A cyclist passes oil silos at the Royal Dutch Shell Pernis refinery in Rotterdam, the Netherlands, on Tuesday, April 27, 2021.
Peter Boer | Bloomberg | Getty Images
LONDON – A Dutch court ruled on Wednesday that oil giant Royal Dutch Shell must cut its CO2 emissions by 45% by 2030 compared to 2019.
This is a much larger reduction than the company’s current goal of reducing its emissions by 20% by 2030.
The landmark ruling comes at a time when the world’s largest corporate emitters are under immense pressure to set short-, medium- and long-term emissions targets that are compatible with the Paris Agreement. The climate agreement is widely recognized as extremely important to avoid an irreversible climate crisis.
According to Shell’s current climate strategy, the company aims to become a net zero issuing business by 2050. The company has set itself the goal of reducing CO2 emissions by 45% by 2035.
A Shell spokesman said the company “fully expects to appeal today’s disappointing court ruling”.
“We are investing billions of dollars in low-carbon energy, including charging electric vehicles, hydrogen, renewables and biofuels,” the spokesman said via email. “We want to increase the demand for these products and expand our new energy business even faster.”
Shell shares traded 0.2% higher in London. The share price is up nearly 10% since the start of the year, after falling nearly 40% in 2020.
“A turning point in history”
The lawsuit was filed in April 2019 by seven activist groups – including Friends of the Earth and Greenpeace – on behalf of 17,200 Dutch citizens. Subpoenas in court alleged Shell’s business model “endangering human rights and lives” by threatening the goals set out in the Paris Agreement.
Under the Paris Agreement, adopted in 2015 and signed by 195 countries, states agreed on a framework to prevent global temperatures from rising by more than 2 degrees Celsius, although the agreement aims to limit global temperature increases by more than 1.5 degrees Celsius.
Roger Cox, an environmental advocate on the case, said in a statement that the ruling marks “a turning point in history” and could have dire consequences for other major polluters.
Meanwhile, Sara Shaw, Friends of Earth’s international program coordinator for Climate Justice and Energy, hoped the ruling would “spark a wave of climate disputes against major polluters, forcing them to stop fossil fuel extraction and burning”.
Mark van Baal, founder of the Dutch group Follow This, told CNBC via email that the judge’s verdict shows that “Big Oil can no longer deny the crucial role it must play in the fight against climate change”.
At Shell’s general meeting last week, shareholders voted overwhelmingly in favor of the company’s energy transition plans. Crucially, however, a growing minority opposed the strategy, insisting that the oil giant had much more to do in the fight against climate change.
Activist investor Follow This said at the time that the outcome would likely mean Shell would have to revise its climate targets yet again.
According to Reuters, the case is the first in which activists have taken a large energy company to court to force it to revise its climate strategy.
