A Dutch appeals court threw out a landmark climate ruling against her on Tuesday Shellas the oil giant was previously ordered to drastically reduce global carbon emissions by 2021.

The development, which comes during the first days of the COP29 climate summit in Azerbaijan, is a reversal in a precedent-setting case and could have far-reaching consequences for the future of climate litigation.

The Hague appeals court said that while Shell is required to reduce carbon dioxide emissions, it cannot determine the extent of those cuts. The case against Shell was therefore dismissed in its entirety.

In May 2021, the regional court in The Hague ruled that Shell must reduce gas emissions by 45% from 2019 levels by 2030.

The verdict, which was handed down when Shell was based in The Hague, also said the company was responsible for all emissions throughout its chain.

It was the first time in history that a company was legally required to align its policies with the Paris Agreement, a framework that seeks to avoid the worst of the climate crisis by limiting the average increase in global temperatures to between 1.5 and 2 degrees Celsius.

The decision was seen as historic in the climate battle and sparked a wave of lawsuits against other fossil fuel companies.

The lawsuit was brought against Shell in 2019 by Milieudefensie, an environmental group and the Dutch branch of Friends of the Earth, along with six other bodies and more than 17,000 Dutch citizens.

“The appeals court rejected Milieudefensie’s claims because the court could not demonstrate that the social standard of care entails Shell’s obligation to reduce CO2 emissions by 45% or some other percentage,” the court said in a statement.

In addition, the court said it found Shell’s obligation to drastically reduce its emissions by a certain percentage “ineffective” because other companies could take that share of the trade and “this would therefore not lead to a reduction in emissions CO2′.

Shell, for its part, welcomed the reversal of the case.

“We are pleased with the court’s decision, which we believe is the right one for the global energy transition, the Netherlands and our company,” said Shell CEO Wael Sawan. “Our goal of becoming a net zero emissions energy company by 2050 remains at the heart of our strategy,” he added.

It is noted that the share price is down about 1% since the beginning of the year.

A blow to the climate struggle

Shell appealed the 2021 decision and subsequently moved its headquarters to the UK, a move criticized as partly motivated by the court defeat. The Hague District Court’s decision was legally binding only in the Netherlands.

At appeal hearings held earlier this year, the oil company argued that the case had no legal basis.

Shell’s lawyers argued that demands on companies to limit greenhouse gas emissions cannot be made by courts, but only by governments, Reuters reported. The company also argued that the court ruling would force it to scale back its operations without any benefit to combating climate change.

“This decision affects us a lot,” said Donald Pols, director of Milieudefensie. “It’s a step back for us, for the climate movement and for millions of people around the world. But those who know us, know that we will not give up,” he added. “It is encouraging that the judge ruled that Shell is responsible for reducing emissions and that companies must also respect human rights. This is a marathon and not a sprint and the race is not over yet,” he stressed.

Burning coal, oil and natural gas is by far the biggest contributor to the climate crisis, accounting for more than three-quarters of global greenhouse gas emissions.

“The decision disappointed climate campaigners, who have celebrated a number of high-profile climate court successes in recent years,” said Tom Cummins, senior executive at Ashurst.

“Climate campaigners will also point to the court’s finding that companies like Shell are under an obligation to limit emissions to tackle climate change and have a responsibility to meet the targets of the 2015 Paris Agreement,” Cummins added. “This conclusion is likely to be used in similar trials,” he noted.