Dutch court rules oil giant Shell must cut carbon emissions by 45% by 2030 in landmark case

LONDON — A Dutch court on Wednesday ruled oil giant Royal Dutch Shell must reduce its carbon emissions by 45% by 2030 from 2019 levels.

That’s a much higher reduction than the company’s current aim of lowering its emissions by 20% by 2030.

The landmark ruling comes at a time when the world’s largest corporate emitters are under immense pressure to set short, medium and long-term emissions targets that are consistent with the Paris Agreement. The climate accord is widely recognized as critically important to avoid an irreversible climate crisis.

Shell’s current climate strategy states that the company is aiming to become a net-zero emissions business by 2050, with the company setting a target of cutting its CO2 emissions by 45% by 2035.

A spokesperson for Shell said the company “fully expect to appeal today’s disappointing court decision.”

“We are investing billions of dollars in low-carbon energy, including electric vehicle charging, hydrogen, renewables and biofuels,” the spokesperson said via email. “We want to grow demand for these products and scale up our new energy businesses even more quickly.”

Shares of Shell were trading 0.2% higher in London. The stock price is up almost 10% year-to-date, having tumbled nearly 40% in 2020.

The lawsuit was filed in April 2019 by seven activist groups — including Friends of the Earth and Greenpeace — on behalf of 17,200 Dutch citizens. Court summons claimed Shell‘s business model “is endangering human rights and lives” by posing a threat to the goals laid out in the Paris Agreement.

Under the Paris Agreement — a deal adopted in 2015 and signed by 195 countries — nations agreed to a framework to prevent global temperatures from rising by any more than 2 degrees Celsius, although the accord aims to prevent global temperature rises exceeding 1.5 degrees Celsius.

Roger Cox, a lawyer for environmental activists in the case, said in a statement that the ruling marked “a turning point in history” and could have major consequences for other big polluters.

Meanwhile, Sara Shaw, Friends of the Earth’s international program coordinator for climate justice and energy, said the organization hoped the verdict would “trigger a wave of climate litigation against big polluters to force them to stop extracting and burning fossil fuels.”

Mark van Baal, founder of Dutch group Follow This, told CNBC via email that the judge’s ruling shows “Big Oil can no longer dismiss the crucial role it has to play in the fight against climate change.”

At Shell’s annual general meeting last week, shareholders voted overwhelmingly in favor of the company’s energy transition plans — but, crucially, a growing minority rejected the strategy, insisting the oil giant needed to do much more in the fight against climate change.

Activist investor Follow This said at the time that the result was likely to mean Shell would have to revise its climate targets once again.

According to Reuters, the case is the first in which activists have taken a major energy firm to court to compel it to overhaul its climate strategy.