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Milieudefensie director Donald Pols, holding a copy of the verdict, celebrates the outcome in the court case of Milieudefensie, the Dutch arm of the Friends of the Earth environmental organization, against Shell in The Hague, Netherlands, May 26, 2021.Peter Dejong/The Associated Press

Big Oil’s day of reckoning allegedly came this week when, within hours of one another, three of the world’s biggest oil companies got spanked for their roles in heating the planet.

On Wednesday morning, a court in The Hague ruled that mighty Royal Dutch Shell must accelerate its planned emission cuts to take them down 45 per cent from 2019 levels by 2030. Later in the day, shareholders backed the long-shot effort of Engine No. 1, a small activist hedge fund, to nominate two climate activists for the board of ExxonMobil. About the same time, Chevron shareholders voted in favour of a proposal to cut emissions generated by its oil and gas products.

The trio of defeats were billed by the media, environmental groups and the expanding contingent of investors guided by environmental, social and governance (ESG) principles as game changers in the fight to get Big Oil to clean up its act for the sake of nature and humanity.

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In a note, Moody’s Investors Service said: “These actions represent a substantial shift in the landscape for oil companies [and] further underscore the intensifying pressure on oil companies to decarbonize.”

As much as I would love to see oil companies fade rapidly from the energy landscape, I don’t buy the theory that this week’s events pose an enormous threat to their existence or even to their central business models. Oil and gas and all their derivative products, from fertilizer to plastics, remain legal and in great demand. Big Tobacco is still alive and well even though smoking cigarettes is a proven killer.

And, sadly, there is no credible scenario that would see oil and gas demand – and therefore emissions – cut by almost half in the next decade, as the Dutch court ordered Shell to do.

That court case, brought by Friends of the Earth and thousands of Dutch citizens, is both remarkable and more of the same.

It is remarkable because it is the first time a judge has, in effect, ordered a company to comply with the 2015 Paris Agreement on climate change, which seeks to limit the rise in global average temperatures to two degrees over preindustrial levels – ideally 1.5 degrees. Courts normally don’t define corporate strategy, but they have in this case (Shell said it will appeal the ruling).

It is more of the same because courts around the world are clogged with lawsuits seeking relief and behaviour changes from big polluters. Reuters reported that almost 1,400 lawsuits have been filed in the United States alone, many from state and local governments, according to the Sabin Center for Climate Change Law at Columbia Law School.

They have been largely ineffective and seem to be treated by Big Oil as minor diversions from their primary role of making enough fuel to keep 273 million U.S. cars, trucks, buses and motorcycles rolling. Hundreds of other go-nowhere lawsuits have been filed in other countries, including Britain and Canada, where WWF Canada is taking legal action to try to stop oil and gas exploration in offshore Newfoundland and Labrador.

Big Oil must believe it faces a conspiracy to put it out of business. Earlier this month, the International Energy Agency said that all new oil, gas and coal developments must stop immediately if the world is to meet net-zero emission goals by 2050. ESG funds are demanding lower emissions, partly because they see radical climate change as a financial risk as much as an environmental one. Now the courts are in the game, with the Dutch court striking the first blow.

On the other side of the ledger is demand. Renewable energy is still a bit player, globally speaking. In the United States, renewables account for only 12 per cent of total energy consumption. While birth rates are dropping everywhere, the global population is still expected to rise by two billion, to about 9.7 billion, by 2050. Energy demand will rise accordingly and much of it will have to come from fossil fuels, which are relatively cheap and fast to produce and deploy. Most of the developing world doesn’t have the money or the expertise to build fleets of nuclear generating stations or huge hydro dams.

The history of human development is one of ever-rising per-capita energy consumption. The Oxford Institute for Energy Studies calculated a decade ago that per-capita energy consumption had climbed by a factor of eight since the Industrial Revolution. With large swaths of the planet, including sub-Saharan Africa, moving up the value chain, that figure may keep rising. Renewables are coming on strong but seem unlikely to meet all the energy needs of the future.

To be sure, Big Oil suffered a setback this week. It is coming under more legal, regulatory, financial and moral pressure to spew out less carbon, and that’s a good thing. But to say that Big Oil has had its day is wildly premature. Consumers usually get what they want and they still want oil – lots of it.

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