Shell CEO Says Company Will Appeal Climate Ruling
(Bloomberg) -- Royal Dutch Shell Plc said it will appeal a ruling by a Dutch court which ordered it to cut its carbon emissions by 45% over the next decade.
Shell has said it will speed up its energy transition plans in response to the order, but is looking to overturn it so it can stick to its own climate timetable. After intense pressure from investors, the May 26 ruling showed companies’ hands may increasingly be forced by courts, and result in far-reaching implications for the global energy industry.
“We will accelerate our transition to net zero,” Chief Executive Officer Ben van Beurden said in Tuesday’s statement, reiterating an assertion made in the weeks after the ruling.
“But we will appeal because a court judgment, against a single company, is not effective,” he said. “What is needed is clear, ambitious policies that will drive fundamental change across the whole energy system.”
The decision by a trio of judges in The Hague on did not consider Shell’s detailed updated energy transition strategy released more than five weeks before the verdict, the company said on Tuesday. In April, Shell’s shareholders voted in favor of its energy transition plan in which the company set new targets for low-carbon products and pledged to gradually reduce oil production.
The ruling came after Milieudefensie, the Dutch arm of Friends of the Earth, sued the company for violating human rights. The court agreed, saying Shell must reduce its total emissions by 45% by 2030 from 2019 levels. That compares with Shell’s own target of reducing the intensity of its greenhouse gas emissions by 20% from 2016 levels.
The decision to appeal “is very bad news for the climate, for the millions of people already affected by dangerous climate change and the future generations,” Donald Pols, director of Milieudefensie, said in an interview. “We are now entering a process that will cost them and us a lot of energy and will not offer the world the solutions it needs.”
Costly Transition
The risk to Shell’s business is that it may only be able to meet the court’s accelerated timetable by selling oil and gas fields, while being compelled to reinvest the proceeds in an already crowded and high-priced market for renewable energy, said Russ Mould, investment director at AJ Bell.
That could make the transition costlier for Shell, while doing little to curb emissions because it would simply push supply into the hands of other companies.
National and private oil companies will ultimately benefit from the European majors’ retreat, said Jefferies analyst Giacomo Romeo. “In private hands, those assets can have great value because they are highly cash-flow generative.”
As the energy transition gathers pace, consultant Rystad Energy A/S expects national oil companies like Russia’s Rosneft PJSC or China’s Cnooc Ltd. to account for as much as 65% of the world’s oil supplies by 2050, up from over half currently. Those companies are less accountable to shareholders or legal challenges than most oil majors.
“If you shrink you don’t necessarily make the demand go away,” van Beurden said in a podcast this month.
Still there is a cost to the appeal, which must be filed by Aug. 26 and could take two or three years. In the current climate, there’s no guarantee that Shell will successfully overturn the verdict. The Dutch appeals court in late 2019 upheld a ruling holding the national government responsible for not protecting its citizens from the harmful effects of global warming.
A second loss for Shell “would make it all the more difficult to try to say that this was a one-off decision based on specific facts rather than a more wide-ranging ruling,” said John McElroy, a partner at law firm Hausfeld in London.
© 2021 Bloomberg L.P.
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Brand Finance Ranks Most Valuable, Strongest Oil and Gas Brands
- Oil and Gas Executives Predict WTI Oil Price
- Canacol Makes New Gas Discovery in Colombia's Magdalena Basin
- FortisBC Denies Gas Greenwashing as Suit Awaits
- Centcom Outlines Latest Red Sea Moves
- Egypt Plans to Meet Summer Fuel Needs with LNG Imports
- Credit Agricole Helps NGP Secure Funds for Fishery-Solar Projects in Taiwan
- Industry Protests Proposed Methane Fee Guidelines for O&G Facilities in US
- Exxon, Cnooc Merge Guyana Arbitration Claims Against Chevron
- Ruptured Oil Pipeline Causes South Sudan's Revenues to Nosedive
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- House Passes Protecting American Energy Production Act
- TotalEnergies Restarts Production in Denmark's Biggest Gas Field
- Blockchain Demands Attention in Oil and Gas
- Republican Lawmakers Say IEA Has Abandoned Energy Security Mission
- USA Oil and Gas Job Figures Jump
- Macquarie Sees USA Oil Production Exiting 2024 at 14MM Barrels Per Day
- Houthis Warn Saudi Arabia of Retaliation If It Backs USA Attacks
- Summer Pump Prices Set to Hit $4 a Gallon Just as Americans Hit the Road
- OPEC and China Conduct High Level Energy Meeting
- New China Climate Chief Says Fossil Fuels Must Keep a Role
- Chinese Mega Company Makes Major Oilfield Discovery
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Another Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Vessel Sinks in Red Sea After Missile Strike
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Equinor Makes Discovery in North Sea
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension