Shell wins appeal against landmark court ruling on emissions cuts

Shell has won an appeal against a major climate ruling ordering the oil supermajor to slash its carbon emissions. A Court of Appeal in The Hague overturned a May 2021 ruling demanding Shell cut its CO2 emissions by 45 per cent by 2030 from 2019 levels, instead of the 20 per cent reduction planned by the firm.

Seven activist groups, including Greenpeace and Friends of the Earth Netherlands [also known as Milieudefensie], brought the case on behalf of 17,200 Dutch people. The landmark verdict said Shell was accountable for emissions right across its value chain, including Scope 3 emissions, which cover those caused by the purchase, use and disposal of its products.

In its appeal, Shell argued that setting emissions goals should be the preserve of national governments and that the target would not work because other suppliers would step in to provide oil and gas. The FTSE 100 business also warned that the requirement to lower Scope 3 emissions could result in customers switching to using coal rather than Shell’s gas.

Wael Sawan, chief executive of Shell, welcomed the appeal’s verdict, saying it was ‘the right one for the global energy transition, the Netherlands and our company’. He added that the firm’s ambition to have net zero emissions by 2050 ‘remains at the heart’ of its strategy, which was ‘making good progress…to deliver more value with less emissions’.

Donald Pols, the director of Milieudefensie, said that despite the decision, the ‘case has ensured that major polluters are not immune and has further fuelled the debate about their responsibility in combating dangerous climate change’. Climate organisations can appeal the judgement to the Dutch Supreme Court, although they have yet to confirm their intention to do so.

The ruling comes as Baku, the capital of Azerbaijan, whose economy relies heavily on fossil fuels, hosts the COP29 climate change conference. Under Sawan’s leadership, Shell axed plans to cut oil production each year for the remainder of this decade, bringing ire from environmental activists.

Oil and gas prices have soared in the past three years due partly to the loosening of Covid-related restrictions and Russia’s full-scale invasion of Ukraine. While they have come down somewhat this year, the fossil fuel sector has continued to post strong results while delivering significant shareholder returns.

Shell posted $6billion in adjusted earnings for the three months ending September, compared to analysts’ average forecasts of $5.4billion. Russ Mould, investment director at AJ Bell, said: ‘Sawan is trying to get Shell to play catch up with US counterparts, which have streaked ahead in valuation terms.

‘The company’s long-term strategy of expanding in natural gas is paying off, with gas seen as a bridge between more polluting fossil fuels like coal and oil and renewables. Shell shares were 0.4 per cent lower at £25.40 ($32.45) just before midday on Tuesday.

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