Shell must do more to cut carbon emissions, says Dutch court

Shell has lost a landmark Dutch legal case brought by environmental campaigners, with the court ruling that the company must reduce its greenhouse gas (GHG) emissions more quickly than planned, with a 45% reduction in CO₂ emissions by 2030 from 2019 levels.

Responding to the ruling, Harry Brekelmans, Projects & Technology Director at Shell, said: ‘Urgent action is needed on climate change which is why we have accelerated our efforts to become a net zero emissions energy company by 2050, in step with society, with short-term targets to track our progress. We are investing billions of dollars in lowcarbon energy, including electric vehicle charging, hydrogen, renewables and biofuels. We want to grow demand for these products and scale up our new energy businesses even more quickly. We will continue to focus on these efforts and fully expect to appeal today’s disappointing court decision.’ He went on to highlight a number of milestones on Shell’s journey so far to become a net zero energy company.

Commenting on the case in relation to legal responsibility for climate change, Tom Cummins, Dispute Resolution Partner at law firm Ashurst, says: ‘This is arguably the most significant climate change related judgment yet, which emphasises that companies and not just governments may be the target of strategic litigation which seeks to drive changes in behaviour. Oil and gas companies will be scrutinising the judgment, as will pressure groups and claimant lawyers to see whether there is scope for similar claims to be brought against other companies in other jurisdictions.’

Noting that there was no major net reaction on the markets as a result of the ruling, Artem Abramov, Head of Shale Research at Rystad Energy, commented that: ‘If we are to hypothesise that Shell is set to deliver on the court decision, this can be done quite easily by portfolio optimisation and a dedicated divestment programme for high-emission assets. Shell has very competitive Scope 1 emission intensity among its major peers, but it still has significant variability in its own portfolio in terms of intensity for different assets. Divesting certain projects in the Middle East, Nigeria, Malaysia and few other countries would probably be the easiest way to comply with the court ruling if the company chooses or is forced to do so. However, other than setting a precedence, there are no immediate implications for the general oil industry. Even if Shell divests high emission assets, they will just change hands, not be taken off the global energy map.’

Per Magnus Nysveen, Head of Analysis at Rystad Energy, adds: ‘It is hard to imagine a final ruling that will condemn oil companies for end-use emissions. E&P companies might one day be held liable for high or unnecessary emissions from the oil fields, but this is more difficult to happen for emissions by cars. End-user emissions should be more of a consumer’s responsibility. In my opinion this ruling has negligible chance to survive appeals. It is not surprising however that we see this low court ruling occur in Netherlands, as the country’s public opinion is particularly sensitive to the climate impacts of the energy industry.’