When the verdict in the climate lawsuit against Shell was handed down in a court in The Hague in May 2021, it was a global sensation. The judges found that the company must reduce its CO₂ emissions by 45 percent by 2030 compared to 2019. Otherwise, the goal of the Paris Climate Agreement cannot be achieved. For the first time ever, an energy company should be forced by the judiciary to change its corporate policy. Climate activists cheered. Hardly anyone had expected such a far-reaching verdict – including Shell.
The group, which now has its headquarters in London, appealed. For fundamental reasons, but also because he would otherwise have to reduce his sales significantly. For the trial, which began this week in The Hague, he has armed himself with an armada of specialized lawyers. Again, the process is being observed worldwide.
Shell generates a large portion of its revenue from fossil fuels
A lot has changed since 2021. On the one hand, it is getting dangerously warmer; The consequences of climate change, caused primarily by human-produced greenhouse gases, can be felt in the form of floods, heat waves and crop failures. On the other hand, the Russian attack on Ukraine caused energy prices to skyrocket. Like other companies, Shell, which continues to generate a large portion of its sales from fossil fuels, made record profits of $42 billion in 2022. Oil and gas projects appear lucrative, which is why Shell continues to invest in them. And that despite the energy sector According to the International Energy Agency, only by 2050 will there be a net zero balance can be achieved in CO₂ emissions if no new oil or natural gas fields are developed.
Just in mid-March, Shell lowered its emissions targets in order to benefit more from the boom in liquid gas. Although the target remains zero by 2050, the target for 2030 will be slightly reduced and that for 2035 (minus 45 percent) will be deleted entirely. In any case, Shell is not talking about absolute emissions quantities, as the Hague judges did, but rather about the “CO₂ intensity” of its oil and gas business – a self-chosen, controversial benchmark. According to Shell boss Wael Sawan, the 2050 target can now be achieved even more easily.
Donald Pols, head of Milieudefensie, sees the announcement as an “outstretched middle finger for the climate and everyone affected by climate change.” This shows how relevant his environmental organization’s lawsuit against Shell is. There is a “regulatory gap”. Shell is one of the big players in the energy business, responsible for around 2.7 percent of global CO₂ emissions. According to Milieudefensie, scientific findings and the Netherlands’ legal obligations create an obligation for Shell to act more quickly than before.
The company sees politics as its duty
Shell replies that it is already fulfilling this obligation. They are producing more sustainable fuel for aviation, building one of the largest biofuel factories in Europe, and investing in one of the largest charging networks for electric vehicles. Anything beyond this cannot be demanded of a single company. That is a matter for politicians, who have the interests of the general public in mind.
Shell itself cannot influence many things, the lawyers argued on the first day of the meeting. About the kind of energy his customers demanded. On this point, the ruling goes very far because it requires Shell to do everything possible, including reducing its customers’ CO₂ emissions – which are far higher than those resulting from Shell’s activities itself. According to the company, aircraft will continue to run on kerosene and ships will continue to run on heavy oil for the time being. Shell also has little influence on the climate policy of the 70 countries in which it operates. Some went faster, others slower, so Dutch judges shouldn’t get involved. In doing so, Shell is addressing the controversial question of the extent to which the judiciary is or should be authorized to decide such questions. It could also be counterproductive for the climate to force Shell to give up business areas. Because other companies, perhaps operating less sustainably, would fill the gap.
Other companies are turning the tables
Shell is making itself artificially small, replied Milieudefensie lawyer Roger Cox, who had already won the spectacular verdict for the organization Urgenda in 2015 that forced the Dutch state to make improvements to climate policy. The energy company is a “private major power”. With its billions in investments in oil and gas, with lobbying activities and direct access to power, it is driving demand for fossil fuels that “does not arise in a vacuum.” “And in doing so, Shell will help determine what the future of humanity looks like.” At the same time, it has been practicing “climate obstruction” for decades by hindering climate policy and, among other things, spreading narratives that the “fossil business model” also has something good in it. For example, because there are many people who depend on affordable energy.
The appeal process is scheduled to last four days and ends on April 12th. The verdict is expected in the second half of the year. It will have consequences far beyond Shell. In January, Milieudefensie announced that it would also sue the major Dutch bank ING, as an example of financial groups that promote fossil fuel businesses. Some corporations have long since turned the tables: ExxonMobil is suing activist shareholders who are insisting on more climate ambition; TotalEnergies wants to take Greenpeace to court over allegedly false emissions estimates.