It has been a turbulent year for the oil and gas giant Shell. Last May, Dutch courts ruled that
Shell must drastically reduce its carbon emissions.
In October, ABP, a major shareholder, divested from the company. The following month, the firm announced plans to move its headquarters from the Hague to London and drop its iconic prefix, ‘Royal Dutch’ (the company is now just Shell plc).
In recent weeks, it has come under fire for its mammoth 14-fold increase in quarterly profits, having made $16.3bn (£12bn) pre-tax profit in the last quarter of 2021, while gas prices surged across Europe.
Now, as Shell presents itself as a global leader in the green energy transition, it is still actively investing in new oil and gas drilling. But that is not the company’s only problem For a start, Shell’s profit-maximising business model is deeply undemocratic, benefitting top management and shareholders at the expense of communities around the world.
The firm has also not reckoned with its colonial past and severe human rights violations, while its privileged access and influence over political decision-making processes are an obstacle towards building a democratic and green energy system. And, finally, its investment in ‘innovation’ is primarily dependent on gas and carbon capture, which keeps the world locked into a fossil fuel future.
While many agree that ending fossil fuel extraction is necessary, questions remain over how to dismantle oil and gas giants such as Shell. These companies will certainly not stop polluting of their own volition – so governments and civil society must take strategic action to force them to do so.
Can this be done via carbon pricing, bankruptcy, strategic litigation or nationalisation?
When assessing these mechanisms, it’s critical to consider how – and if – they would reckon with the corporation’s colonial legacy and safeguard labour rights to build a fairer and
regenerative energy system. Carbon pricing On an international scale, carbon pricing is the
main policy incentivising big corporations to become carbon neutral.
With this approach, greenhouse gas emissions are captured in a price, which polluting companies can either choose to pay in order to continue emitting carbon or they can reduce their emissions.
Although some of these mechanisms can yield incremental improvement, there’s no
evidence that they can produce the transformational change that we need. Two and a half
decades after the Kyoto Protocol established the first carbon markets, Shell is still profiting
from expensive carbon offsetting and storage programs that distract from necessary
emissions reductions. Together with promoting net-zero as the primary climate target, Shell
has effectively delayed the implementation of more radical climate action.
An energy transition powered by carbon pricing also does not break with the current profit-
maximisation model of such corporations, which prioritises shareholders’ interests over
people and the planet. Nor does it prevent dubious actions to secure access to energy
resources, such as illegal land grabs of Indigenous territories. As such, the best-expected
outcome from carbon pricing is a green capitalist Shell that might produce solar energy but
thrives on the same anti-democratic and colonial practices it does today.
How about pushing Shell into bankruptcy?
While Shell is not close to filing bankruptcy, and indeed is expected to make profits of £23.6bn this financial year, bold climate action by governments – in the form of cutting subsidies and closing off tax havens – and more of its big investors divesting their shares, might bring the corporation closer to collapse.
However, these initiatives carry significant risks. Economists suggest that, at this point, bankrupting Shell might be counterproductive, leading to the corporation selling its assets to other oil and gas giants instead of decommissioning its oil and gas infrastructure. Moreover, firms often exploit legislative loopholes in bankruptcy legislation to shed labour and clean-up obligations.
Anti-Shell campaigns therefore need to find ways to financially mandate the company to disburse reparations to the communities directly destroyed by extraction, prevent the corporation from selling or spinning off assets as part of a restructuring process, and guarantee an effective net-reduction in CO2 emissions.
Will strategic litigation work? More than 1,500 climate- related court cases have been brought worldwide, with some extraordinary victories booked against Shell in the past year.
The groundbreaking climate ruling in a case brought by Friends of the Earth Netherlands obliged Shell to drastically reduce its future carbon emissions, even though it moved its headquarters to the UK. The ruling underlined the transformative potential of strategic litigation and its ability to shift the public discourse towards matters of corporate responsibility to act on the climate crisis.
However, this process is praising, long and expensive. It also remains to see how the actual
court cases in the Netherlands or the United Kingdom can change the power of
communities affected by the global south. Public estate according to the shell, which
knowingly deceived the public from the connection between greenhouse gas emissions and
global warming, the future of the company must be defined democratically.Surprisingly, however, it is not a widely discussed idea.
Recent proposals indicate that the nationalization of energy systems (employed entitled to a national government) could enable citizens to democratically control their livelihood, allowing a transition only for fossil fuel workers and cleansing the in the extraction front lines.
In view of this, that the three quarters of world oil reserves are already in states and this has not led to a more just and more sustainable approach to energy production if the Bank of England should acquire a 51% stake of The now British multinational, would not be enough to guarantee a fair transition.
This nationalization does not necessarily lead to a repair process and a computational
contribution with colonial attempts and extractive damage. In fact, some experts argue that
nationalization instead of leading to the deepest justice could feed colonialism to
colonialism by feeding on corruption and aggravated historical inequalities. Therefore,
nationalization is not enough, but it must be coupled with democratic control and
There are no silver balls for the elimination shell. We need a combination of strategies. Although they are not perfect, strategic legal disputes and democratic public properties are important to break the earnings maximization model from the shells and manage the specific decline of the company. Shell workers can combine fossil fuel infrastructure and rear assets can be converted into a fund to finance air conditioning and adjustments in the global south.
Crucially we need internal social movements arranged in solidarity with affected communities around the world. Shell could believe that her empire is too big to fall, but also the absolutist monarchs in a moment. But could some of these proposals above show it isn’t as mighty.