A Dutch court is expected to deliver a crucial decision on Tuesday regarding a landmark climate ruling against Shell, a major British-Dutch oil and gas company. The ruling, which will be announced around midday, will determine whether the court’s 2021 order for Shell to sharply reduce its greenhouse gas emissions will be upheld, dismissed, or modified.
In the 2021 ruling, Shell was mandated to cut its carbon emissions by 45% by 2030, compared to 2019 levels. The court also included Scope 3 emissions in the ruling—those resulting from the use of Shell’s products by consumers, which has been a contentious issue. The appeals court in The Hague will make its decision on November 12, with three possible outcomes: uphold the original ruling, dismiss the case entirely, or revise the ruling to exclude Scope 3 emissions.
This decision is closely watched, as it is expected to feature prominently in discussions at COP29 in Baku, Azerbaijan. Both parties have already indicated that they may appeal the verdict to the Netherlands’ Supreme Court, regardless of the outcome.
Shell’s Response
For Shell, the stakes are high. The company argues that an adverse ruling would not only impact its business operations but also fail to significantly reduce global emissions. According to Shell’s Vice President of External Relations, Saskia Kapinga, the company’s appeal centers on whether it has a legal obligation to cut the worldwide carbon emissions it reports across Scope 1, 2, and 3.
Shell believes the court’s order to reduce emissions by 45% by 2030 is unworkable and counterproductive. “An order from a Dutch court against an individual company will not bring down global emissions and will not help the climate,” Kapinga said. Shell maintains that climate policy should be the responsibility of governments, not courts. The company also stresses that it cannot control the emissions produced by its customers, who may switch to other suppliers if Shell cuts its output, thereby reducing the potential impact of its own emissions reductions.
Concerns Over Economic Impact
Many in the Netherlands, particularly industry groups and political factions, worry that a ruling against Shell could harm the country’s economy. The Dutch economy is already struggling with rising energy prices, limited grid availability, and inflation. These challenges, combined with high energy costs, could be worsened if the court decision leads to even more restrictive emissions targets for companies.
In this context, Shell argues that imposing specific emissions reduction targets on individual companies has no legal basis. Dutch politicians, especially from the right-center government, have consistently rejected calls for such measures. This opposition aligns with Shell’s position, given the company’s move to London in 2022 amid increasing political and financial pressure in the Netherlands.
Shell’s Strategy and Global Implications
Shell has indicated that it is already on track to meet the emissions reductions required for its production facilities, with emissions in 2023 30% lower than in 2016. However, Shell’s new leadership, which has refocused the company on oil and gas operations, has revised its carbon intensity targets for 2035, signaling a shift in strategy.
The outcome of this case will be closely watched by global markets and other oil and gas companies, as it could set a precedent for environmental groups and political parties pushing for more aggressive climate policies. If upheld, the ruling could pressure the hydrocarbon sector globally and accelerate changes in the ownership structure of the industry, potentially shifting power from international oil companies (IOCs) to national oil companies (NOCs).
Many environmentalists argue that emissions are only one piece of the puzzle and that pushing for drastic emissions cuts without considering the broader context may not provide a complete solution to climate change. The ongoing shift in the global energy landscape, with less oil and gas being controlled by traditional IOCs, reflects this complexity.
The Dutch court will begin reading its ruling at 07:00 GMT on Tuesday, and its decision will likely have significant implications for both Shell and the global energy market.
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