Celebration after The Hague District Court ruling

Climate change is a hot topic (pun intended). As with many hot topics, the momentous forces of the often well-intentioned activism and not-so-well-intentioned political catering threaten to melt away the institutional framework on which progress depends. Two recent examples of such risk come to mind: one from Europe and one from the United States.

            On May 26, 2021, in Milieudefensie et al v Royal Dutch Shell, the District Court in The Hague ruled against the multinational oil and gas giant Shell. Shell had been accused of not meeting its obligation, ensuing from “the unwritten standard of care”, to “contribute to the prevention of dangerous climate change through [its] corporate policy”. The company objected that the energy transitions require efforts from society as a whole, that the claimant’s case has no legal basis, and that “the solution should not be provided by a court, but by the legislator and politics”.

The court nonetheless ruled that Shell’s activities were unlawful for being “in conflict with what is generally accepted according to unwritten law”. In its interpretation of the unwritten standard of care, the court included such considerations as “possible reduction pathways”, “the consequences of CO2 emissions for the Netherlands and the Wadden region”, and “the effectiveness of the reduction obligation” – in short, all kinds of analysis that would normally be considered by qualified experts and policy-makers, not judges and justices.

Despite not having broken any actual laws on emissions, Shell was held guilty of not caring enough about the harm caused by its activities, and was obliged to reduce its emissions by 45% by 2030 (in line with the non-binding Paris Agreement). One wonders as to what is the point of passing written laws on pollution and climate change if courts can simply make an ad-hoc decision that the unwritten law has been violated, and thereby set a new mandatory standard on which no parliament voted and no referendum was held. The loudness of the activists and the current scientific consensus have apparently become substitutes, at least in the eyes of that court, for democratic decision-making processes.

            A different line of development occurred this June in the United States, where the Supreme Court ruled on the scope of the Environmental Protection Agency’s (EPA) authority in West Virginia et al. v. Environmental Protection Agency et al. The question revolved around the Agency’s authoritative scope in managing pollution by looking for the “best system of emission reduction”, as it was tasked by the government. While, under that provision, EPA had traditionally imposed higher technological requirements on individual plants, it now wanted to implement a carbon cap scheme that would forcibly shift power generation from more polluting sources to cleaner ones.

The majority opinion ruled against it, noting that such an intervention would require a significantly different understanding of the word “system”. While “capping carbon dioxide emissions […] may be a sensible ‘solution to the crisis of the day’”, the agency needs to have a “clear delegation” from the Congress to make “a decision of such magnitude and consequence” (Court Opinion, p. 31). The dissent argued that it was precisely for the sake of regulatory flexibility that the word “system” was not specified as a technological one (Dissent, p. 7).

            Yet it is that very “regulatory flexibility” that would generate uncertainty as to what, at the end, is the limit to EPA’s regulatory power. The majority opinion and the dissent speak somewhat past each other in this regard: while the latter is focused on demonstrating that non-technological systems are within EPA’s regulatory authority, the former is much more concerned about the scope of regulatory power that was envisioned by the government. Given the inherent ambiguity of human language, the court wishes to see a clear government mandate that would give EPA the right to enforce system-wide generation changes, as opposed to regulating emissions on the level of individual plants.

            These two cases highlight an important aspect of tackling complex long-term problems. Climate change is an issue for which solutions will have to be developed and implemented over decades; an integral part of that process will therefore be the robustness and reliability of the institutional framework within which regulatory and technological development will take place.

Legislating from the bench, as was basically done by the The Hague District Court, will generate uncertainty even for law-abiding companies. Nor is that uncertainty limited to fossil fuel corporations. Who is to say that, by the principle of the unwritten rule, solar power providers will not be accused of not doing enough to remove the lifecycle pollution of their products, or nuclear plants – of not doing enough to reduce the risk of a nuclear accident? No technology is completely risk-free and pollution-free, which is why laws are passed, not only to mitigate the adverse effects of those technologies, but also to provide a guarantee of the limit within which they will be held liable, and therefore encourage their development.

Likewise, granting regulatory agencies a significantly larger scope of authority must be clearly communicated by the elected government, especially due to the scope of action expected in dealing with climate change. An agency’s expertise, just as loud activism and scientific consensus, is not a substitute for democratic decision-making – certainly not when decades-long processes are in view. The less defined an agency’s scope of authority – the more freedom it has in pursuing its own self-interests, as well as those of special interest groups that exercise political pressure. The primary question is not whether Shell cutting its emission or the US shifting away from coal-powered generation is good for the climate, but whether the processes and the standards set by the manner in which these decisions are made will lead to positive outcomes.

Armen Danielian

MSc Energy Systems graduate, currently researcher at the Foundation for Armenian Science and Technology

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