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In a blow to environmental campaigners, oil giant Shell has won its appeal against a landmark 2021 ruling that ordered the company to drastically cut its carbon emissions.
The Hague Court of Appeal on Tuesday dismissed the original court order that had required Shell to reduce its absolute emissions by 45% by 2030 compared to 2019 levels, including emissions from the use of its products. The appeals court agreed that Shell had an obligation to help combat climate change, but said it could not establish a specific emissions reduction target for the company.
"In general, any reduction in greenhouse gas emissions is positive to mitigate climate change," said Presiding Judge Carla Joustra. "But that does not mean that a reduction order for Shell has that same effect."
The case was brought in 2019 by the Dutch arm of Friends of the Earth, along with over 17,000 Dutch citizens. It was seen as a pivotal moment in the fight against climate change, with the original ruling marking the first time a court had ordered a private company to align its operations with the Paris Agreement.
"This hurts," said Friends of the Earth Netherlands director Donald Pols after Tuesday's decision. "At the same time, this case has shown that large polluters are not above the law."
The environmental group said it would continue its legal battle against major emitters, though it did not indicate whether it would appeal the ruling to the Netherlands' Supreme Court.
Shell, which moved its headquarters from The Hague to London in 2022, welcomed the appeals court's decision. CEO Wael Sawan said the company believed the ruling was "the right one for the global energy transition, the Netherlands and our company."
The case was closely watched as it coincided with the COP29 U.N. climate summit underway in Baku, Azerbaijan. The opening procedures of the conference were delayed on Monday due to a dispute over the prominence of fossil fuels on the agenda.
While the appeals court agreed Shell had an obligation to address climate change, it said the company was already taking "serious steps to reduce emissions." Shell reported that its emissions were 30% below 2016 levels last year.
However, the oil major has faced criticism for scaling back some of its renewable energy operations in recent years, focusing instead on investments in its traditional oil and gas business. In March, Shell weakened its targets for reducing the carbon intensity of the products it sells, to 15-20% by 2030 relative to 2016.
Analysts at Citi said Tuesday's ruling was the "best case outcome" for Shell, as it signaled that the company's strategy was now more firmly in the hands of its shareholders rather than the courts.
