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Dutch court orders Shell oil company to cut carbon emissions 45% by 2030

Image of an oil refinery.

On Wednesday, a court in the Netherlands ordered Royal Dutch Shell, an energy giant, to cut its carbon emissions by 45 percent before the decade is over. Ruling in response to a suit filed by the Netherlands branch of Friends of the Earth, the court concluded that the company’s current plans to reduce emissions are incompatible with the targets of the Paris agreement.

Shell has already announced that it intends to appeal.

Not fast enough

Royal Dutch Shell is a large international energy conglomerate that made its name from oil extraction and processing. The company has recognized the need to diversify its energy portfolio, however, and has concluded that its oil production likely peaked in 2019. Emissions have been falling since 2018, and the company has plans to reach net zero emissions by 2050. A key intermediate step to that goal is a plan to reach a 20 percent drop in carbon emissions by 2030.

The Dutch branch of Friends of the Earth, Milieudefensie voor Veranderaars, feels that a reduction by 2030 simply isn’t fast enough and has been putting pressure on the company since 2018 to do better. By 2019, that campaign resulted in a lawsuit filed in The Hague, where Royal Dutch Shell has its corporate headquarters.

Aside from being the right location from a corporate structure perspective, the location for the suit was propitious given past legal rulings in the Netherlands. In 2019, the country’s Supreme Court became the first to order the national government to enact emissions cuts, a ruling based on the concept of a “duty of care”—the idea that the government has a responsibility to avoid damaging the lives of current and future generations.

In this case, a lower court has determined that corporations are bound by the same standard. Specifically, the suit cited the Paris Agreement goals of limiting warming to 1.5º C or less and argued that Shell’s planned pace of emissions reductions were incompatible with reaching that goal. (Bloomberg published a good background on some of the details of the case.)

The first of many?

Given Shell’s intention to appeal, it could take a number of years to get to a final ruling from the Netherlands Supreme Court. But this shouldn’t necessarily reassure Shell. In the case against the government, the Supreme Court left the emissions goals of the original ruling intact, and the intervening years of appeal meant that the government was left with only a year to reach them.

In addition, the case has potential implications far beyond Shell. While US courts have ruled that climate change is a matter for policy solutions rather than legal rulings, the situation in many other countries remains undecided. The Dutch ruling will allow climate activists to consider whether their country’s legal system and precedents allow suits similar to this one to succeed.

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