Home » It’s too soon to say whether court ruling will force Shell to slash carbon emissions – but case could still set a precedent
It’s too soon to say whether court ruling will force Shell to slash carbon emissions – but case could still set a precedent
May 27, 2021
It is difficult to say, at first blush, how much of a difference today’s court ruling in The Hague District Court will actually make to Royal Dutch Shell’s policy on carbon emissions.
For a start, Shell has already said it expects to appeal the “disappointing” ruling.
Secondly, the verdict is only legally binding in the Netherlands. The court’s demand that Shell cuts its emissions by 45% by 2030 – it is currently committed to hitting that target by 2035 – will not apply in the rest of the world.
Thirdly, it must be pointed out that this was not an absolute victory for the environmental groups that brought the case.
Crucially, the court ruled that Shell is currently not in breach of its obligation to reduce emissions – as the activists had argued – because it is currently in the process of tightening its policy on emissions.
Fourthly, aspects of this ruling raise more questions than answers. The court offered no suggestions on how Shell should seek to comply with its ruling or how that ruling might either be enforced or monitored.
Nonetheless, the ruling may have wider ramifications. There are more than 1,300 similar climate change-related cases being brought against governments and companies around the world by environmental and human rights groups and, with little relevant case law in place, courts will naturally be looking for legal precedents where they can find them.
That is why today’s ruling was billed in advance as having implications for all oil and gas companies and not just Shell – although it is also worth pointing out that, of the hundreds of climate change-related cases of this kind that have already come before the courts, the vast majority have been dismissed.
These include a high profile case that was brought before the city-state court in Berlin in October 2019 in which three German farming families, backed by Greenpeace, claimed that Angela Merkel’s government was violating their rights by not lowering greenhouse gas emissions quickly enough.
It is also perfectly likely that similar cases brought against multinational companies like Shell may be less effective in other jurisdictions.
The Dutch courts have proved unusually supportive of climate change cases, as shown by a 2015 ruling, later upheld on appeal, in which the Dutch government was ordered to reduce the country’s greenhouse gas emissions by at least 25% by 2020 from their 1990 levels.
Moreover, some courts are concluding that the solution to climate change is not legal, but political.
A US federal appeals court last month rejected an attempt by New York City to hold five major oil companies – Shell, BP, Exxon Mobil, Chevron and ConocoPhilips – liable for the cost of addressing harm caused by global warming. They said local legal claims were displaced by the Federal Clean Air Act.
The judges said in their ruling: “Global warming presents a uniquely international problem of national concern. It is therefore not well-suited to the application of state law.”
The Hague District Court has reached exactly the opposite conclusion but it is likely the New York ruling may carry the greater weight around the world.
It’s worth pointing out that Shell’s share price has not budged – and markets usually get this right.
There is also a danger that this ruling ultimately does more harm than good.
The US oil majors have largely behaved during the last decade as if it is business as usual.
But the European super-majors, in particular BP and Shell, have shown a genuine commitment to reducing their emissions.
Both have also proved far more receptive to engaging with environmental campaigners and other interested parties on the issue than they ever did in the past and have been much more open and transparent.
Shell stressed throughout this court case that it felt a collaborative approach was needed to help address climate change rather than confrontation through the courts.
It would be a pity if this ruling forced them onto the defensive and made them – forgive the pun – retreat back into their shells.
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