Shell to Step Up Energy Transition after Landmark Court Ruling

Emmanuel Addeh

Royal Dutch Shell will seek ways to accelerate its energy transition strategy and deepen carbon emission cuts following a landmark Dutch court ruling last month, its Chief Executive Officer, Ben van Beurden has said.

The move is likely to lead to a dramatic shrinking of its oil and gas business.

Shell plans to appeal the May 26 court ruling that ordered it to reduce greenhouse gas emissions by 45 per cent by 2030 from 2019 levels, significantly faster than its current plans.

But the court ruling applies immediately and cannot be suspended before the appeal, van Beurden said in a LinkedIn post.

“For Shell, this ruling does not mean a change, but rather an acceleration of our strategy,” van Beurden added.

Earlier this year, Shell had set out one of the sector’s most ambitious climate strategies. It has a target to cut the carbon intensity of its products by at least six per cent by 2023; 20 per cent by 2030; 45 per cent by 2035 and 100 per cent by 2050 from its 2016 levels.

“Now we will seek ways to reduce emissions even further in a way that remains purposeful and profitable.

That is likely to mean taking some bold but measured steps over the coming years,” he said.

The court ruling called for Shell to cut its absolute carbon emissions, a move van Beurden had previously rejected because it would force Shell to scale back its oil and gas business, which account for the vast majority of its revenue.

Shell currently plan to increase its spending on renewables and low carbon technologies to up to 25 per cent of its overall budget by 2025, Reuters reported.

Analysts have said the ruling could lead to a 12 per cent decline in the company’s energy output, including a sharp drop in oil and gas sales.

The court case came shortly after the International Energy Agency (IEA) said in a report that investments in new fossil fuel projects should stop immediately in order to meet UN-backed targets aimed at limiting global warming.

Shell, which is the world’s top oil and gas trader, has said its carbon emissions peaked in 2018, while its oil output peaked in 2019 and was set to drop by 1 per cent to two per cent per year.

The ruling by the court in The Hague, where Shell is headquartered, could trigger action against energy companies around the world, but van Beurden repeated his call for governments and companies to tackle oil and gas consumption around the world, and not only supply.

“Imagine Shell decided to stop selling petrol and diesel today. This would certainly cut Shell’s carbon emissions. But it would not help the world one bit. Demand for fuel would not change. People would fill up their cars and delivery trucks at other service stations,” van Beurden said.

“A court ordering one energy company to reduce its emissions – and the emissions of its customers – is not the answer,” he added.