/ 27 May 2021

Landmark ruling orders Shell to comply with Paris Agreement targets

Enbridge Says Great Lakes Oil Pipeline Will Keep Running
Higher oil prices can increase the costs of living and doing business, and South Africa’s oil imports will also likely rise in the second half of 2021, but there are a few reasons to remain positive too. (Cole Burston/Bloomberg via Getty Images)

Royal Dutch Shell is set to appeal the outcome of a landmark judgment that ordered the mega polluter to cut its emissions by 45% by 2030, compared with 2019 levels. 

Climate organisations across the globe are celebrating the first of its kind win. 

A court in The Hague, Netherlands, passed the ruling on Wednesday, and activists are confident it will set a landmark precedent for the trajectory of the energy transition. 

The case against the British-Dutch company was filed by Friends of the Earth Netherlands (Milieudefensie), 17 000 co-plaintiffs and six other organisations. 

In delivering the ruling, the judge said: “Shell must do its part to contribute to the fight against dangerous climate change” and that the company’s plans were “not concrete enough and full of caveats”.  

The judge also dismissed the idea that if Shell reduced emissions, other companies would make up the difference, saying all businesses would need to act to deliver on the Paris Agreement

The ruling also orders Shell to endeavor to reduce the carbon dioxide (CO2) emissions of suppliers and customers by 45% by 2030 through corporate policy, which the oil and gas giant will have to revise.

Shell is headquartered in the Netherlands. It is one of the 10 biggest oil and gas companies in the world. 

Friends of the Earth International said that the transnational company had known about the severity of climate change and the impacts of oil drilling for years when it launched the court bid in 2018.

“Shell has not only misled the public on the issue, it continues drilling for oil. In Nigeria Shell continues to leave a trail of oil spills, gas flaring, water contamination, human rights abuses and destruction,” the organisation said. 

Royal Dutch Shell emits two times the total greenhouse gas emissions of the Netherlands. 

“Worse still, Shell has known that fossil fuels cause climate change for over 30 years,” said Friends of the Earth International. 

The ruling was the second blow to Shell this year after a court of appeal in The Hague found in favor of four Nigerian farmers in an oil spill case first filed in 2008. The February ruling meant that Shell’s Nigerian operations had to compensate for oil spills that happened in two villages. The company was also ordered to immediately instal a leak detection system or pay €100 000 for every day they fail to do so.

Most cases related to climate change are legal attempts to force big greenhouse gas emitters to pay for the existing and current effects of climate change — widely referred to as loss and damage.

The development is viewed as a clear message to investors and companies that the end of fossil fuels is in sight.

“It is the first time that a company has to align its policy with the Paris Climate Agreement. That is a mega breakthrough that will have worldwide consequences,” said Friends of the Earth this week. 

Reacting to the judgment, Roger Cox, Milieudefensie’s lawyer, said it was going to change the world. 

“People around the world are ready to sue oil companies in their own country, following our example. And not only that. Oil companies will become much more reluctant to invest in fossil fuels, polluting fuels. The climate has won today.”

The company released a statement following the ruling to highlight its efforts to reduce its impact on the climate. 

Among those, Shell said that it had become the first energy company to offer investors an advisory vote on its energy transition strategy, adding that in 2020 it announced a target to become a net-zero emissions energy business by 2050 as it worked towards the Paris Agreement goal. 

“This target is comprehensive, because it includes our own emissions, as well as emissions from our customers’ use of all the energy products we supply. Not just what we get out of the ground, but everything we sell,” Shell said.

Last week the International Energy Agency released a report that identified the urgent need for an end to new oil and gas exploration, and the immediate start of a phasing out of fossil fuels around the world. On gas, the report says that the goals of the Paris Agreement will be lost if more gas boilers are sold from 2025. 

It is too early to tell what this will mean for the future funding and viability of South Africa’s emerging gas development. The ruling, according to experts, is large enough to increase both the risks and costs of fossil fuel investments. 

The department of mineral resources has moved to propose a number of amendments to existing gas legislation to pave the way for South Africa’s future gas sector.  

Included are the gas master plan, the draft liquified petroleum gas roll-out strategy and the upstream petroleum resources bill earmarked to attract investment into the petroleum sector.

The department has said that talks are underway in the Southern African Development Community to discuss joint beneficiation and exploitation of natural gas in the region.