Giant Shell won an appeal on Tuesday against a landmark ruling requiring it to speed up efforts to reduce carbon emissions.
The ruling by the appeals court in The Hague overturns a 2021 ruling that ordered Shell to reduce its absolute carbon emissions by 45% by 2030 compared to 2019 levels, including those resulting from the use of its products. Was also included.
The appeals court accepted Shell's responsibility to reduce greenhouse gas emissions to protect people from global warming.
However, it rejected the strict emissions reduction mandate of the original decision. The court supported Shell's argument that emissions reductions should be demanded by governments, not courts.
The court also said the full curtailment order could have unintended global consequences if shale customers switch to more polluting alternatives such as coal.
“In general, any reduction in greenhouse gas emissions is positive for mitigating climate change,” presiding judge Carla Joustra said in the ruling. “But that doesn't mean the cut order for Shell will have the same effect.”
The decision comes amid a shift in global priorities following Russia's invasion of Ukraine in 2022, which sent oil and gas prices soaring and, in many cases, weakened the climate ambitions of governments and shareholders.
Tuesday's decision also coincides with the COP29 UN climate summit in Baku, Azerbaijan, where discussions have been delayed by a dispute over the role of fossil fuels on the agenda.
Environmental advocacy group Friends of the Earth Netherlands, which brought the initial case against Shell in 2019, expressed disappointment at the appeals court's decision.
The organization has not indicated whether it will appeal further to the Supreme Court of the Netherlands.
“It's sad,” said Donald Pols, director of Friends of the Earth Netherlands. “At the same time, this case shows that big polluters are not above the law.”
Shell CEO Vel Savan welcomed the decision, saying, “Shell believes this decision was the right one for the global energy transition, the Netherlands and our company.” Savan's comments align with Shell's stance that emissions mandates should not be enforced by courts but decided at the national and international level.
Shell argued earlier this year that court-ordered emissions cuts could disrupt the global energy transition by pushing customers toward coal and other more polluting energy sources. The appeals court agreed, acknowledging the potential adverse effects of such mandates on the worldwide energy landscape.
Shell says it is already on track to meet emissions reductions within its production. The company has recorded a 30% reduction in production-related emissions over the past year compared to 2016 levels.
However, like other major oil and gas companies, Shell has reduced its renewable energy investments in recent years, citing slower returns compared to its fossil fuel operations.
Shell plans to invest $10–15 billion in low-carbon energy between 2023 and 2025, but recently revised its target to reduce the net carbon intensity of its products by 2016. The target is to reduce the emissions by 15-20% by 2030 relative to the current level. The company also met its previous target of 45% reduction by 2035.
Citi analysts saw the court's decision as a positive outcome of Shell's strategy. Citi analysts commented, “While success in the appeals court may not be the end of the legal process, by signaling that the company's strategy is now more firmly in the hands of shareholders, we believe it is having a positive impact. “
Following the announcement, Shell shares traded 0.7% lower by 13:45 GMT, in line with the broader sector, as analysts indicated the court decision had already been largely priced into the market. It was over.
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