Big Oil executives are being forced to pull their heads out of the sand
Climate Change- Shutterstock

Last week, oil companies were hit by simultaneous business decisions by climate activists to force rethinking their strategies towards reducing emissions much more quickly than had been planned.

In The Hague, a Netherlands court insisted that Royal Dutch Shell make immediate changes to comply with the Paris climate accords that would require Shell to nearly halve emissions for which it is responsible by 2030. Shell would most certainly have to reduce oil in its energy portfolio and halt growth in liquefied natural gas.

The groups suing Shell argued successfully that the company has a legal duty to protect citizens from looming climate risks.

Denial and delay, the stand-by attitudes for decades, do not seem the best approach.

For ExxonMobil, an activist hedge fund that owns a small amount of the company's stock will get to name two green-minded board directors, likely pressuring that firm to invest in technologies that address climate issues more directly and rapidly.

Chevron's shareholders also were active, voting for the company to slash its emissions.

As with any precedent, the court and shareholder decisions could pave the way for more.

So, after letting the dust settle, is there any noticeable policy change?

After all, we still need oil – and as the recently forced shutdown of the Colonial Pipeline that interrupted gas deliveries to the East Coast showed, we will not brook shortfalls or delays without it all turning political in near moments.

Still, there seems an important message here in the dangers of continuing to stick one's environmental head in the sand, whether governments, polluting businesses, the transportation industry or financial institutions.

Denial and delay, the stand-by attitudes for decades, do not seem the best approach, particularly as economic marketplaces are simultaneously moving toward electric cars and alternative fuels. In that regard, Joe Biden's move to suspend oil drilling leases in Alaskan waters seems of more than passing interest, to spur investment in alternative fuels.

The Shell Game

It's probably safe to assume that Shell and other oil companies have inside teams scurrying to assemble a load of competing plans; what we have for now is what they say publicly. The Shell Oil website is gussied up plenty with self-congratulatory plans and eventual targets for dealing with climate change, but there is little direct practical information about what the judicial orders will change operations, other than the transcript of their lawsuit response in court.

Shell basically had three answers: Appeal the ruling, which could take years, and is a process that has become the lifeblood of modern business politics; tinker around the edges of emission reduction in current production and refinement by 3%-6%, and invest in alternative energies.

The investment option pays off by positioning the company for future energy needs and also broadens the company's outputs, basically easing the standards by which the energy company is judged as being compliant. Shell already had said that global oil demand had likely reached a peak in 2019 and would slowly wane in the coming years.

Shell reports that putting into operation a second wind farm, working with a partner on a third, and is building a fourth solar park with more to come. It has built 200 fast-charging points around Europe and offering 100% green electricity for electric driving in the Netherlands, and underwriting home charging equipment throughout Europe through a subsidiary. It is developing hydrogen fueling stations for cars and buses that it promises will reduce industry emissions and provide new jobs. And it is developing biofuels for more sustainable freight transport.

Viewed in total, these are impressive statements that seem serious in purpose and somewhat fascinating to see. It is in the smaller print that we get to the technical difficulties, and the need to trim emissions at the edges rather than take it on head-on.

The goal here seems to be legal compliance rather than building a new world.

The issue seems to center on how fast all this is happening. Targets listed by the company point towards net-zero emissions by 2050. The court decision says make more happen sooner.

Of course, this case about Shell is in Europe rather than the United States, and there seems more desire on the part of governments to serve up heavier enforcement in Europe, particularly in the courts.

You can see similar plans from the U.S.-based company websites. It turns out that climate politics may be a bonanza for website public relations.

Nevertheless, the issues and outlined solutions are similar in the United States, where auto makers already are committing to electric vehicle production long before the American public will be ready to accept energy efficiency.

Lacking Will

"The science of climate change is clear, severe consequences are already visible, and rising generations will not tolerate inaction," reports The Washington Post. "Society will force businesses to face up to climate change sooner than they may imagine, and it is in their best interest to advocate aggressively for policies that make the forthcoming energy transition predictable, economically rational and effective."

From the difficult negotiations underway now in Washington over including climate projects in the Biden administration infrastructure proposals, that assessment seems a tad shy of reality itself. Too much political money, too much industry lobbying, too much bullheadedness about perceived liberal bias seems to say otherwise.

The arguments over strong carbon taxes, for example, go nowhere.

Without government sanctions or government investments, we're asking the marketplace to sort it all out – on their own profit-laden schedule. Meanwhile, the reported effects of climate change, from storms of increasing ferocity to rising coastal waters to measurable effects on agriculture and droughts are growing.