by Harvin Bhathal, Peak Associate

In a landmark case, Royal Dutch Shell, more commonly known as Shell, was ordered by a court in The Hague to reduce their carbon emissions by 45% by 2030. The case was brought forth by the Dutch branch of international environmental organization Friends of the Earth and over 17,000 individual co-plaintiffs.

Shell’s arguments in the court proceedings included new carbon emission targets that were set in February 2021 for the corporation to transition its business to net-zero by 2050. This included a 68% reduction by 2023, 20% by 2030, and 45% by 2035. However, the plaintiff’s lawyers argued the corporation had been aware of the environmental impacts of the fossil fuel industry for decades and the new targets were still insufficient.

The 45% reduction in emissions is in accordance with the 2030 target agreed upon by climate scientists through the Intergovernmental Panel on Climate Change (IPCC), as well as energy analysts from the International Energy Agency (IEA)

While Shell did not break any laws, the court established that “an imminent violation of the reduction obligation” would occur, and that the corporation’s policies and ambitions “largely amount to rather intangible, undefined, and non-binding plans for the long-term.”

If a 45% reduction in emissions is achieved by 2030, and net-zero by 2050, then the impacts of human-caused climate change can be limited to a global 1.5 C increase in temperature.

According to Panmao Zhai, co-chair of IPCC Working Group I, limiting the global temperature increase is significant because “we are already seeing the consequences of 1 C of global warming through more extreme weather, rising sea levels, and diminishing Arctic sea ice, among other changes.” 

In an interview with The Peak, Thomas Budd, PhD Candidate and member of SFU’s Energy and Material Research Group (EMRG), said,  “Even though individual societies and private corporations may still seek to achieve stronger climate targets,” the 45% and net-zero targets are “fundamentally important.”

Shell has vowed to appeal the court’s ruling, but the court has also said their decision must be immediately implemented and not suspended pending an appeal. In previous climate action lawsuits in the Netherlands, there is precedent of losing appeals; the Dutch government lost multiple appeals in a case where the Dutch Supreme Court ruled the government had an obligation to protect the rights of their citizens regarding the climate crisis.

“In general, I can foresee that this question concerning a court’s role in ordering climate action on private corporations could be brought to courts and courts of appeal all over the world as more claims against fossil fuel companies are made,” said Budd.

In a LinkedIn post titled “The spirit of Shell will rise to the challenge,” Shell CEO Ben van Beurden wrote, “I still feel disappointed that Shell is being singled out by a ruling that I believe does not help reduce global CO2 emissions.” 

According to the court proceedings, Shell argued that “the energy transition required for achieving [this goal] demands a concerted effort of society as a whole.” The plaintiffs also agreed with the statement. 

The court “acknowledge[d] that Shell cannot solve this global problem on its own. However, this does not absolve Shell of its individual partial responsibility to do its part regarding the emissions of the Shell group, which it can control and influence.”

Shell’s arguments were rejected on the basis that corporations have legal obligations to address the climate crisis through “the best available science” on climate change.

In addition, van Beurden added that corporations “need bold, clear, and consistent government policies and regulations.”

“For the time being, the most effective way to reduce global emissions is for governments to implement compulsory decarbonization policies of increasing stringency in their jurisdictions,” said Budd.

Rachel Kennerley, an international climate campaigner at Friends of the Earth, said, “If van Beurden was as serious about this as he claims, he’d stop dismissing his company’s role in driving this devastating situation and would use the court ruling as an intervention to do the right thing, rather than appealing it with all of Shell’s corporate might.”

In terms of what Shell reducing their carbon emissions by 45% will look like, van Beurden pointed to the corporation’s Energy Transition Strategy published in April 2019. This includes decarbonization investments such as “electric vehicle charging, hydrogen, power from wind and solar energy, and biofuels.”

Budd noted, “It is also important to consider that this could also raise the cost of energy Shell is able to provide relative to other fossil fuel providers, causing an economic feedback effect where fuel users could partially shift away from Shell and buy other higher emitting and cheaper sources of energy from elsewhere.” 

This was a part of Shell’s counter-arguments, which van Beurden alluded to on Linkedin. He stated, “Demand for fuel would not change.”

However, the court found that “other companies will have to respect human rights” and “make a contribution” in mitigating the climate crisis as well.

According to Budd, “[T]he most significant outcome of this ruling will likely be that environmental organizations all over the world will feel embolden[ed] to bring their own lawsuits against corporations which supply fossil fuels.”

Although he noted that “other jurisdictions have different legal systems and rules” than The Hague, “if the court ruling against Shell can be replicated in other jurisdictions and applied to more fossil fuel companies around the globe, legal action against individual fossil fuel corporations can potentially grow to become a more potent tool for climate action.”

Friends of the Earth and over 17,000 individual co-plaintiffs made history by taking one of the world’s most powerful and environmentally destructive corporations to court and winning. As Budd noted, this case has the potential to set a precedent for future cases against the fossil fuel industry and accelerate the transition to more sustainable and renewable forms of energy consumption.