Earlier this month the High Court in London dismissed a climate-based lawsuit against the Board of Directors of Shell company for failure to act responsibly in strengthening the company’s energy transition strategy. The court in its ruling argued that the principal role of directors is to act in the best interests of the company and its members as a whole. ClientEarth being a minority shareholder claimed that the Directors’ roles extended to ensuring adopting strategies likely to meet the company’s targets to mitigate climate risks. The Court held that it would be unreasonable and unnecessary to require Directors to consider specific obligations while balancing different interests.  

In the suit, ClientEarth blamed Shell’s Board of Directors for its failure to move away from fossil fuels. Shell and Exxon Mobil are among the largest and richest oil companies in the world. They, however, have for the longest time denied the contribution of human activities and the impact of fossil fuels on climate change. Their research always concluded that there was not enough data leading to uncertainty about human activities in climate change. This denial resulted in brutal droughts, floods and extreme heat waves all over the world. The reluctance of such companies to transition from dense fossil-fuel based to clean renewable sources is brought about by the significant impact fossil fuels industries have on the economy. This industry is attributed to have led to the westernisation and growth of superpower economies such as the United States.

Fossil fuel industries in most countries such as the US are politically powerful with great lobby prowess. Concerns about oil and the environment have been constant tools in political campaigns and the fight in geopolitics. Russia’s President Vladimir Putin has tried to position Russia as the world’s major oil exporter to global markets such as Europe and China. The shale revolution yet again changed the US position in the world in terms of oil and gas export market competitiveness due to its access to the latest technology in fracking. The use of coal declined and the US started to impose energy policies that could lead the US to oil dependence following the energy crisis that arose between the Middle East and the US. Some of the policies were less stringent on oil and gas exploration and gas emissions. All these led to the US becoming a force to reckon with in energy security and infrastructure.

While in the West energy security was appreciated, other countries like Russia began to feel threatened, vulnerable and manipulated. China and US also began to develop a strategic rivalry with certain regulations being fronted to restrict oil exports to China.

Oil and natural gas rose in demand with the increase of human energy use for agriculture, transportation and manufacturing industries. However, these led to high greenhouse gas (GHG) emissions, if anything, the transition to natural gas exploration led to further dire consequences as gas emissions such as methane are equally as worse as carbon dioxide emissions. Carbon dioxide remains in the atmosphere for hundreds to thousands of years, methane takes a decade to break down.

Climate Action was necessary to reduce the impact of GHG emissions. The Paris Agreement, 2015 is a landmark binding agreement in the multilateral climate change process as it binds all nations to combat climate change and adapt to its effects. The Paris Agreement approaches the issue of climate action in a three-pronged method: finance, technology and capacity building. Climate finance is needed for mitigation because large-scale investments are required to significantly reduce emissions, it also speaks of the vision of fully realising technology development and transfer for both improving resilience to climate change and reducing GHG emissions. Regarding capacity building, the Paris Agreement places great emphasis on climate-related capacity-building for developing countries and requests all developed countries to enhance support for capacity-building actions in developing countries.

Entry into force of the Paris Agreement faced a lot of criticism especially politically. In the US President Obama tried introducing the Clean Power Plan that sought to set limits on carbon pollution from US power plants. This did not succeed and was replaced by less stringent environmental and climate regulations, Affordable Clean Energy Rule, under President Trump’s regime. The Rule established emission guidelines for states to use when developing plans to limit carbon dioxide at coal-fired electric generating units.

Nonetheless, since the entry into force of the Paris Agreement more countries, regions, cities and companies have been establishing carbon neutrality targets. Zero-carbon solutions are becoming competitive across economic sectors representing 25% of emissions. This trend is most noticeable in the power and transport sectors and has created many new business opportunities. Over the years there has been a slow transition from fossil fuels to renewable sources such as wind, water, geothermal and solar, credited to accelerated technological advancement. The energy transition requires supportive policies and regulations which are different in various parts of the world. Next week’s feature will look at how the energy transition from fossil fuels to renewable sources will play out and what it means for Kenya’s oil discovery in Turkana.