Dutch appeals court overturns ruling requiring Shell to reduce emissions

The Dutch Court of Appeal overturned Nov. 12 a lower court ruling that required Shell to cut its global carbon footprint by 45% by 2030, ruling that Shell has a more general obligation to reduce its emissions by an unspecified amount.

Shell welcomed the overturning of the earlier judgement by a district court in 2021 in a case brought by the Dutch chapter of Friends of the Earth. Shell had in response to the ruling committed to tougher emissions reductions, underlining its commitment to becoming a "net-zero" emissions company by 2050. It has also committed to cut its operational emissions by half by 2030, but it appealed against the district court ruling, arguing that it unfairly discriminated against the company.

The appeal court found "it is primarily up to the government to ensure the protection of human rights, but indirectly these rights also influence the social due diligence that companies such as Shell must observe. [However], the court has not been able to establish that social due diligence means that Shell is obliged to reduce its CO2 emissions by 45% (or another percentage). There is currently insufficient agreement in climate science about a specific reduction percentage that an individual company such as Shell should adhere to."

Campaigners have a further right of appeal in the supreme court, it noted.

"We are pleased with the court's decision," Shell CEO Wael Sawan said in a statement. "Our target to become a net-zero emissions energy business by 2050 remains at the heart of Shell's strategy and is transforming our business. This includes continuing our work to halve emissions from our operations by 2030," Shell said, noting that it recently set a new goal to reduce customer emissions from the use of its oil products — so-called Scope 3 emissions — by 15%-20% by 2030 compared with 2021.

"A court ruling would not reduce overall customer demand for products such as petrol and diesel for cars, or for gas to heat and power homes and businesses," it said. "It would do little to reduce emissions, as customers would take their business elsewhere."

Scottish court battle

The ruling comes as proceedings opened Nov. 12 in a case in the Scottish Court of Session examining whether North Sea oil and gas projects by Shell and others were incorrectly granted approval by UK regulators because of a failure to consider the emissions resulting from consumption of oil and gas to be produced by the companies. The Scottish cases relate to Equinor and Ithaca Energy's Rosebank oil project and Shell's Jackdaw gas and oil project, both of which are already underway.

The Court of Session hearing follows from a separate case successfully brought by campaigners against an onshore oil and gas project in England.

The government has already conceded environmental approval procedures fell short in not considering the consumption of produced oil and gas, and the Scottish case is likely to hinge on what is the correct remedy, and whether the companies should be forced to abandon the projects, according to David Welsh of Cornerstone Barristers, which says it is acting for Greenpeace.

"The question of remedies in judicial review is ... always a matter of discretion for the court. The petitioners, Greenpeace and [campaign group] Uplift, both argue that the [project] consents should be reduced (ie. quashed)," with the companies arguing the court should use its discretion to allow the projects to continue, Welsh said.

A Shell spokesperson noted the Jackdaw project in the North Sea is well underway already. "From the outset, Jackdaw has been developed in line with all relevant consents and permits. We accept the Supreme Court's ruling in the Finch case, but our position is that Jackdaw is a vital project for UK energy security and the project is already well advanced," the spokesperson said. "Stopping the work is a highly complex process, with significant technical and operational issues now that infrastructure is in place and drilling has started."

Shell moved its global headquarters from the Netherlands to London in the wake of the district court ruling against it in the Netherlands, but more recently has also objected to UK government treatment of the North Sea industry, including plans to end the issuance of new offshore licenses.

Platts, part of S&P Global Commodity Insights, assessed North Sea oil benchmark Dated Brent at $72.37/b Nov. 11.