Shell to step up energy switch after landmark court ruling
Dutch energy giant ordered to cut carbon emissions by 45% by 2030 from 2019 levels
London — Royal Dutch Shell will speed up its energy transition strategy and further cut its carbon emissions following a landmark Dutch court ruling last month, CEO Ben van Beurden said on Wednesday, a move that is likely to lead to an considerable scaling down of its oil and gas business.
Shell plans to appeal the May 26 ruling that ordered it to reduce greenhouse gas emissions by 45% by 2030 from 2019 levels, significantly faster than its plans at present. 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 said.
Shell shares were up 0.8% at 1.46pm GMT compared with a 0.4% gain in the broader European energy index.
Earlier this year, the energy giant set out one of the industry’s most ambitious climate strategies, in which it aimed to cut the carbon intensity of its products by at least 6% by 2023 from 2016 levels, increasing to 20% by 2030, 45% by 2035 and 100% by 2050.
“Now we will seek ways to reduce emissions even further in a way that remains purposeful and profitable,” van Beurden. “That is likely to mean taking some bold but measured steps.”
The court ordered Shell to cut its absolute carbon emissions, a move van Beurden previously rejected because it would force the company to scale back its oil and gas business, which account for the vast majority of its revenue.
Shell currently plans to increase its spending on renewables and low-carbon technologies to as much as 25% of its overall budget by 2025.
Analysts have said the ruling could lead to a 12% decline in the company’s energy output, including a sharp drop in oil and gas sales.
The court case came shortly after a report by the International Energy Agency recommended an immediate halt to investments in new fossil fuel projects so as to meet UN-backed targets that seek to limit global warming.
Shell, 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%-2% per year.
The ruling by the court in The Hague, where Shell is headquartered, could lead to 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 just supply.
“Imagine Shell deciding to stop selling petrol and diesel today. This would certainly cut its carbon emissions, but it would not help the world one bit,” he said. Demand for fuel would not change. People would fill up their cars and delivery trucks at other service stations.”
“A court ordering one energy company to reduce its emissions, and the emissions of its customers, is not the answer,” he said.
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