Climate Change

Why Shell being asked to cut emissions is a big move on Big Oil

Fossil fuel companies are notorious for greenwashing their intentions and this legal challenge can set a precedent for other courts

By Avantika Goswami
Published: Thursday 27 May 2021
A Shell Oil (Royal Dutch Shell) gas station in California, United States. Photo: Coolcaesar via Wikipedia

In 2019, the Climate Accountability Institute published findings that just 20 fossil fuel companies have contributed to one-third of all energy-related carbon dioxide (CO2) and methane worldwide since 1965.

Royal Dutch Shell plc is one among these companies. On May 26, 2021, a Dutch court ordered Shell to slash its carbon emissions in a landmark ruling.

Judge Larisa Alwin of the Hague District Court said (according to news agency Reuters):

The court orders Royal Dutch Shell, by means of its corporate policy, to reduce its CO2 emissions by 45 per cent by 2030 with respect to the level of 2019 for the Shell group and the suppliers and customers of the group.

The lawsuit was filed by activist groups and civil society organisations including Friends of the Earth Netherlands (Milieudefensie) and Greenpeace, on behalf of 17,000 Dutch citizens in April 2019.

Shell’s climate pledge aims to achieve net zero emissions by 2050 and reduce the carbon intensity of its energy products by 6-8 per cent by 2023, 20 per cent by 2030, 45 per cent by 2035, and 100 per cent by 2050. 

But the plans include the continued production of natural gas (a cleaner fuel than coal but still a potent emitter of CO2 and methane) and the use of carbon capture and storage and tree planting to offset its emissions.

The latter focus on offsets is now increasingly being recognised as problematic and a strategy to simply delay near-term emissions cuts. Its plans also excluded its petrochemicals business, and therefore ignore the plastics made from fossil fuels, which consume huge amount of fossil fuel byproducts.

A discussion paper by Oil Change International published in September 2020 found that Shell’s climate commitments are “grossly insufficient” according to its assessment criteria, with no meaningful cuts to oil and gas exploration and production.

Echoing this, the Dutch court said Shell's climate policy “is not concrete, has many caveats and is based on monitoring social developments rather than the company’s own responsibility for achieving a CO2 reduction.”

It also found that “emissions reduction targets for 2030 are lacking completely”. The court did not specify the methods to reduce emissions, or how monitoring and enforcement of the ruling would be conducted.

This ruling accompanies other developments in the fight to hold fossil fuel majors accountable. In Exxon’s annual shareholder meeting this week, investors voted to replace at least two members of the board with climate activists backed by the hedge fund Engine No. 1. The group believes that Exxon’s failure to decarbonise its operations has eroded shareholder value and led to poor performance. 

At American oil giant Chevron, 61 per cent of shareholders supported a resolution filed by activists calling on the company to set targets to reduce its emissions.

Today, there is a minority of climate writers, analysts and experts who frequently spotlight fossil fuel companies as the main perpetrators of spiraling greenhouse gas (GHG) emissions. They are drowned out by mainstream voices turning our attention to things like developing countries using coal and biomass for survival, or individuals driving to work instead of cycling or walking.

But their voices have always been and continue to be backed by evidence that is far from anecdotal.

A paper by Harvard historians published this month found that Exxon has deployed carefully-crafted communication strategies over the years to shift the blame for oil sector emissions onto individual consumers; similar to the tobacco and gun industries — ie, obscuring the supply-side issue. Shell’s attempts at making consumers aware of their carbon footprint were ridiculed last year for shirking responsibility for its own role in global GHG emissions.

Last week, the International Energy Agency (IEA), in its Net Zero by 2050 report, called for no new approvals of oil and gas fields for development beyond 2021, if the world is to reach net zero emissions by 2050. Oil demand should also decline by 75 per cent between 2020 and 2050, the IEA said.

These developments are the precipitation of decades of activist pressure and scientific consensus on the major role played by fossil fuel companies in worsening the climate crisis. Which among these or future actions will be the ‘straw that broke the camel’s back’ for the lobbying / funding clout held by these companies worldwide, is yet to be seen.

This judgement by the Dutch court can still be appealed by Shell, but experts suggest that this move could influence courtrooms around the world.

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