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Sustainable Business

Shell to step up energy transition after landmark court ruling

4 minute read
  • CEO van Beurden says ruling will accelerate transition strategy
  • Court ordered to Shell to cut emissions by 45% by 2030
  • Shell will appeal decision, which cannot be suspended

LONDON, June 9 (Reuters) - Royal Dutch Shell (RDSa.L) will seek ways to accelerate its energy transition strategy and deepen carbon emission cuts following a landmark Dutch court ruling last month, CEO Ben van Beurden said on Wednesday, a move that will likely 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% by 2030 from 2019 levels, significantly faster than its current plans. read more

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 1346 GMT compared with a 0.4% gain in the broader European energy index (.SXEP).

Earlier this year, Shell 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 6% by 2023, by 20% by 2030, by 45% by 2035 and by 100% by 2050 from 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."

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.

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The Royal Dutch Shell logo is seen at a Shell petrol station in London, January 31, 2008. REUTERS/Toby Melville/File Photo

Shell currently plans to increase its spending on renewables and low carbon technologies to up to 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. read more

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

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% to 2% per year.

The ruling by the court in The Hague, where Shell is headquartered, could trigger action against energy companies around the world. read more

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.

Reporting by Ron Bousso, editing by Louise Heavens

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