Climate group can't force Shell to set and achieve CO2 reduction targets: Appeals Court

The Court of Appeal in The Hague has dismissed Milieudefensie’s claims against Shell. According to the court, the company does have a “duty of care” to combat dangerous climate change, but Shell cannot be forced to set specific percentages by which it must reduce CO2 emissions. The appeals court thereby annulled the initial ruling.

In their ruling, the judges explain that various reports discussed during the case provided “insufficient support” to impose a specific percentage on Shell. The court also does not believe that a reduction obligation for Shell would have a positive effect on combating climate change worldwide. If Shell were to resell less oil and gas extracted by other companies, other companies could fill that gap.

Milieudefensie and other organizations had demanded that Shell reduce the CO2 emissions that it causes directly and indirectly by at least 45 percent by 2030. The plaintiffs based that percentage on scientific reports on the global emission reductions needed to still have a reasonable chance of limiting global warming to 1.5 degrees.

However, such a general standard is “not fine-meshed enough to be directly applicable to Shell,” the court ruled. According to the judges, different reduction percentages may be needed per country and per sector.

In the introduction to the ruling, the court pointed out the dangers of climate change and the responsibility of countries to reduce greenhouse gas emissions that cause global warming. This is a human rights issue for which companies like Shell also bear responsibility, the court said.

“Shell has a duty of care to limit CO2 emissions and thus counter dangerous climate change,” the court ruled. However, the court can’t force a company to do this in a certain way.

The court also agreed with the oil and gas company that the carbon intensity of different fossil fuels varies. For example, coal is more polluting than natural gas. If Shell were to supply gas to a company that previously used coal, this would lead to a decrease in total CO2 emissions, while the emissions that can indirectly be attributed to Shell would increase, the court said.

Milieudefensie director Donald Pols called the appeals court’s ruling painful, but the environmental organization is still proud of what it achieved. This lawsuit showed that “major polluters are not immune,” Pols said. Milieudefensie has thus fueled the debate about companies’ responsibility. “That is why we will continue to tackle major polluters like Shell.”

Shell is pleased with the ruling. “We are satisfied with the court’s ruling. We believe it is the right one for the global energy transition, for the Netherlands, and for our company,” said CEO Wael Sawan. He reiterated that Shell continues to strive to reduce its greenhouse gas emissions to zero by 2050.

“As Shell has previously indicated, a court ruling will not reduce overall customer demand for products like gasoline and diesel for cars, or for gas to heat and power homes and businesses. It will do little to reduce emissions as customers will simply switch to another supplier,” the company wrote.