Shell wins appeal against order to cut greenhouse gas emissions

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Shell has won an appeal against a landmark order for it to cut greenhouse gas emissions, in a victory for energy companies’ ability to ward off attacks by activists in court.

The Hague Court of Appeal on Tuesday annulled an order made by a district court in 2021 for Shell to slash its emissions by 45 per cent by 2030, relative to 2019 levels.

Shell had framed the case as an attempt by activists to push an essentially political question through the court system without Dutch and European Union voters and lawmakers first fully buying into the idea of individual companies being forced to cut emissions at pace. 

“There is currently insufficient agreement in climate science on a specific reduction percentage that an individual company such as Shell should adhere to,” the Court of Appeal said in a statement on the second day of a global UN climate summit.

It also gave its backing to Shell’s argument that any ruling targeting one company would be ineffective as other suppliers would step in to meet demand for fossil fuels. But it said the energy company had an obligation to “limit its CO₂ emissions”.

The UN body of scientists, the Intergovernmental Panel on Climate Change, has said a 43 per cent global cut in emissions relative to 2019 by the end of the decade is needed to keep within the boundaries of ideally 1.5C of global warming above pre-industrial levels that was set down in the Paris agreement in 2015.

“This hurts,” said Donald Pols, chief executive at Friends of the Earth Netherlands, which filed the case. But “this case has ensured that major polluters are not inviolable and has further fuelled the debate about their responsibility in combating dangerous climate change”.

Shell chief executive Wael Sawan said: “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.”

Friends of the Earth Netherlands did not confirm on Tuesday whether it would appeal against the ruling, but is expected to do so, likely dragging out the matter until at least 2027. It has three months to launch an appeal to the Dutch Supreme Court, which would then take about 18 months to come to a final decision, according to people familiar with the process, or longer if it refers questions to the European Court of Justice. 

While activists around the world have filed a series of copycat legal cases against major polluters, including French energy major Total, cement company Holcim and utility RWE, these have been slow to get off the ground. 

The landmark Paris agreement on climate change that incoming US President Donald Trump has promised to quit helps underpin much of the ongoing climate litigation cases against states and fossil fuel companies, including the Shell case.

“Our court case is the opposite of this [Trumpian] vision of society,” Pols told the Financial Times before the appeal result. “We believe the judiciary has an important role to play if the government is failing to act,” he added.

By the end of last year, Shell said it had reduced its direct emissions by 29 per cent compared with the Dutch court’s 2019 base year. But it has also scaled back one of its end-of-decade decarbonisation targets, addressing its much larger indirect emissions from the burning of fossil fuels.

Climate litigators have had more success targeting governments, including in a landmark 2019 order compelling the Dutch government to reduce greenhouse gas emissions.