Governments and firms under pressure on CO2 as COP nears

Many nations in the world currently have to cut down on their greenhouse gas emissions. Photo: Shutterstock

Roger Cox, lawyer for the Netherlands branch of Friends of the Earth, called on organisations across the world to “pick up the gauntlet” and take legal action to force multinationals to play their full part in tackling the climate emergency, after successfully taking on Shell over its emissions.

A court in the Hague last month ordered Royal Dutch Shell to cut its global carbon emissions by 45 per cent by the end of 2030 compared with 2019 levels, in a landmark case initiated by Friends of the Earth and over 17,000 co-plaintiffs.

“This is a turning point in history,” Cox said. “This case is unique because it is the first time a judge has ordered a large polluting corporation to comply with the Paris Agreement. This ruling may also have major consequences for other big polluters.”

The oil giant’s sustainability policy was found to be insufficiently “concrete” by the Dutch court in an unprecedented result that could have bigger consequences for the energy industry and other multinationals.

The Anglo-Dutch company was told it had a duty of care and that the level of emission reductions of Shell and its suppliers and buyers should be brought into line with the Paris Agreement.

Judge Larisa Alwin said Shell must “at once” reduce its CO2 output, adding that the ruling may “curb the potential growth” of the Shell group. “The interest served with the reduction obligation outweighs the group’s commercial interests,” she said.

Shell’s activities and products are responsible for about 1 per cent of global emissions annually, but the company is investing billions more in oil and gas.

Shell, which said it would appeal the judgment, was the ninth-biggest polluter worldwide between 1988 and 2015, according to the Carbon Majors database. An appeal against the ruling could last two years but Cox said he hoped the company’s executives and shareholders would act in the meantime.

Earlier this year the multinational said it would push forward with transition of its business to net-zero emissions, including targets to reduce the carbon intensity of energy products by 20 per cent by 2030 and 100 per cent by 2050. But lawyers for the plaintiffs successfully argued that the company had been aware for decades of the dangerous consequences of CO2 emissions and its targets remained insufficiently robust.

A Shell spokesperson said, “We are investing billions of dollars in low-carbon energy, including electric vehicle charging, hydrogen, renewables, and biofuels. We want to grow the demand for these products and scale up our new energy businesses even more quickly. We will continue to focus on these efforts and fully expect to appeal today’s disappointing court decision,” the spokesperson said.

Worldwide ramifications

Around the same time as the court ruling, other iconic energy companies were facing new pressures to change. Exxon shareholders voted to appoint at least two climate-conscious members to the company’s board in the face of stiff opposition from management, while their counterparts at Chevron supported a motion to include emissions from burning fuels sold by the company in future reduction targets, also against the wishes of the board.

Oil companies have adopted climate consciences at very different rates, with those in the United States generally lagging behind their European counterparts. They tend to focus on scope 1 and scope 2 emissions – those from their own operations such as drilling, pumping, shipping, and processing oil and gas, as well as from those of their suppliers. But Bloomberg reported that companies now face a more complex challenge of reducing what is known as scope 3 emissions — those generated by burning the products they produce. That could change with the Dutch court ruling, which says Shell must take account of the carbon dioxide emitted from the fuels it produces.

Friends of the Earth Netherlands is already helping other groups mount similar cases under human rights laws in other countries. Companies operating in developed economies, mainly the US, UK, European Union, and Australia, face the highest risk of legal action, according to a Climate Litigation Index by research firm and consultancy Verisk Maplecroft. But climate lawsuits are breaking new ground in emerging markets, with cases filed in Argentina, South Africa, and India.

“We are already supporting other organisations to set up similar cases in their countries,” said Donald Pols, director of Friends of the Earth Netherlands. “This court case and verdict open a whole new approach to climate litigation and because of its success it will be copied by other civil society organisations in the rest of the world.”

Oil majors have taken steps to address criticism from investors and consumers about their environmental impact, but they’re under pressure to do much more as the global climate movement gains momentum and the cost of clean energy drops faster than expected, according to Bloomberg.

Decarbonisation plans put forward by Eni SpA, Total SE, and BP Plc were last month ranked the best in a report published by financial think tank Carbon Tracker. Shell, Equinor ASA, Repsol SA, and Occidental Petroleum Corp are in the middle of the pack, while ConocoPhillips Co, Chevron, and Exxon Mobil Corp were rated the worst.

The top-ranked companies set goals to reduce emissions on absolute terms, while Shell, Equinor, Repsol, and Occidental have only pledged to cut the intensity of their emissions – as in, even if the amount of emissions per unit of energy falls over time, overall emissions may keep rising if their production increases.

In a warning for corporations worldwide, Arthur Peterson, professor of science, technology, and public policy at University College London wrote last week, “That a court can order any company to fundamentally change its business model because it constitutes a climate danger should give firms around the world pause to rethink their commitment (or lack thereof) to the low-carbon transition.”

Vietnamese projections

As well as individual organisations, governments also have to step up and work together for the betterment of humanity. This November, Scotland will host the 26th UN Climate Change Conference of the Parties (COP26), which will bring nations together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change.

The summit hopes to build consensus on securing global net zero by mid-century and keeping 1.5 degrees within reach, with countries being asked to come forward with ambitious 2030 emissions reductions targets. To deliver on these targets, countries will need to accelerate the phase-out of coal, curtail deforestation, speed up the switch to electric vehicles, and encourage investment in renewables, according to COP26 organisers.

Vietnam has offered recent positive renewable energy policy developments, with solar capacity increasing despite the pandemic and global supply chain disruptions. The country could become a regional leader for solar and has a large untapped potential for offshore wind, yet the coal pipeline is still expansive even considering draft plans to cancel some planned coal projects, according to The Climate Action Tracker – an independent scientific analysis that tracks government climate action and measures it against the globally agreed Paris Agreement aims.

“Vietnam updated its Paris Agreement NDC target in 2020, resulting in a slightly lower emissions level that is still above the current policy projection. A target based on a reduction from current policy projections would ensure real progress in climate action,” the analysts explained.

Vietnam submitted its updated Nationally Determined Contribution (NDC) to the UN Framework Convention on Climate Change in September 2020. Using 2014 as a new base year with and an updated national emissions inventory, Vietnam has committed to reducing its greenhouse gas emissions by about 7.3 per cent compared to the business-as-usual (BAU) scenario by 2025, and has slightly increased its relative mitigation target for 2030 from 8 per cent in its previous NDC to 9 per cent. The NDC now suggests that this percentage could be increased to 27 per cent by 2030 with international support, a moderate rise compared to the 25 per cent target set in the previous NDC.

According to the updated NDC, the investment costs of achieving the unconditional commitment (a 9 per cent emissions reduction compared to BAU by 2030) are estimated at about $24.7 billion. According to a recent communication by the Vietnamese Ministry of Natural Resources and Environment, these investments would need to be more than doubled to $56 billion to meet the conditional target of a 27 per cent emissions reduction compared to BAU by 2030.

Minh Anh Nguyen, research fellow at the International Climate Protection Fellowship Program, said, “This is a tall order for a lower middle-income country, especially given the recent negative effects of the COVID-19 pandemic. However, given the multiple co-benefits addressed by the updated NDC, these actions can be considered as an investment in a future-oriented economy for the Vietnamese people.”