By Bart H. Meijer
AMSTERDAM (Reuters) -Shell on Tuesday told a Dutch court a 2021 order that it should drastically cut greenhouse gas emissions lacks a legal basis and risks obstructing the fight against climate change.
In a landmark ruling that shocked the energy sector, a lower Dutch court in 2021 ordered Shell (LON:RDSa) to reduce its planet warming carbon emissions by 45% by 2030 from 2019 levels.
The order related not only to Shell's own emissions, but also to those caused by the buyers and users of its products around the globe.
Shell said that implementing the ruling would force it to shrink its business and simply lead customers to shift to other suppliers of fuel.
"This case has no legal basis", Shell's lawyer Daan Lunsingh Scheurleer told a court in The Hague on the first day of hearings in Shell's appeal against the order.
"It obstructs the role that Shell can and wants to play in the energy transition."
Shell's lawyers said it was up to governments to set climate policies and goals, as courts lacked a mandate to do so.
But Friends of the Earth Netherlands, which brought the case, said Shell influences government policies worldwide through its size and global presence and is one the most important drivers of demand for oil and gas.
"Demand for oil and gas doesn't exist in a vacuum," lawyer Roger Cox said. "It is being sustained by Shell and its peers, through abundant supply."
Cox said no government had protested the 2021 verdict and no one had ever said climate goals that energy companies have set themselves were a threat to the world's energy supply.
Lunsingh Scheurleer, however, said the energy crisis triggered by Russia's invasion of Ukraine had shown the importance of fossil fuels, as governments scrambled to increase imports of liquefied natural gas and spent billions to compensate households for surging energy prices.
"Oil and gas will play an important role in both the security of supply and affordability during the energy transition," he said.
Shell's lawyers stressed the company's investments in the development of non-fossil fuels as well as its support for the Paris Climate Agreement and said the company's targets to reduce its own emissions went further than the court's order.
But a general order to reduce total emissions of its products by 45% went too far, Lunsingh Scheurleer said, and a wider implementation would cripple the Dutch economy.
"A general application of this order is impossible without drastic measures," he said.
Shell earlier this month weakened a 2030 carbon reduction target and scrapped a 2035 objective, citing expectations for strong gas demand and uncertainty in the energy transition, even as it affirmed a plan to cut emissions to net zero by 2050.
The court has planned four days of hearings for the appeal this month. A verdict is expected in the second half of the year.
A further appeal to the country's Supreme Court is generally expected regardless of the outcome of this appeal.