been a ‘huge build-out of [liquefied natural gas (LNG)] capacity and companies, like Shell, amplifying LNG’s place in their wider portfolio,’ says Maeve O’Connor, an analyst at Carbon Tracker. As a result, global LNG production is likely to increase by 50% by 2030, leading to a ‘massive’ supply glut she adds.

Earlier this year, Shell followed BP in weakening its short-term emissions reduction targets, citing a growing demand for energy. O’Connor points to mounting investor pressure after windfall profits, combined with a growing backlash against the environmental, social and governance (ESG) investment movement in the US and lower rates of return on renewables investments, compared to oil and gas projects.

Carbon Tracker’s latest research on the sector’s emission reduction targets shows progress has stalled. No companies have Paris-aligned targets, and just five of those analysed have absolute emission reduction targets for 2030. Since countries signed a Global Methane Pledge in 2021, many oil and gas companies have set targets for near zero methane emissions by 2030, but report author Olivia Bisel notes that only one company, Chevron has goals extending to its non-operated assets. ‘Another blind-spot we see is most companies limit their methane goals to upstream operations [whereas] midstream assets, particularly gas pipelines, emit significant volumes of methane that aren’t being addressed,’ Bisel said.