Shell is not obliged to dramatically reduce its planet-heating pollution by 2030, a Dutch appeals court ruled Tuesday, delivering a blow to efforts by environmental activists to push energy companies away from fossil fuels.
The ruling — handed down just as annual climate talks take place at COP29 in Azerbaijan’s capital Baku — overturns a previous verdict that imposed steep carbon emissions reductions on the British oil and gas giant.
“We are pleased with the court’s decision, which we believe is the right one for the global energy transition, the Netherlands and our company,” Shell (SHEL) CEO Wael Sawan said in a statement.
Shell had appealed the previous ruling, handed down in 2021, which ordered the company to slash its CO2 emissions by 45% by 2030 from 2019 levels. That included emissions from its own operations and from the energy products it sells.
While The Hague Court of Appeal ruled that Shell is obliged to limit its CO2 emissions — in order to protect the planet from dangerous climate change — it said there is insufficient agreement in climate science on a specific reduction percentage that an individual company such as Shell should adhere to. As such, it dismissed the previous ruling.
Tuesday’s ruling noted that Shell is already working to reduce emissions from its own operations — so-called scope 1 and 2 emissions — and that forcing the company to reduce the far greater emissions caused by the use of its products, known as scope 3 emissions, would not be effective.
“A court ruling would not reduce overall customer demand for products such as petrol (gasoline) and diesel for cars, or for (natural) gas to heat and power homes and businesses,” Shell said.
Friends of the Earth Netherlands, an environmental campaigning group that brought the case against Shell, expressed disappointment with the outcome.
“This hurts,” said director Donald Pols. At the same time, he highlighted several positives from the ruling.
“The court affirmed that companies… are responsible for the human rights violations resulting from climate change,” he told CNN. “The judge also stated that the more than 800 fossil fuel projects (in Shell’s pipeline) are contradictory to its responsibility to act in accordance with human rights principles. These are all very important legal principles that… can be used in future court cases.”
Pols said Friends of the Earth Netherlands would study the ruling before deciding whether to launch an appeal at the Supreme Court of the Netherlands.
Joshua Sherrard-Bewhay, an analyst at investment platform Hargreaves Lansdown, said Shell’s successful appeal “signals to high emitters that they are safe for now from the jurisdiction of international frameworks,” citing the Paris Agreement, which binds nearly all countries to drastically cut carbon pollution, as one example.
Shell’s backslide on emissions targets
Despite the initial ruling ordering Shell to slash its emissions, the energy giant has in fact watered down some of its climate targets as it seeks to boost financial returns and amid concerns globally about secure and affordable energy.
Earlier this year, the company said it would target a 15-20% reduction in the so-called net carbon intensity of its energy products by 2030 compared with 2016, having previously aimed for a 20% cut. It also scrapped an objective to almost halve its net carbon intensity by 2035.
At the same time, Shell has pledged to halve emissions from its own operations by 2030 and to become a net-zero emissions energy business by 2050, meaning its greenhouse gas emissions must go down to zero by mid-century, taking account of all the pollution it produces and removes from the atmosphere.
Shell continues to invest much more into fossil fuels than it does into clean energy. Last year, it invested $5.6 billion into low-carbon energy, amounting to 23% of its total capital spending. By comparison, it poured more than $16 billion into its oil and gas businesses.
According to Friends of the Earth Netherlands, Shell accounts for 3% of worldwide greenhouse gas emissions, more than most countries emit individually.
Addressing the ruling’s implications for COP29, Pols said international climate agreements will be ineffective at combating climate change if they exclude, as the Paris Agreement does, large corporate polluters. He noted that since 2015, when that accord was signed, about 50 companies had emitted 80% of global CO2 pollution.
“It is as if the negotiations between governments have not adapted to the new economic and geopolitical reality of multinationals,” he added.
Mark van Baal, the founder of Follow This, a group that aims to compel major energy companies to reduce emissions through shareholder votes at their annual meetings, said the ruling intensifies investors’ responsibility to “reform Big Oil.”
“The court’s decision… is a setback in the fight against the climate crisis,” he added.
This story has been updated with additional information.
