This Statement of Defence on Appeal ("Defence on Appeal") sets out the response of Milieudefensie et al. to Shell plc's Statement of Appeal ("Appeal") in the appeal against the judgement of 26 May 2021 of the District Court of The Hague (the "Judgement"). In this Defence on Appeal the abbreviation "Shell" is used to refer to appellant Shell plc, the parent company of the international Shell Group. The international Shell Group will be referred to by the abbreviation "Shell Group".
Milieudefensie et al. maintains everything it presented at first instance. In this context it notes that in the Appeal, Shell did not or only barely discussed, or did not present appeal grounds against, the facts established by the District Court. Nor did Shell pay attention to the great number of crucial facts and circumstances presented by Milieudefensie et al. at first instance and which, in view of the (positive side of the) devolutive effect of the appeal, form part of the legal dispute in appeal.
Milieudefensie et al. notes that in its Appeal, Shell acknowledges and emphasises that urgent action is necessary to solve the climate problem and that it is a necessity to lower global carbon emissions by 45% by 2030.1 Shell also acknowledges that the matter requires an emissions reduction in an absolute sense because there is only a limited and shrinking global carbon budget to be able to achieve the temperature goals of the Paris Agreement.2 According to Shell, emissions reductions will therefore have to take place in the economic sectors responsible for the global emission of greenhouse gases, that are in accordance with the carbon budget.3 Shell states that consequently these sectors require a fast and drastic decarbonisation and that this requires action on the part of both state and non-state actors, including business enterprises.4 Shell acknowledges that toward this end the existing energy sources and infrastructure will have to be replaced at an unprecedented pace and on an unprecedented scale and that this requires massive investments this decade.5 Shell also acknowledges that there is a societal consensus regarding the fact that individual companies must take measures to reduce their emissions and that doing nothing is not acceptable.6 Shell furthermore states that climate change threatens to have consequences for people's lives, including people living in the Netherlands.7 With regard to its obligations in relation to human rights, Shell also confirmed in appeal that it embraces the United Nations Guiding Principles on Business and Human Rights and that its policy is based on said Guiding Principles.8 Lastly, Shell acknowledges that the Shell Group can become a smaller oil and gas company and that this in any event will result in a reduction of its own carbon emissions.9
In connection with this latter acknowledgement of Shell, i.e. that the Shell Group can become a smaller oil and gas company and as a result its carbon emissions will fall, it is striking that Shell does not argue in the Appeal that this would be de facto too onerous for it. It only asserts that making the company smaller would not be effective, but that it is possible is a certainty.
Bearing in mind the possibility for Shell to reduce the emissions of the Shell Group by reducing its oil and gas activities, in its essence this case revolves around the question whether Shell, as one of the biggest carbon emitters in the world, has a legal duty to make a proportional contribution to preventing dangerous climate change.10
The District Court answered that question in the affirmative and held that Shell is under an obligation to reduce the emissions of the Shell Group by 2030 by at least 45% net. Within the boundaries of the legal dispute limited by Shell's grounds of appeal, this legal question regarding Shell's reduction obligation is before us again and is now more important than ever.
Despite the Judgement, Shell's current corporate policy for the Shell Group still provides for very large-scale investments in oil and gas and will consequently lead to no or hardly any emissions reductions on the part of the Shell Group by 2030.11 This means that Shell's policy is still at odds with the global task of limiting the warming of the earth to 1.5˚C in the last few years when this is still possible.
At the same time, the urgency of the climate problem since the ending of the debate at first instance has only continued to increase. Because countries and important non-state actors like Shell have not taken sufficient action in the past few years to reduce their emissions, in its last report of 2022 the IPCC calculated that a global reduction in carbon emissions of 48% by 2030 is now necessary.12 Every year that too little is done, will only increase this percentage further and will make the global climate task more difficult and consequently less likely to succeed. This confirms that the reduction obligation which the District Court imposed on Shell of at least 45% net by 2030 must be deemed an absolutely necessary lower limit.
There will therefore be no other or better time to call Shell to account. In a few years it will be too late and it will no longer be possible to prevent a warming up of 1.5˚C.
In view of the extreme urgency and need for emissions reductions to be realised by Shell as well as in view of the positive effects for climate action which arise worldwide from the reduction order with regard to parties other than Shell (more on this further on in the Defence on Appeal),13 Milieudefensie et al. is merely seeking affirmation of the Judgement. If the urgency were not so great, Milieudefensie et al. would have wanted to address parts of the operative part of the Judgement by means of a cross-appeal. However, because of the urgency it has decided not to do so and it will only focus on maintaining the reduction obligation that was challenged in appeal. What is also relevant in this respect is that Shell has chosen to largely ignore a judgement which was declared to be immediately enforceable. In this appeal Milieudefensie et al. therefore requests the Court of Appeal to reject Shell's grounds of appeal as unfounded and to affirm the Judgement, where necessary providing supplementation ( ex officio) of legal grounds or improving the grounds of the decisions of the District Court.
One of Shell's central arguments in the Appeal is that only political decision makers can take responsibility for urgent climate action. Important reasons presented in this respect are that the energy transition is very complex and that this transition requires a weighing of interests between climate change, energy access and economic development, which are interests that should be weighed by political decision makers. Consequently, only political decision makers should be dealing with this case, not the courts. In addition, judicial intervention would allegedly be an unacceptable encroachment on political processes. According to Shell, the Court of Appeal would thus not be able to give an opinion on the claims of Milieudefensie et al., or in any event should set aside the Judgement and dismiss these claims now.
This Defence on Appeal will go into the relationship between courts and political decision makers in this case (and in climate cases in general) and reasons will be presented that the Judgement is not an unacceptable encroachment on state policy. It will become clear that the courts in fact have democratic legitimacy and are equipped to answer the legal questions that have been presented, which touch upon the foundation of a state ruled by law. Naturally the other assertions which Shell presented in its Appeal will be dealt with in detail. Nevertheless, Milieudefensie et al. wishes to make it clear in this introduction that Shell is failing to understand two important points in this case. By briefly referring to these two points, some background is provided for the argument that recurs in this Defence on Appeal, that the Court of Appeal is not being asked to make political choices. It also clarifies up front that, contrary to what Shell suggests, the Court of Appeal is also not being asked to shape the global energy transition. Therefore, as an explanation of these two points the following.
Firstly, Shell fails to note in its Appeal that the political choice it cites regarding climate approach, energy security and economic development was already made in 2015. September 2015 is when the 2030 Agenda for Sustainable Development was adopted by UN Resolution. This was followed by the Paris Agreement in December 2015. The Paris Agreement and the Sustainable Development Goals refer to each other and must be seen in conjunction with each other, as was also determined by the District Court (no ground of appeal was lodged regarding this determination).14
Compliance with the Paris Agreement also serves other significant social interests, both nationally and internationally, such as affordable energy access, energy security, economic development and combating poverty. The temperature goal of the Paris Agreement is therefore not only crucial to prevent dangerous climate change, but also to secure sustainable economic and social development in general. This applies in both the developed countries and in the developing countries. The Sustainable Development Goals apply to all countries and are relevant for all countries.15
Preventing dangerous climate change is therefore a prerequisite for a fair and just development for every individual country and in order to secure a joint future for humans on a habitable earth.16 Preventing dangerous climate change also serves to protect the socio-economic progress which has been made in many developing countries in the past few decades. If the temperature goal of the Paris Agreement is not achieved, the UN believes this socio-economic progress will be nullified, with serious consequences for billions of people.17
With an eye on the above the District Court determined that Goal 7 of the UN Sustainable Development Goals ("Ensure access to affordable, reliable, sustainable and modern energy for all." ) does not detract from the goals of the Paris Agreement, nor does it encroach on these goals. The District Court made it clear in this respect that this also ensues from Goal 13 of the Sustainable Development Goals ( "Take urgent action to combat climate change and its impacts.") and in the preamble under 8 of the Paris Agreement in which the intrinsic connection is emphasised between the approach to dangerous climate change and the fair access to sustainable development and ending poverty. The District Court noted that Shell's arguments relating to the political choice to be made by states in relation to climate action, energy security and economic development cannot succeed.18 Shell has not presented a ground of appeal against the aforementioned specific considerations of the District Court.
States have thus already jointly made the political choice relating concerning climate action and energy security and access to affordable energy (and the other Development Goals of the 2030 Agenda) and recorded them in international agreements. They are very aware of the mutual connection and integrated nature of the climate and energy goals and see these goals (together with the other goals) as an integral and indivisible whole that must be realised in conjunction
"to realize human rights for all".19
Political decision makers and policymakers in all countries are therefore expected to come up with a holistic approach. This also appears from the citation quoted by Shell in the Appeal in para. 2.5.12 from the Theme Report on Energy Transition; Towards the Achievement of SDG 7 and Net-Zero Emissions published by the UN in September 2021, from which Shell quotes the following citation:
The challenges of balancing energy security, economic development, and climate concerns must be accepted and the paths must be sought that promote each of these simultaneously. Such paths exist and it is the task of policymakers to find them.20