A Dutch court has ruled that Royal Dutch Shell must significantly cut its carbon emissions in a landmark climate decision that could spell trouble for oil companies.
What is Happening?
- Shell has been ordered to cut its emissions by 45% by 2030 from 2019 levels, according to a judgement from a district court in The Hague on Wednesday, May 27. This includes emissions from its own operations as well from the energy products it sells.
- This decision marks the first time that a court has ruled that a company needs to reduce its emissions to align with global climate goals, according to Friends of the Earth Netherlands, the environmental group that brought the case against Shell.
- This judgement could pave the way for similar cases to be brought in other countries, forcing oil companies to reduce fossil fuel production.
- Shell announced plans in September 2020 to achieve net zero emissions by 2050, a target that includes emissions from its products. It is targeting a 20% reduction in carbon intensity by 2030, and 45% by 2035.
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Roger Cox, lawyer for Friends of the Earth Netherlands, said, “This is a turning point in history.”
- The court relied on global human rights standards and international instruments on climate change in arriving at its decision.
Eric De Brabandere, a professor of international dispute settlement at Leiden University in the Netherlands, said, “I can imagine this will inspire a series of other cases against companies, especially those active in the oil extraction industries like Shell. It is a groundbreaking decision, it’s really a landmark.”
Mounting Pressure on Shell
- Shell argued that its carbon intensity targets are aligned with the Paris Agreement, but Friends of the Earth Netherlands argued that the company’s ongoing investments in oil and gas extraction show that it is not taking climate change seriously.
- In its judgement, the court found that Shell’s carbon emissions pose a “very serious threat” to Dutch residents, and that the company has an “individual responsibility” to reduce emissions. The court added that the company would have “total freedom” to comply with its order and shape corporate policy.
- Shell will appeal the ruling.
In a statement, a Shell spokesperson said, “We are investing billions of dollars in low-carbon 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.”
Mounting Pressure on Big Oil
- Oil companies around the world are facing growing pressure from shareholders and activists to move away from fossil fuels and invest in clean energy sources.
Friends of the Earth Netherlands director Donald Pols told reporters, “Shell is the first but will not be the last company that will be forced to stop dangerous climate change. As of today climate lawsuits are a material risk for all major polluters in the world.”
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