Dutch Court Orders the Government to Reduce Greenhouse Gas Emissions
On June 24, 2015, the Hague District Court ruled that the government of the Netherlands must reduce the country's greenhouse gas emissions by 25 percent compared to 1990 levels by 2020.
The Urgenda Foundation, a nonprofit organization focused on preventing climate change, brought suit against the Netherlands on its own behalf and on behalf of almost 900 individuals, arguing that the Dutch government has a legal duty to protect its citizens from climate change. In its suit, Urgenda claimed that the government's climate policy was inadequate and breached its duty of care to Urgenda, the other plaintiffs, and Dutch society generally.
In addition, Urgenda argued that, considering the Netherland's high greenhouse gas emissions, the country was unlawfully exposing the international community to the risk of climate change and attendant damage to human health and the environment. On these grounds, Urgenda sought a declaratory judgment that (i) greenhouses gases, to which the Netherlands is one of the largest contributors in the world, are causing damaging temperature increases that threaten humans and the environment; and (ii) the government of the Netherlands is liable for the country's unlawful volume of emissions if it does not reduce national annual greenhouse gas emissions by 25 percent compared to 1990 levels by 2020 or, alternatively, by 40 percent by 2030. Urgenda also asked the court to order the government of the Netherlands to make these reductions.
In response, the Netherlands first argued that Urgenda did not have standing because it was bringing the action in the name of current and future generations of individuals in other countries and because the country had not taken any unlawful actions toward Urgenda. The Netherlands agreed that global temperature rise must be constrained but argued that (i) its current and future climate policies, including international agreements and European Union standards and targets, were aimed at meeting this objective; (ii) it had no legal obligation to take the specific measures requested by Urgenda; (iii) Urgenda's claims were inimical to the Netherlands' discretionary power; and (iv) Urgenda's claims interfered with the Netherlands' system of separation of powers and its international negotiating position.
The court agreed with Urgenda. It found that Urgenda had standing to bring the action on its own behalf because, under Dutch law, an environmental organization has standing to bring a claim to protect the environment. The court, however, concluded that it had insufficient detail regarding the individual plaintiffs and left the question of their standing unanswered. Substantively, the court ruled that (i) the government of the Netherlands has a duty of care to mitigate the impact of climate change; (ii) the Netherlands target of 14 to 17 percent reduction by 2020 is below the standard that has been scientifically accepted for harm reduction and would cause harm to humans and the environment, and that such harm would be attributable to the Netherlands; and (iii) reductions of 25 percent compared to 1990 levels by 2020 are within the Netherlands' discretionary authority and would not be burdensome. Accordingly, the court ordered the government to reduce the nation's greenhouse gas emissions by 25 percent compared to 1990 levels by 2020.
The French National Low-Carbon Strategy: A Step Toward COP 21
In the context of the COP 21, the French Parliament adopted, on July 22, 2015, the Energy Transition Bill (the "Bill"), which is currently being reviewed by the French Constitutional Court prior to its publication in the Official Gazette. In essence, the Bill provides for a national low-carbon strategy, as an implementation of the decision 1/COP 16 (Cancun 2010) and of the European Regulation (525/2013) "on a mechanism for monitoring and reporting greenhouse gas emissions and for reporting other information at national and Union level relevant to climate change."
The strategy, as defined by Article 48 of the Energy Transition Bill, will allocate carbon budgets (i.e., greenhouse gas emission thresholds) between key sectors and will provide sectoral and national guidelines to meet the defined targets. This strategy will cover, in particular, sectors that are not included in the European Union's Emission Trading System. The implementing decrees will define both carbon budgets and a roadmap. The roadmap will take into account French international and European undertakings as well as the competitiveness issues in sectors facing international competition. In addition, governments will have to assess the potential social, economical, and environmental impacts of these new tools.
The Bill will add new reporting obligations for institutional investors. To date, institutional investors are required to indicate in their annual report how their investment policies include social and environmental dimensions. Pursuant to the Bill, institutional investors will have to demonstrate how these policies contribute to energy transition and to mention their efforts to meet the objectives of limiting global warming. If their contribution is below the "indicative targets"—determined in keeping with the low-carbon strategy—institutional investors will have to justify in their annual report the reasons for their insufficient contribution. Moreover, institutional investors will have to provide data on their exposure to climate risks.
Finally, the Bill will extend the reporting obligations applicable to certain types of companies. Public companies will have to provide in their annual report a list of measures implemented to mitigate the climate-change-related financial risks and to respect the national low-carbon strategy. Similarly, all limited liability companies whose turnover will exceed the threshold (fixed by decree) will have to include in their business report the impact on climate change resulting from the use of the services and goods they provide, along with the existing obligations to assess the social and environmental impacts of their activities. These new obligations will apply not only to limited liability parent companies but also to their subsidiaries and controlled companies.