Milieudefensie supporters react after Shell wins its appeal against The Hague’s 2021 ruling - Yves Herman/Reuters
Shell has won an appeal against a landmark climate ruling in the Netherlands that would have forced the oil and gas giant to radically cut back its greenhouse gas emissions.
The appeals court in The Hague dismissed the entire 2021 ruling on Tuesday, saying Shell was already on its way to meet required targets for its own emissions.
The court added that it was unclear if demands for Shell to reduce emissions caused by the use of its products would help the fight against climate change.
The ruling overturned a 2021 judgment ordering Shell to slash its greenhouse emissions by 45pc by 2030, including those from using its products. It was originally prompted by a case brought by local environmental group Milieudefensie, which is linked to Friends of the Earth.
The 2021 ruling had threatened to cripple Shell’s operations in the Netherlands and further afield, setting an example that other countries might follow. The outcome of the case was seen as vital to the future of both the company and the whole sector.
Wael Sawan, chief executive of Shell, said: “We are pleased with the court’s decision, which we believe is the right one for the global energy transition, the Netherlands and our company.
“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. We are making good progress in our strategy to deliver more value with less emissions.”
It comes as Shell faces separate legal action in Scotland where a judge is set to decide on whether to allow the company to continue work on its Jackdaw gas field. Two other companies, Norway’s Equinor and independent producer Ithaca, are involved in the same case, defending their licence to develop the separate Rosebank oil field.
The challenges by green pressure groups Greenpeace and Uplift follow the UK Supreme Court’s Finch ruling that environmental impact assessments for oil and gas production facilities had to consider the effects of burning the products.
Battle ‘not settled’
The Dutch ruling marks a huge victory for Shell but the legal battles will continue, with Milieudefensie expected to appeal to the Dutch supreme court. A final ruling may not be delivered until 2027.
Donald Pols, Milieudefensie director, told Bloomberg outside the court after the verdict: “It is certainly a setback. It could have been a very important step but the battle has not yet been settled.”
The organisation will make a decision on whether to appeal or start a new case based on the implications of the ruling, Mr Pols said.
Donald Pols, the Mileudefensie director, insisted the legal battle had ‘not yet been settled’ - JEROEN JUMELET/EPA-EFE/Shutterstock
The Dutch courts originally ordered Shell to reduce three types of greenhouse gas emissions in 2021: its scope one emissions, which come from a company’s own operations, in this case extraction and refining of oil and gas; its scope two emissions generated indirectly through the energy it consumes; and its scope three emissions, which are those generated in a company’s supply chain and by its customers.
For a company like Shell producing refined fossil fuels, the vast majority of emissions – about 90pc – are scope three. It means that a ruling to control scope three emissions would be devastating for any oil and gas producer.
Shell argued in its appeal that the ruling had no legal basis. It argued that court-mandated emissions targets would be an ineffective and counterproductive way of managing the energy transition.
The court supported this position, rejecting any attempts at enforced reductions for all three scopes.
“It is not possible to determine what percentage Shell must adhere to,” the judges said in their verdict. “Some sectors are more difficult to make sustainable than others.”
The court removed the obligation to control emissions from the use of Shell’s products – the biggest component – saying it was unclear if this would help the fight against climate change.
However, the court did agree with the climate activists who brought the case in 2019 that Shell had a general obligation to cut its greenhouse gas emissions to protect people from global warming. It noted that Shell was meeting the required targets for its own emissions.
A Shell spokesman said: “As Shell has stated previously, 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 would do little to reduce emissions, as customers would take their business elsewhere. We believe that smart policies from governments, along with investment and action across all sectors, will drive the progress towards net zero emissions that we all want to see.”
‘Substantive error of law’
In a separate case that began on Tuesday, the Scottish Court of Session heard arguments as to why judges should block two of the UK’s largest remaining oil and gas fields in a crucial case for the UK offshore industry’s future.
Environmental groups Greenpeace and Uplift argued that the last UK government and the North Sea Transition Authority (NSTA) had failed to consider the full impact of the projects’ emissions.
They said the carbon footprint of consumers using the gas from the Jackdaw field – being developed by Shell – and the oil produced by the massive Rosebank field – being developed by Norway’s Equinor along with Ithaca Energy – should also be considered.
Ruth Crawford KC, representing Greenpeace UK, told the court that a “substantive error of law” had been made when consent was granted for the two schemes based on limited information on their environmental impact.
Ms Crawford argued for both developments to be paused and for the oil companies involved in the projects to be made to submit revised environmental impact assessments.
The three oil and gas companies are expected to accept that the Government made a legal error in granting them licences for the Jackdaw and Rosebank fields.
However, all three say they acted in good faith and should not be blamed for errors made by the then government. They argue they should be allowed to press on with the two projects – because it would cost billions to remove the existing kit and plug the wells.
Shell said Jackdaw is a “vital project for UK energy security” and will provide enough fuel to heat 1.4m homes.
Equinor has similarly said Rosebank is “vital for the UK” in terms of local investment, jobs and energy security.
The case, before Lord Ericht, is expected to take four days with Shell, Equinor and Ithaca presenting their arguments too. A written judgment is expected some weeks or months later.
