In a landmark ruling with major implications for the oil and gas industry, and beyond, a Dutch court has ordered energy giant Shell to dramatically reduce its carbon emissions over the next few years.
The ruling, ordering Shell to slash emissions by 45% by 2030, on a 2019 basis, comes only days after shareholders overwhelmingly approved the company’s energy transition strategy, in a move that made the company the first energy major to bring its climate plans to a shareholder vote. The strategy contained detailed plans of the company’s targets and actions to reduce emissions and promote a net zero future, including short-, medium-, and long-term emissions reduction goals, the company’s decarbonization strategy and milestones, and its capital allocation plans, with Shell aiming to become a net zero company by 2050. The strategy was approved by 88% of shareholder votes.
In her ruling on the case, however, Judge Larisa Alwin stated that the company’s plan is ““not concrete and is full of conditions.” In addition to the emissions reduction order, the ruling also held the company responsible for Scope 3 emissions from the company’s value chain.
Donald Pols, director of Friends of the Earth Netherlands, one of the organizations that filed the case, said:
“This is a monumental victory for our planet, for our children and is a stop towards a liveable future for everyone.The judge has left no room for doubt: Shell is causing dangerous climate change and must stop its destructive behaviour now.”
The ruling could have wide ranging implications, with a precedent potentially set for similar actions across the energy industry and other high-emitting sectors.
Roger Cox, lawyer for Friends of the Earth Netherlands, said:
“This is a turning point in history. This case is unique because it is the first time a judge has ordered a large polluting company to comply with the Paris Climate Agreement. This ruling may also have major consequences for other big polluters.”
In a statement following the ruling, Shell indicated it would appeal the decision, and highlighted its efforts and investments to transition the company to net zero.
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 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.”