Climate goals should be imposed on all companies and consumers, not in isolation, writes Jan Paul van Soest.
The climate lawsuit against Shell set tongues wagging. The court ruled that Shell must accelerate its global emissions reduction by 2030. Images of the cheering claimants went around the world. There are many similar cases going on worldwide, and it is understandable that they are being filed. Companies could and can make private profits thanks to the free use of collective resources – the commons, our natural capital, such as raw materials, ecosystems and a stable climate.
The judge is now calling such a private company to order. Shell's plans do not fit into a global transition path to a maximum of 2 degrees of warming, the judge finds. According to the ruling, the company has its own responsibility to comply with this, because Shell emissions due to climate change can endanger Dutch citizens. This threatens a violation of essential human rights. That is why the judge imposes on Shell what the company should have done if it had paid more attention to the world of tomorrow. The judge orders Shell to achieve 45 percent fewer emissions by 2030 compared to 2019.
I have been emphasizing the urgency of the climate issue for more than twenty years, and analyzed it in the book, for example The Doubt Brigade from 2014 the opposing forces. Still, when I read the verdict, I felt a sense of serious discomfort.
That's because I have a fundamentally different view than the court on how we view our lives global commons should decide, and who bears the main moral and formal responsibility for this. The court leaves the moral judgment on the question of how large the greenhouse gas emissions should be with the private company, but adds that the company should be more concerned with social considerations.
Irreversible damage
De commonsreasoning follows a different track. It is important that the community determines the level to which resources and ecosystems may be used or taxed. That is the 'usage space', and in climate terms that is: the carbon budget. If that runs out, irreversible damage can occur.
It is equally up to the community to determine the distribution or distribution principles for the usable space. Conversely, it is a recipe for misery as users commons determine their own usage space themselves: this poses the known risk of tragedy of the commons: excessive use that damages the natural capital itself.
Sustainable management of the commons asks for rules that ensure that every user of that commons knows where he stands, and who keeps the total use within the limits set by the community. That is better and more effective than not or hardly agreeing on rules for use and hoping that everyone voluntarily limits their use on the basis of individual morals. That is like not setting a speed limit but making a moral appeal to motorists never to drive faster than 90 km/h.
Flexible distribution
Successive global climate agreements have paved the way towards shared responsibility for the climate, with states as representatives of the world community. The usable space is demarcated based on the goal of limiting global warming to 2 degrees, preferably 1,5 degrees. The resulting carbon budget is divided among all countries in consultation between the states. Various reduction targets have been agreed for the countries, based on a mixture of considerations such as acquired rights, fair distribution of benefits and burdens, economic efficiency, and the various options for contributing to the solution.
It is then up to the countries, or their partnerships such as the EU, to provide national carbon budgets with policy instruments in such a way that companies, consumers and other carbon emitters on their territory are sufficiently incentivized or forced to in their entirety to stay within that carbon budget.
Numerous scenario and model studies have also shown that it is economically efficient if such a carbon budget is 'distributed' flexibly. This means that different companies and industries face completely different objectives. Imposing a goal for the entire system on a part, a sector or a company, as the court does with Shell, violates the insights from environmental economics. It offers space to other players in the global energy system: they will happily draw up the carbon budget that Shell now has to forego.
There are therefore not only fundamental comments to be made about this division of the usable space, the outcome is also ineffective and inefficient.
Now that the court's ruling has been issued, it is time for all parties to ask themselves whether this is the route we want to take. Governments will have to realize that by insufficient climate policy they open the door to legal battles over climate change commons in civil law. Shouldn't we rather decide as a community, represented by governments, about the usable space and its distribution?
Companies will adopt a more principled view of their role in the commons and decision-making in the most desirable manner. And civil society organizations will have to ask themselves whether, if we look beyond the symbolic success of the lawsuit, climate protection will ultimately be served by it.
