A Court Ruled Shell Is Liable for Its Contributions to Climate Change. What Happens Now?

In a ruling designed to have a far-reaching effects on the world’s largest oil companies, a Dutch court has held Royal Dutch Shell liable for its contributions to climate change, finding the massive energy company’s ongoing fossil fuel operations undermine basic guaranteed human rights. The court ordered the company to act immediately to reduce those harms by slashing its global carbon dioxide emissions by 45% by 2030.

The ruling from the The District Court of the Hague, where Royal Dutch Shell is headquartered, is expected to impact the company’s U.S. operations, and U.S. advocates aim to ensure the effects are felt across the industry. “For U.S. fossil fuel companies this is a reckoning day,” Kate DeAngelis of Friends of the Earth U.S. tells Rolling Stone. “This isn’t just going to impact Shell; it’s going to have a rippling effect.”

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“This is obviously a groundbreaking verdict,” says lead lawyer Roger Cox. “There will be a lot more climate change litigation” with groups worldwide already planning to build on the case against other fossil fuel companies.

While courts have previously held governments liable for the harms of climate change, Shell is the first individual company to face such a ruling. Activists are determined that it will not be the last. Climate justice groups worldwide are planning to build on the case by taking fossil fuel companies in other countries to court. U.S. lawyers see new advantages to bolster existing and future litigation against U.S. oil companies, while campaigners ready demands for policy action by the Biden Administration. Lawyers for the Shell case also warn of new legal threats to individual oil company executives and shareholders.

This week’s ruling stems from a case that was brought in 2019 at The District Court of The Hague. Friends of the Earth Netherlands (Milleudefensie), Greenpeace Netherlands, several other groups, and 17,000 co-plaintiff Dutch citizens filed a class action lawsuit alleging that Shell has an obligation to reduce its carbon dioxide emissions and that it has violated human rights by fueling the climate crisis.

The Dutch court largely agreed. In a sweeping judgement that details the devastating harms of a warming planet, the necessity to restrict warming to 1.5 degrees Celsius over preindustrial levels, the significant contribution that fossil fuels and major corporate producers make to that warming, the court ruled Shell has an individual obligation therefore to reduce its own emissions on a rapid timescale.

“The Court acknowledges that [Royal Dutch Shell] cannot solve this global problem on its own,” the judgement reads. “However, this does not absolve RDS of its individual partial responsibility to do its part regarding the emissions of the Shell group, which it can control and influence.” It adds: “RDS does bear an individual responsibility, which it can and must effectuate through its corporate policy for the Shell group.”

The ruling comes just one week after the International Energy Agency released a landmark report finding that there can be no investment in new fossil fuel supply projects if the world is to avert the worst of the climate catastrophe. The Dutch court reaches a similar conclusion, saying in its ruling that the decision may cause Shell to forgo new investment in fossil fuel extraction and limit development of its existing reserves.

Critically, it also finds that Shell is not alone in this effort, writing, “it is necessary to reduce the worldwide oil and gas extraction and to facilitate the curtailment of CO2 emissions that cause dangerous climate change; other companies will also have to make a contribution.”

Shell said in a statement that it expects to appeal the ruling. It pointed to billions of dollars in investments in low-carbon energy, including electric vehicle charging, hydrogen, renewables and biofuels. “We want to grow demand for these products and scale up our new energy businesses even more quickly,” Shell said. It has pledged to reduce its greenhouse gas emissions by 20% within a decade, and to net-zero before 2050.

But the Court’s decision finds that those actions are insufficient, intangible, and too unspecified to meet the global standard set by the Paris Climate Accord and to meet the companies’ human rights obligations.

Michael Burger, Executive Director of the Sabin Center for Climate Change Law at Columbia University in New York finds the Court’s ruling historic. “This is the first time that a Court of law has drawn a clear connection between a fossil fuel company’s basic business model — the production and sale of fossil fuels — and the threats to human rights that results from climate change impacts and [then] directed the company to do something about it,” he tells Rolling Stone.

Among the most far-reaching aspects of this ruling is the Court’s order for how Shell must account for its emissions, potentially impacting other oil companies—particularly Exxon and Chevron, which have been among the most recalcitrant global energy companies to accept a full accounting standard of their absolute carbon emissions. Shell is ordered to take account of what are known in climate parlance as Scope 1, 2 and 3 emissions. Shell must consider the emissions of its parent company, all its global subsidiaries, all its suppliers, and all its customers across the entire chain of its enterprise everywhere that it operates throughout the globe.

That would include, for example, the climate-harming emissions released when it fracks for oil or natural gas, builds a pipeline, ships its product by tanker or receives a product from a supplier, refines its oil into gasoline, turns its natural gas into the feedstock for plastics, stores its petrochemicals in a tank or shipyard, and when its consumers burn its gasoline in their cars, trucks or airplanes. When every one of these sources is considered, the Court said, Shell’s global emissions must decline by nearly fifty percent over 2019 levels in just nine years.

The Court left it to Shell to determine how and where to make the changes. When asked how the sweeping ruling would be enforced, an exuberant Donald Pols, Director of Friends of the Earth Netherlands, explained that while there is no explicit enforcement mechanism, the plaintiff can take Shell to Court if it fails to implement the ruling. And, while Shell may appeal the judgement, it is nonetheless required to follow it in the meantime.

Lawyer Roger Cox points out that the largest share of Shell’s operations are located in the United States. While the Court is clear that Shell can make changes to its global operations in whatever way it deems fit, given the scope, scale and speed of the emissions cut the Court has required, “it’s almost impossible that they could achieve this without impacting operations everywhere,” including the U.S., argues Efje de Kroon, climate and energy campaigner at Greenpeace Netherlands.

U.S. climate campaigners are ready to ensure that not only are Shell’s operations impacted by the ruling, but so too is the entire U.S. industry. Janet Redmond, Greenpeace U.S. Climate Campaign Director is taking the call to U.S. policymakers starting with the Biden Administration, arguing that the ruling adds even more evidence for the necessity of swift action for a “managed phase out” of fossil fuels. Redmond also finds support in the ruling for greater financial accountability from all oil companies for the impacts of their entire operations. She’s looking to demands for reparations for environmental and climate injustices to Indigenous communities and communities of color on the frontlines of fossil fuel activities and the devastating impacts of climate change.

Critics of the ruling, including Shell, have argued that forcing Shell to reduce its production will simply shift production and consumption to other companies and consumers. Polis, the Friends of the Earth Netherlands director, says European governments and the European Commission will step in with policies that require an elevated climate ambition from governments and companies to ensure a higher bar to a more level playing field.

The Court also provided a detailed retort to Shell’s argument, citing the findings of among others, the Stockholm Environment Institute. In his response to the ruling, the Institutes’ Senior Scientist Peter Erickson explains even if Shell were to transfer its existing licenses to other companies, the overall effect would be to reduce overall fossil fuel supply by increasing costs.

The ruling will also likely increase the risk calculation that investors, policymakers, financiers, and others apply to fossil fuel activities, increasing their costs vis-à-vis alternatives and encouraging a barrel lost in oil for example to be more readily made up in a ray of the sun. The individual responsibility component, argues lawyer Roger Cox, may also increase the likelihood that individual corporate executives and board members are held liable for a company’s harmful activities, further increasing the risks associated with fossil fuels.

Others see a clear pathway to U.S. climate litigation. Calling the Court’s decision “earth-shaking”, Kathy Mulvey of the Union of Concerned Scientists notes that the Shell case in The Hague does not have an immediate impact on U.S. courts, but she nonetheless sees great potential in its findings on the individual responsibility of oil companies for climate change. “ExxonMobil and Chevron in particular have refused to take responsibility for reducing emissions from the use of their products,” Mulvey says. The essence of the Dutch court’s ruling, she says, is that “if you dig it up and sell it and profit from it, you’re responsible for it.”

Dr. Geoffrey Supran, research fellow at Harvard University, agrees. In an email, he called the “individual responsibility” aspect of the ruling “a game-changer” which “legally and rhetorically inverts Big Oil’s decades-long propaganda campaign” to switch responsibility for the climate crisis from themselves to individual consumers.

“It is precisely this sort of corporate accountability, for the climate damages caused by Big Oil’s products, that dozens of cities, counties, and states are seeking in US climate litigation. So, in my view, this Shell verdict provides powerful precedent,” Supran argues.

The Shell case now joins a burgeoning international body of law conferring the basic and fundamental human right to survive the climate crisis and hold fossil fuel companies accountable for causing it. Critical to this broad and increasingly successful movement was the decades-long struggle of Indigenous peoples to secure the United Nations Declaration on the Rights of Indigenous Peoples, which confirms rights not only to their lands but also the natural resources found on and within it.

Pols, director of the Friends of the Earth Netherlands, said that while he had certainly hoped for a victory, he feared he’d “wake up in a nightmare.” Instead, the exhausted director is celebrating a hard-fought win: “The future looks a bit more bright than it was yesterday.”

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