The 2021 case in the Netherlands against Shell was a landmark moment in climate litigation involving the oil industry, even though it was overturned
If Shell had conformed to the ruling, it would not have had an impact on emissions. Instead, it would have simply shifted the production onto another company – possibly resulting in higher emissions
Environmentalists will continue finding new ways to launch legal challenges. But societies need to work out how to find a balance between sustainability and security

Litigation has become an increasingly prominent tool in the environmentalists’ armoury in recent years. The 2021 ruling in the Netherlands against Shell buoyed this approach.

However, these legal efforts have largely failed to place binding requirements on major energy suppliers to cut emissions.

Even if these challenges succeeded, they would arguably have no impact on global emissions, at best. At worst, they may be counterproductive to reaching net zero.

To really tackle emissions there must be more focus on reducing demand.

The Shell ruling

On November 12, The Court of Appeal of The Hague, in the Netherlands, struck down a 2021 ruling by another Dutch court. This would have required Shell to greatly accelerate emissions reductions this decade. The original ruling, by the District Court of The Hague, required the major to cut its absolute operational, scope 1 and 2, and end-use, Scope 3, emissions by 45% by 2030.

Dutch environmental organisation Milieudefensie and other plaintiffs brought the case to court.

Three years ago, the initial ruling came. It marked the first time that a court ordered an oil company to revise its climate strategy to meet Paris Agreement objectives. It also placed responsibility for end-use emissions – released when oil and gas products are combusted – on the producer.

The ruling’s requirements far exceeded Shell’s goal, which was to lower net scope 1, 2 and 3 emissions intensity by 20% by decade’s end. The focus on emissions intensity rather than absolute emissions meant Shell could continue expanding its oil and gas operations.

Following the verdict, Shell pledged to halve its absolute scope 1 and 2 emissions by 2030 using 2016 as a baseline. The court-ordered cut was based on 2019 emissions, making the reduction harder to achieve.

Hard targets

Bracewell partner John Gilbert, speaking at a webinar in November, noted the Dutch Court of Appeal had not shied away from attributing responsibility to companies to tackle climate change.

“But where [the case] fell down is in imposing a precise duty on companies to reduce emissions by a definitive amount.” It was on the point of ascribing a particular reduction on Shell that the case was overturned, he said.

In the wake of the global energy crisis, which shifted focus from energy sustainability to energy security, Shell watered down its emissions intensity target to a 15-20% cut by 2030. It also announced a new “ambition” to reduce absolute scope 3 emissions from its oil products by 15-30% by 2030.

Shell has yet to set a target for tackling its overall absolute scope 3 emissions, as required by the court order. In 2023, those amounted to 517 million tonnes of CO2 equivalent, or about 90% of the company’s total.

*Brent decommissioning. Source: Shell International*

Scope 3

As Shell and experts noted, the issue with targeting this large reduction in scope 3 emissions is that the company couldn’t meet the requirement without divesting or scaling back its business. When it filed its appeal in April, it stated in comments to the media, “without changing demand and the way in which customers use energy, this could effectively mean handing over retail and commercial customers to competitors.”

The company said that if it stopped selling “kerosene for aviation or petrol for cars, people would not fly or drive less, customers would simply turn to other suppliers”. Would other companies be able to produce these products with lower emissions than Shell?

“By definition, scope 3 relates to activities that are beyond the control of the producers and suppliers,” Paul de Leeuw, Director of Robert Gordon University’s Energy Transition Institute, told E-FWD. “They can take them into account but they cannot control them.”

He said that government policy and societal behavioural changes are needed to tackle scope 3 emissions. Oil and gas companies will expand low-carbon energy options like biofuels and hydrogen. But unless government policy or consumer preferences drive their adoption, energy users will continue consuming traditional fuels – and suppliers will meet that demand.

Other oil and gas majors have avoided commitments to significantly address their absolute scope 3 emissions in the near term.

BP aims for cuts of 10-15% by 2025 and 20-30% by 2030, but only for upstream production. TotalEnergies confines its end-of-decade reduction target of 40% for oil products only, not its gas business.

Growing legal momentum

Last month, the Netherlands’ Milieudefensie noted, after the court ruled in favour of Shell’s appeal, that the case brought greater attention to the responsibility of oil and gas producers.

Since the 2021 verdict, more cases against other oil and gas companies have emerged over climate change. Since the Paris Agreement, cases against fossil fuel companies have nearly tripled, according to Zero Carbon Analytics. Most seek compensation for climate damages, accusing companies of misleading advertising and forcing tougher emissions targets.

Last year, Greenpeace sued Italy’s Eni for failing to align its business practices with Italy’s climate commitments under the Paris Agreement in an ongoing case.

In March, Belgian farmer Hugues Galys launched legal proceedings against TotalEnergies with NGO backing. Beyond claiming climate change damages, he sought to halt the company’s new investments in oil and gas and curb production by 75% by 2040.

In May, eight individuals affected by climate-related disasters, along with three NGOs, filed a lawsuit against Total. They made a number of accusations and sought more ambitious climate strategies from the French major.

And it’s not just European cases. In November, Maine sued ExxonMobil, BP, Shell, Chevron and Sunoco.

The state accused them of misleading the public about oil and gas’s impact on climate change. It sought unspecified damages and demanded funding for adaptation, mitigation and resilience measures.

So far, the 2021 Shell ruling is the only case where a major oil and gas company was ordered to revise its emissions reduction strategy. The successful appeal will be considered by other courts.

Bracewell’s Gilbert contrasted the Netherlands’ case with those under way in the UK, which have come to focus more on planning.

*Shell Gibraltar – LNG Terminal. Stuart Conway.*

The UK’s own bellwether

In June, the UK Supreme Court ruled that environmental impact assessments (EIAs) for oil and gas projects must consider scope 3 emissions.

The case was brought by climate campaigner Sarah Finch against Surrey County Council, over permitted drilling at the Horse Hill oilfield, near Gatwick Airport. Its decision overturned previous rulings by the High Court and Court of Appeal.

The ruling has spurred other challenges in the UK. In November, Greenpeace initiated one against the government’s approval of the Rosebank and Jackdaw offshore oil and gas fields, as it did not consider downstream emissions.

Meanwhile, last month North Lincolnshire Council rescinded planning permission for drilling at the onshore Wressle oilfield after another environmental challenge. The Supreme Court also rejected a plan for a new coal mine, on the basis that it would increase emissions.

This new legislation does not prevent authorities from approving projects. The full environmental cost of oil and gas production, to burning it in a car or power plant, must be considered.

Novel litigation

Bracewell’s Gilbert said that, in contrast to the Netherlands’ case, the fight in the UK was at a project level. “It is local authorities or governmental authorities that have to make planning decisions relating to a particular project – and how that project will relate to the increase in scope 3 emissions.”

The outcome of the Rosebank and Jackdaw challenges are likely to come early next year. The government is also due to provide the outcomes of a consultation in spring 2025 on licences.

Gilbert highlighted that climate litigation was not going away. “Each year we’ve seen new, and in some cases novel, attempts to find ways to use litigation to apply pressure on governments and on companies. I have no doubt that that will continue.”

He predicted that there would be a particular focus on finance and how it supplied to the industry, while also continued scrutiny over allegations of greenwashing. “We may also see attempts to use the new corporate failure to prevent fraud offence being used,” the Bracewell partner said.

Playing out challenges

While the environmentalists’ efforts will not stop all hydrocarbon projects outright, their persistence forces companies to adapt.

The requirement to consider scope 3 emissions is a case in point. In the narrow sense, the case in The Hague failed, with the court ultimately rejecting the requirement to specify the amount of emissions Shell should tackle.

But the Shell case demonstrates these challenges pose serious threats to companies that cannot be dismissed. The message from a number of courts is that these companies must consider their scope 3 emissions.

The Finch case represents a refinement of the Milieudefensie attempt. The Dutch case sought sweeping change and failed. But Finch throws up complexities on a project-by-project case that companies cannot ignore.

It seems certain, as Gilbert suggests, that there will be new legal cases. Hydrocarbon opponents will find new vectors by which to pressure companies’ plans. Oil and gas companies will need to come up with new ways to account for – and address – scope 3 emissions.

But the fundamental question remains. How can society balance environmental drivers with practical limits. Such a question cannot be solved by the courts, but only by voters and their chosen representatives.

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