Dutch Court Gives Shell Nine Years to Cut Its Carbon Emissions by 45 Percent from 2019 Levels

In a landmark ruling being hailed by climate activists as “game-changing,” a Dutch court on Wednesday ordered Royal Dutch Shell to cut its carbon emissions by 45 percent from 2019 levels by 2030. 

The Hague District Court verdict is only legally binding in the Netherlands. But the ruling could influence dozens of similar cases around the world, including in the United States. And it’s the first time a court has held a major energy company liable for its role in rapidly warming the planet, according to activists involved in the lawsuit.

“This is a turning point in history,” said Roger Cox, a lawyer with Friends of the Earth Netherlands, in a press release announcing the verdict. “This case is unique because it is the first time a judge has ordered a large polluting company to comply with the Paris climate agreement.”

Cox’s group, along with Greenpeace, sued Shell in 2019 on behalf of 17,200 Dutch citizens. The lawsuit argued that Shell’s continuing investments and operations in oil and gas are “endangering human rights and lives” by threatening the goals laid out in the Paris Agreement, which seeks to avoid the worst impacts of global warming by the end of the century by holding the average global temperature increase to between 1.5 and 2 degrees Celsius. That agreement was signed by 195 countries in 2015.

Shell said in a statement that it plans to immediately appeal “today’s disappointing court decision.” The company highlighted its investments in renewable energy and its previously announced plan to get to net-zero emissions in its operations by 2050.

Some energy analysts said the ruling wouldn’t hold up in the appeals process, and others said activists were overestimating the ruling’s influence. 

But Donald Pols, director of Friends of the Earth Netherlands, disagreed. At a news conference, Pols said that not only would the Dutch decision stand after the appeal, but it would gain strength because of recent developments like a ruling last month in a German court that the country’s climate law is not aggressive enough, and a report this month from the International Energy Agency that called for a halt to new investment in fossil fuel projects.

Pols said shareholders of oil companies need to recognize that change is happening and work to be a constructive part of the energy transition. “This verdict means that climate litigation has now become a material risk to all major polluters,” he said.

The ruling happened on a day of potentially far-reaching actions in the global push for a transition away from fossil fuels. In addition to the Shell case, an activist investor succeeded in forcing ExxonMobil to replace at least two board members with its chosen candidates, as part of a strategy to get the oil giant to move more quickly to address climate change, and Chevron shareholders approved a resolution that asks the company to do more to cut emissions by consumers of its products.

Greenhouse gases from activities downstream of the oil industry, such as those from customers who burn the companies’ fuels in their cars, are known as scope 3 emissions, and that classification was also a key part of Wednesday’s ruling. The court found that Shell had some responsibility to address the harmful results from the use of its products.

Many of the world’s biggest oil companies, including Shell, Total and BP, have pledged to achieve net-zero emissions by mid-century. But those promises mostly apply to emissions coming directly from producing, refining and processing oil and gas. A far greater portion of the emissions associated with the industry comes from scope 3 emissions.

Some economists said Wednesday’s decision could even help the fossil fuel industry in the long run, allowing companies like Shell to more openly discuss with their own employees what a transition to a clean economy would mean for their business plans.

“I can easily imagine that there are some within (Shell) who frankly have been trying to have this debate more openly for a long time and have wanted to make bigger changes faster,” Gernot Wagner, a New York University economist, said. “These companies are not hyper-rational monoliths where everyone marches in lockstep and everyone thinks the same thing.”

Oil majors around the world are facing increasing pressure to align their activities with international goals to slow the rapid pace of global warming, and many prominent climate activists praised the Dutch court’s announcement Wednesday morning.

“Wow, Wow, Wow,” Bill McKibben, founder of 350.org and a Schumann Distinguished Scholar in environmental studies at Middlebury College, Vermont, wrote in a tweet regarding the ruling. “This could be game-changing.”

Climate-related lawsuits have surged in recent years, with at least 1,550 cases being considered in 38 different countries, according to a January report from the United Nations Environment Programme. As of July 2020, around 1,200 of those cases were filed in the United States, with 350 in all other countries combined. 

Among those lawsuits are dozens filed in the U.S. by local and state governments against oil and gas companies, arguing that the industry must be held liable for the damages that cities and states face from rising sea levels, increasingly dangerous heat waves and intensifying storms.

Activists on Wednesday were quick to point to those pending cases, warning other energy companies to take note of today’s announcement or risk facing similar judgments in the future.

“These companies have had decades where they have known the impacts of burning oil and gas (and) decades to change course,” Sara Shaw, a climate justice advocate with Friends of the Earth International, said at Wednesday’s press conference. “We expect that this victory today will hopefully really open the floodgates to another round of cases.”