Shell wins appeal against groundbreaking court ruling on emission reductions

Shell has won an appeal against a major climate ruling ordering the oil giant to reduce its CO2 emissions.

An Appeal Court in The Hague overturned a May 2021 ruling that required Shell to reduce its CO2 emissions by 45 percent from 2019 levels by 2030, instead of the company’s planned 20 percent reduction .

Seven action groups, including Greenpeace and Friends of the Earth Netherlands (also known as Milieudefensie), filed the case on behalf of 17,200 Dutch people.

The landmark judgment found that Shell was responsible for emissions across its value chain, including Scope 3 emissions, which cover emissions caused by the purchase, use and disposal of its products.

In its appeal, Shell argued that setting emissions targets should be the domain of national governments and that the target would not work because other suppliers would step in to supply oil and gas.

The FTSE 100 company also warned that the requirement to reduce Scope 3 emissions could lead to customers switching to using coal instead of Shell’s gas.

Shell CEO Wael Sawan welcomed the appeal verdict, saying it was “the right decision for the global energy transition, the Netherlands and our company.”

He added that the company’s ambition to reach net zero emissions by 2050 “remains at the core” of its strategy, which was to “make good progress… delivering more value with fewer emissions.”

Donald Pols, director of Milieudefensie, said that despite the decision, the case has “ensured that major polluters are not immune and has further fueled the debate about their responsibility in the fight against dangerous climate change.”

Climate organizations can appeal the verdict to the Supreme Court, although they have yet to confirm their intention to do so.

The ruling comes as Baku, the capital of Azerbaijan, whose economy is heavily dependent on fossil fuels, hosts the COP29 conference on climate change.

Under Sawan’s leadership, Shell scrapped plans to cut oil production every year for the rest of this decade, angering environmentalists.

Oil and gas prices have soared over the past three years, partly due to the easing of Covid-related restrictions and Russia’s large-scale invasion of Ukraine.

Although down somewhat this year, the fossil fuel sector continues to deliver strong results while delivering significant shareholder returns.

Shell posted an adjusted profit of $6 billion for the three months ended September, compared with the average analyst forecast of $5.4 billion.

Russ Mould, investment director at AJ Bell, said: ‘Sawan is trying to push Shell to catch up with its US peers, which have taken a lead in terms of valuation.

“The company’s long-term strategy to expand into natural gas is paying off, with gas seen as a bridge between more polluting fossil fuels such as coal and oil, and renewable energy sources.

Shell shares were 0.4 percent lower at £25.40 just before midday on Tuesday.