Recent decisions issued by German, Dutch, Australian and Belgian courts regarding climate change have placed energy transition in the spotlight. The decisions demonstrate future developments in the area of climate change litigation, and in particular, an increase in the frequency of this type of case.
Decision of the German Federal Constitutional Court
In a decision dated 24 March 2021, the German Federal Constitutional Court held that the provisions of the Federal Climate Change Act of 12 December 2019 (the "Act"), which regulates Germany's national climate targets and annual emissions up to 2030, do not provide for adequate specifications for emission reductions beyond 2031 and are therefore incompatible with fundamental rights.
Decision of the Hague District Court
Secondly, on 26 May 2021, the Hague District Court ruled, in a claim brought against Royal Dutch Shell PLC ("RDS"), that RDS is obliged to reduce its CO2 emissions by 45%, compared to 2019 levels, by end of 2030. This obligation extends to the whole energy portfolio of the Shell group and its combined volume of emissions.
The claimants argued that RDS has the obligation, arising from the unwritten standard of care under Section 162 of the Dutch Civil Code (the "standard of care"), to participate in the prevention of climate change and reduce emissions attributable to the Shell group. In interpreting the standard of care, the court assessed and considered factors and principles such as RDS's position in the determination of the Shell group's general policy, the right to private and family life, as well as international soft law principles such as the United Nations Guiding Principles.
Decision of the Federal Court of Australia
Thirdly, in a decision issued on 27 May 2021, the Federal Court of Australia found that Australia's Minister for the Environment owes a duty of care to Australian children to protect them from the effects of climate change. As with the German Federal Constitutional Court decision, this decision emphasised the consequences for future generations of failure to take action against climate change.
Decision of the Brussels Court of First Instance
More recently, the Brussels Court of First Instance found that the failure of the federal and regional governments to implement adequate climate change policies constituted a breach of their duties of care and human rights obligations under the European Convention on Human Rights.
Campaigners in England have followed a similar course of action to those in Germany, Netherlands, Australia and Belgium, and recently submitted an application to the High Court for a judicial review of the government's support of the Oil and Gas Authority's strategy with respect to the North Sea.
The launching of these proceedings demonstrates that the above decisions are not isolated cases. They illustrate the rise in legal activism related to climate change and energy transition. They also put stakeholders on notice that similar actions may be taken in other jurisdictions.
Human rights law and principles of soft law embodied in environmental, social and corporate government guidelines, such as the UN Guiding Principles, have been a common thread in these decisions.
Investors in the energy industry should ensure that they are familiar with this body of law and the role it plays in their activities. Equally, Governments will have to pay heed, in exercising their regulatory powers, to ensure that this is done consistently with both their international climate change commitments and their obligations to investors.
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