April 02, 2024
Shell will fight to convince judges in The Hague this week to repeal a landmark order to cut greenhouse gas emissions, in a closely watched test of polluters’ ability to keep climate change-related court action at bay.
Lawyers from British firm Clifford Chance will argue that the ruling compelling the oil and gas company to slash its emissions by 45 per cent by 2030, relative to 2019, had no legal basis and overstepped the remit of the judiciary.
The historic win in the district court of The Hague in May 2021 for the Dutch wing of Friends of the Earth, Milieudefensie, spawned a series of copycat cases by non-profit groups against multinationals, including most recently BNP Paribas and TotalEnergies.
“This was the mother of all climate cases against corporations,” said Klaas Hendrik Eller, an assistant professor at the University of Amsterdam’s centre for transformative private law. “It fuelled this idea of courts being an important actor in combating climate change.”
Floods, heatwaves and crop failures that have struck parts of the world since the first judgment, and record-breaking global temperatures in the past year, could all help Milieudefensie make its case again, its director Donald Pols told the Financial Times.
“The knowledge that this has partly been the result of Shell’s activities of pumping and burning oil and gas . . . for our argument towards the Dutch court, that is indeed favourable,” he said.
Shell recently weakened some of its climate targets to accommodate plans to keep growing its giant gas business, scrapping a 2035 emissions reduction target even as it maintained a net zero goal by 2050. The company is now targeting a 15-20 per cent drop in carbon intensity by 2030.
Both sides will make their arguments between April 2 and April 12, with a judgment expected in the second half of this year.
Milieudefensie’s case draws on new findings by international bodies and scientists about how far burning fossil fuels drives global warming.
An influential International Energy Agency report, released after the time limit for evidence to be submitted for the original case, has said there would be no room for new oil and gas exploration projects if global warming was to be limited to within internationally agreed levels.
But the non-profit environmental group will ultimately deploy the same argument that helped it win the case almost three years ago, which is that “Shell has a responsibility to act in accordance with climate science and international climate agreements”, Pols said.
A cluster of international agreements on climate change are broadly applicable in Dutch civil liability law, it argues. This includes the 2015 Paris Agreement to limit global warming to 2C or ideally 1.5C above pre-industrial levels.
The hearing is held as series of increasingly bitter battles between activists and polluters unfold in other jurisdictions.
Last week, a Paris court dismissed a summons by TotalEnergies against the environmental campaign group Greenpeace. Total had contested the accuracy of estimates of greenhouse gas emissions.
Separately, Shell is suing Greenpeace for targeting its oil and gas assets, in what Greenpeace says is “one of the biggest legal threats” it has faced.
This month’s hearings in The Hague will be Shell’s last chance to present evidence in its challenge to the 2021 ruling. It argues that companies do not share the legal obligations imposed on states to cut emissions, making the case “ineffective and even counterproductive to addressing climate change.”
While Shell says it has already started to implement the legally binding court order, it maintains that the 45 per cent emissions cut, based on a global average reduction estimated by the UN Intergovernmental Panel on Climate Change, should not apply to individual companies.
It is concerned about a provision in the 2021 judgment that it should cut the largest part of its emissions on a “significant best efforts” basis, according to a person close to the company, believing the ambiguity in this statement could leave it exposed to future litigation.
More broadly, Shell argues that forcing it to sell less oil and gas before first addressing the global demand for its products would not reduce global emissions. It would risk Shell having to sell parts of its business to companies that may produce or sell the fuels in even more carbon-intensive ways, it says.
Milieu en Mens, a non-profit group that campaigns for energy security, will intervene in the case on Shell’s side, arguing that forcing the energy company to cut emissions could push up energy prices.
Enforcing any ruling against Shell, which switched its headquarters from The Hague to London in 2022, could be a challenge, said Maurizio Carulli, head of corporate research at the non-profit Carbon Tracker. Shell says it would comply with any new ruling.
If it fails, Shell is expected to make a further appeal to the Dutch supreme court, which would rule on whether the law had been properly applied by the appeals court.
But a second defeat for Shell in the court in this round would create “quite a turbulence on its share price”, Carulli foreshadowed. It would also serve as a “wake-up call” for European energy companies, after their retreat from climate goals after the supply crisis following Russia’s war against Ukraine boosted energy prices.
www.ft.com
Shell will fight to convince judges in The Hague this week to repeal a landmark order to cut greenhouse gas emissions, in a closely watched test of polluters’ ability to keep climate change-related court action at bay.
Lawyers from British firm Clifford Chance will argue that the ruling compelling the oil and gas company to slash its emissions by 45 per cent by 2030, relative to 2019, had no legal basis and overstepped the remit of the judiciary.
The historic win in the district court of The Hague in May 2021 for the Dutch wing of Friends of the Earth, Milieudefensie, spawned a series of copycat cases by non-profit groups against multinationals, including most recently BNP Paribas and TotalEnergies.
“This was the mother of all climate cases against corporations,” said Klaas Hendrik Eller, an assistant professor at the University of Amsterdam’s centre for transformative private law. “It fuelled this idea of courts being an important actor in combating climate change.”
Floods, heatwaves and crop failures that have struck parts of the world since the first judgment, and record-breaking global temperatures in the past year, could all help Milieudefensie make its case again, its director Donald Pols told the Financial Times.
“The knowledge that this has partly been the result of Shell’s activities of pumping and burning oil and gas . . . for our argument towards the Dutch court, that is indeed favourable,” he said.
Shell recently weakened some of its climate targets to accommodate plans to keep growing its giant gas business, scrapping a 2035 emissions reduction target even as it maintained a net zero goal by 2050. The company is now targeting a 15-20 per cent drop in carbon intensity by 2030.
Both sides will make their arguments between April 2 and April 12, with a judgment expected in the second half of this year.
Milieudefensie’s case draws on new findings by international bodies and scientists about how far burning fossil fuels drives global warming.
An influential International Energy Agency report, released after the time limit for evidence to be submitted for the original case, has said there would be no room for new oil and gas exploration projects if global warming was to be limited to within internationally agreed levels.
But the non-profit environmental group will ultimately deploy the same argument that helped it win the case almost three years ago, which is that “Shell has a responsibility to act in accordance with climate science and international climate agreements”, Pols said.
A cluster of international agreements on climate change are broadly applicable in Dutch civil liability law, it argues. This includes the 2015 Paris Agreement to limit global warming to 2C or ideally 1.5C above pre-industrial levels.
The hearing is held as series of increasingly bitter battles between activists and polluters unfold in other jurisdictions.
Last week, a Paris court dismissed a summons by TotalEnergies against the environmental campaign group Greenpeace. Total had contested the accuracy of estimates of greenhouse gas emissions.
Separately, Shell is suing Greenpeace for targeting its oil and gas assets, in what Greenpeace says is “one of the biggest legal threats” it has faced.
This month’s hearings in The Hague will be Shell’s last chance to present evidence in its challenge to the 2021 ruling. It argues that companies do not share the legal obligations imposed on states to cut emissions, making the case “ineffective and even counterproductive to addressing climate change.”
While Shell says it has already started to implement the legally binding court order, it maintains that the 45 per cent emissions cut, based on a global average reduction estimated by the UN Intergovernmental Panel on Climate Change, should not apply to individual companies.
It is concerned about a provision in the 2021 judgment that it should cut the largest part of its emissions on a “significant best efforts” basis, according to a person close to the company, believing the ambiguity in this statement could leave it exposed to future litigation.
More broadly, Shell argues that forcing it to sell less oil and gas before first addressing the global demand for its products would not reduce global emissions. It would risk Shell having to sell parts of its business to companies that may produce or sell the fuels in even more carbon-intensive ways, it says.
Milieu en Mens, a non-profit group that campaigns for energy security, will intervene in the case on Shell’s side, arguing that forcing the energy company to cut emissions could push up energy prices.
Enforcing any ruling against Shell, which switched its headquarters from The Hague to London in 2022, could be a challenge, said Maurizio Carulli, head of corporate research at the non-profit Carbon Tracker. Shell says it would comply with any new ruling.
If it fails, Shell is expected to make a further appeal to the Dutch supreme court, which would rule on whether the law had been properly applied by the appeals court.
But a second defeat for Shell in the court in this round would create “quite a turbulence on its share price”, Carulli foreshadowed. It would also serve as a “wake-up call” for European energy companies, after their retreat from climate goals after the supply crisis following Russia’s war against Ukraine boosted energy prices.
Shell appeal against landmark climate ruling kicks off in Dutch court
Test case on power of courts as oil and gas companies push back over judgments on their role in global warming
www.ft.com
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