Carbon, Caveats and Consumers
A landmark ruling last week ordered Shell to cut its emissions by a ‘net’ 45% before 2030. Although this is in line with the Paris Agreement, this news has big implications for the energy industry.
Reducing emissions affects all business, Government and shareholder agendas. However, for some companies, reducing their carbon footprint is easier than for others. Risks of greenwashing, opaque targets and inconsistent measurement are high.
Shell had already set itself a target to reduce the carbon intensity of its products by 100 per cent before 2050. The judge was concerned that this was not enough and said, “policy intentions and ambitions for the Shell group largely amount to rather intangible, undefined and non-binding plans for the long-term.” Their target had too many caveats.
This is a common problem. Companies are understandably keen to look like they are taking action, but it is paramount that they first audit where they are now before setting clear science-based targets. To avoid any greenwashing accusations, they must consider genuine alternatives and have a strategy to reduce carbon – not just offset it.
Carbon intensity reflects the total amount of greenhouse gas emitted per unit of energy sold, allowing the oil majors to rely somewhat on offsetting to reach the target rather than make absolute emissions cuts. This could mean increased fossil fuel production if it is offset alongside.
A statement released by Shell explains a strategy to grow demand for low-carbon products. And this is where the real opportunity lies.
If energy firms lead the education, investment and infrastructure, they will remain in control and stay relevant. But it won’t be easy. There was always going to be a messy middle; the transition period where ongoing consumer demand, infrastructure and supply are at odds.
The case in the Hague was brought by Friends of the Earth and over 17,000 co-plaintiffs. A lawyer for Friends of the Earth in the Netherlands, called on organisations across the world to take legal action to force multinationals to play their full part in tackling the climate emergency. This certainly isn’t going to be the last case of its kind and it isn’t just environmental campaigners pushing for change. Last week, shareholders in two other oil majors made it clear they wanted those boards to take climate change seriously.
The consequences of CO2 emissions have been documented for decades, but it is now or never for the energy industry to accelerate reduction plans before shareholders, customers and plaintiffs decide what’s best.