Out-Law News | 28 May 2021 | 10:12 am | 2 min. read
Royal Dutch Shell (Shell) must cut its global carbon emissions by 45% compared to 2019 levels by 2030, a court in the Netherlands has ruled.
The district court in The Hague ruled that Shell owed an “unwritten standard of care” under the Dutch civil code to Dutch residents, requiring it to limit global warming to the 1.5˚C cap set out in the Paris climate change agreement. This standard of care also incorporated Shell’s obligations under human rights law, it said.
The court also found that Shell’s published policy intentions and ambitions on climate change mitigation “largely amount to rather intangible, undefined and non-binding plans for the long-term” which are “not unconditional but … dependent on the pace at which global society moves towards the climate goals of the Paris agreement”.
The court’s ruling “gives [Shell] leeway to develop its particular reduction pathway and to differentiate as it sees fit, as long as it achieves a net 45% reduction in CO2 emissions of the Shell group (Scope 1 through to 3) relative to 2019”, it said. The 2019 base was chosen as the year in which the proceedings began.
However, it noted in its judgment that a consequence of the ruling “may be that [Shell] will forgo new investments in the extraction of fossil fuels and/or will limit its production of fossil resources”.
The case against Shell was brought by a group of non-governmental organisations (NGOs) led by Friends of the Earth Netherlands (Milieudefensie) and around 17,000 individual claimants. The court ruled that the NGOs’ claims were admissible to the extent that they related to the interests of current and future generations of Dutch residents and Dutch inhabitants of the area around the Wadden Sea, but not the interests of current and future generations of the world’s population as a whole. The court also struck out the individual claims, which it said could not be ‘bundled’ with the NGOs’ claims.
“[T]ackling dangerous climate change needs immediate attention,” the court said in its judgment. “The imperativeness for the Netherlands to reduce CO2 emissions is even greater, because so far the temperature rise in the Netherlands has developed about twice as fast as the global average, with serious and irreversible consequences and risks for the human rights of Dutch residents and the inhabitants of the Wadden region.”
While the court agreed that there were many factors contributing to climate change and that any one company could not be held solely responsible, Shell owed “a significant individual best-efforts obligation” to play its part by reducing emissions attributable to the activities of the corporate group.
“This is in line with the broad international consensus that each company must independently work towards the goal of net zero emissions by 2050,” the court said.
“The parties agree that the world faces a twin challenge: dangerous climate change must be curbed by reducing CO2 emissions while meeting the global energy demand of the rapidly growing world population. However, the importance of access to reliable and affordable energy, as pointed out by [Shell], and the Shell group’s role in it, have no bearing on [Shell’s] reduction obligation. That interest must always be served within the context of climate targets,” it said.
In a statement, Shell said that the court’s decision was “disappointing” and that it “fully expect[s] to appeal”.
“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,” it said.
Shell announced its 2050 target, which includes emissions from customers’ use of the energy products it supplies (‘Scope 3’ emissions) as well as its own emissions (‘Scope 1’ and ‘Scope 2’ emissions), last year. It has also set interim targets to cut the ‘carbon intensity’ of its products by at least 6% by 2023; 20% by 2030; 45% by 2035; and 100% by 2050, from 2016 levels.
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