Dutch court rules Shell must reduce CO2 emissions

A Dutch court ruled today that Shell must sharply reduce its CO2 emissions by the end of this decade.

The Hague District Court ordered Shell to cut its carbon emissions, including those from its suppliers and customers, by a net 45pc by the end of 2030.

Shell's energy transition strategy includes becoming net-zero by 2050, but it does not have shorter-term absolute emission reduction targets. The strategy it announced in February aims to cut its carbon intensity by 20pc by 2030, 45pc by 2035 and 100pc by 2050, all compared with 2016.

Pressure is mounting on oil and gas firms to raise their game on emissions: ExxonMobil faces what may be a landmark shareholder vote today as an activist investor seeks to unseat a third of its board of directors, saying the company has "no credible strategy to create value in a decarbonizing world."

The case against Shell was brought by Dutch environmental organisation Milieudefensie — part of campaign group Friends of the Earth — in 2018, and was joined the following year by more than 17,000 co-plaintiffs and six organisations. They argued that Shell was doing too little to reduce emissions and would endanger human lives in the longer term, and that Shell places the responsibility to prevent climate change mainly on politicians and consumers.

"Shell is so incredibly big and has so much influence that it is sometimes more powerful than governments. And that is why we went to court," it said.

"The court finds that [Shell] is not presently in breach of its reduction obligation, as the claimants argue," the court ruling said. "However, seeing as the policy is not concrete, has many caveats and is based on monitoring social developments rather than the company's own responsibility for achieving a CO2 reduction, the court finds that there is an imminent breach of the reduction obligation."

Shell said that it will appeal this ruling, which it described as "disappointing".

"We have set our net-zero target, and our short- and medium-term carbon intensity targets, so that they are fully consistent with the more ambitious goal of the Paris Agreement," it said today.

The firm said last year that action is needed now on climate change, but that acceleration will be achieved through "effective policy, investment in technology and changing customer behaviour. None of which will be achieved with this court action."

Last week, Shell's shareholders voted in favour of the firm's energy transition plans. Activist investor Follow This called for the company — and its peers — to set shorter-term absolute carbon emissions targets and not just those based on carbon intensity.

But Shell has resisted pressure from activist investors to set shorter-term absolute emission targets, instead sticking with carbon intensity ones.

"We believe these targets are aligned with the 1.5 degrees Celsius scenarios used in the IPCC Special Report on Global Warming," chief executive Ben van Beurden told shareholders this month. Environmentalists insist that carbon intensity targets allow companies like Shell to increase oil and gas output while bringing down the firms' carbon intensity by adding 'green' energy projects to the mix.

Van Beurden also told shareholders that "we believe our absolute emissions cross scope 1, 2 and 3 reached a high point in 2018 at 1.7 gigatonnes. Now we are working to bring them down".

The firm said that its oil production peaked in 2019, and its transition strategy includes oil production falling by 1-2pc a year and excludes any new frontier exploration entries after 2025.

By Rowena Edwards, Konstantin Rozhnov and Florence Schmit

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