Shell has won its appeal in the highly publicised climate case brought by the environmental organisation Milieudefensie.
As a result, the oil giant will not be required to nearly halve its carbon emissions by 2030. The Court of Appeal in The Hague overturned the initial ruling, which mandated a 45% reduction in Shell’s emissions by 2030 compared to 2019 levels.
Michael Bloss MEP
“A dark day for climate protection: When even the courts fail to keep our future in mind, there’s little left for us to rely on. The Hague’s ruling gives Shell free rein to keep pumping out CO₂ – once again, profit over planet. But in the end, we all pay the price,” Michael Bloss MEP told EU Today.
In 2021, a lower court ordered Shell to significantly reduce its emissions, marking the first time a company had been legally required to comply with specific emissions targets.
Milieudefensie, a Dutch environmental group, argued that Shell’s operations were a major contributor to climate change and that the company bore significant responsibility for the associated impacts.
The ruling garnered worldwide attention, as it highlighted the role that corporations play in addressing global warming and the potential for legal frameworks to enforce emission reduction obligations.
Appeal Ruling: ‘Insufficient Basis’ for Binding Reduction Target
The Court of Appeal, however, ruled that while Shell does have a “duty of care” to mitigate climate change, it cannot be compelled to meet specific emissions reduction percentages.
The court stated that the various reports considered during the legal proceedings provided “insufficient basis” to impose a binding target.
Additionally, the court expressed doubts about the global impact of a specific reduction target imposed on Shell, reasoning that if Shell curtailed its oil and gas activities, other companies might simply fill the gap.
In a statement, Milieudefensie director Donald Pols expressed disappointment, acknowledging the setback for their cause.
The court, however, underscored the dangers of climate change, noting that it is the responsibility of both governments and major corporations to reduce greenhouse gas emissions. It described climate change as a human rights issue, emphasising that companies like Shell also bear responsibility. Nevertheless, it concluded that judicial intervention should not extend to enforcing precise emission cuts.
Customer Emissions a Key Dispute
One contentious aspect of the case was the responsibility Shell should bear for emissions produced by its customers, which comprise over 90% of the company’s total emissions.
Milieudefensie argued that Shell should be required to influence customer behaviour to lower emissions, whether through promoting renewable options or by reducing sales of fossil fuels.
Shell, on the other hand, argued that it is not within their control if customers choose petrol over electric vehicles, nor can they dictate energy choices in sectors like aviation.
Shell maintained that if it were to reduce its customer base, it would lose its ability to support sectors like aviation in their efforts to decarbonise.
The company argued that its role in energy provision remains crucial and that a forced reduction in its customer operations would limit its influence in promoting sustainable solutions.
Shell’s Position on Climate Action
Shell defended its record, noting that it invests more in clean energy than most other oil and gas companies and is committed to a gradual transition to greener sources.
It argued that an adverse ruling would have severe consequences not only for Shell but also for the Dutch economy, impacting the investment climate and potentially affecting employment across the sector.
However, Milieudefensie countered that Shell continues to allocate billions to fossil fuel ventures, undermining its commitment to sustainable energy.
Both parties concur on the need to address global warming and move away from fossil fuels, yet differ sharply on the approach.
While Milieudefensie insists on rapid cuts to all fossil fuel emissions, Shell advocates a phased approach, particularly emphasising natural gas as a “bridge” fuel. This strategy is based on the premise that gas emits less CO₂ than coal, and therefore, the company argues, can serve as a transitional solution.
However, Milieudefensie disputes the effectiveness of this approach, pointing out that many developing nations still rely on coal for energy, and gas may not be a viable substitute in all regions.
Future Implications of the Ruling
The Court of Appeal’s decision to dismiss Milieudefensie’s demands may have broader implications for similar cases worldwide.
The ruling highlights the challenges environmental groups face in holding corporations legally accountable for their contributions to climate change, particularly in cases where specific reduction targets are demanded.
The court’s emphasis on the insufficiency of evidence for imposing concrete reductions could set a precedent, discouraging future attempts to use the judiciary as a means to enforce corporate emissions targets.
For Shell, the verdict alleviates immediate pressure to meet specific, court-mandated reduction targets. However, it still faces public and shareholder pressure to accelerate its transition to cleaner energy, as well as scrutiny over its continued investments in oil and gas.
The ruling does not absolve Shell from its duty of care, leaving room for potential regulatory or shareholder actions that may push the company to adopt more ambitious climate goals.
