A Dutch appellate tribunal has determined that Royal Dutch Shell is not required to make substantial cuts to its greenhouse gas emissions by the year 2030, a decision that environmental campaigners view as a setback in the battle against climate change. The ruling, which came as the COP29 climate conference commenced in Baku, Azerbaijan, reversed a prior judgment that had mandated significant reductions in carbon emissions for the multinational oil and gas corporation.

Shell's CEO, Wael Sawan, expressed satisfaction with the court's decision, stating, "We believe this is the right outcome for the global energy transition, the Netherlands, and Shell as a company." This appeal overturned a 2021 ruling that had ordered Shell to reduce its CO2 emissions by 45% by 2030, relative to 2019 levels, encompassing both direct emissions from its operations and those from the sale of energy products.

The Hague Court of Appeal acknowledged Shell's obligation to curb CO2 emissions to mitigate the risks of climate change but argued that there is not enough consensus within climate science to dictate a specific reduction target for an individual company like Shell. Consequently, the court annulled the earlier ruling.

The recent decision highlighted that Shell is already making efforts to decrease emissions from its direct operations, known as scope 1 and 2 emissions. The court also argued that compelling Shell to reduce the more substantial emissions resulting from the use of its products, or scope 3 emissions, would not be practical, as it would not diminish the overall market demand for gasoline, diesel, or natural gas.

Shell argued that a court mandate would not lessen the overall consumer demand for products such as gasoline and diesel for vehicles, or natural gas for heating and powering homes and businesses. Friends of the Earth Netherlands, the environmental advocacy group that initiated the legal action against Shell, expressed disappointment with the outcome. The organization's director, Donald Pols, stated, "This is a blow," while also noting some positive aspects of the ruling.

He pointed out that "the court confirmed that companies are accountable for human rights abuses stemming from climate change," and that "the judge also stated that the over 800 fossil fuel projects in Shell's pipeline are in conflict with its duty to act in accordance with human rights principles. These are significant legal principles that can be leveraged in future legal battles."

Pols indicated that Friends of the Earth Netherlands would review the ruling before deciding on whether to pursue an appeal at the Netherlands' Supreme Court. Joshua Sherrard-Bewhay, an analyst at the investment platform Hargreaves Lansdown, commented on Shell's successful appeal, suggesting that it "signals to high emitters that they are currently safe from the reach of international frameworks," referencing the Paris Agreement, which commits nearly all nations to significantly reduce carbon emissions, as an example.

Despite the initial ruling that demanded Shell to cut its emissions, the energy conglomerate has actually moderated some of its climate goals in pursuit of enhanced financial returns and amid global concerns over secure and affordable energy. Earlier this year, Shell announced that it would aim for a 15-20% reduction in the so-called net carbon intensity of its energy products by 2030, compared to 2016, downgrading from a previous target of a 20% reduction. The company also abandoned an objective to nearly halve its net carbon intensity by 2035. Concurrently, Shell has pledged to halve emissions from its own operations by 2030 and to achieve net-zero emissions by 2050, meaning that its total greenhouse gas emissions must reach zero by mid-century, accounting for all emissions produced and removed from the atmosphere.

Shell continues to invest significantly more in fossil fuels than in clean energy. In the previous year, it invested $5.6 billion in low-carbon energy, representing 23% of its total capital expenditure. In contrast, it invested over $16 billion in its oil and gas ventures. Friends of the Earth Netherlands claims that Shell is responsible for 3% of global greenhouse gas emissions, surpassing the individual emissions of most countries.

Regarding the ruling's impact on COP29, Pols argued that international climate agreements will be ineffective in combating climate change if they exclude large corporate polluters, as the Paris Agreement does. He noted that since the agreement was signed in 2015, approximately 50 companies have been responsible for 80% of global CO2 emissions. "It seems that the negotiations between governments have not adapted to the new economic and geopolitical reality of multinational corporations," he added.

Mark van Baal, founder of Follow This, an organization that aims to compel major energy companies to reduce emissions through shareholder votes at their annual meetings, stated that the ruling increases the responsibility of investors to "reform Big Oil." He also described the court's decision as "a setback in the fight against the climate crisis." This report has been updated with additional information.