Article
Fossil Fuel Companies owe $209bn per year for Climate Damage - Study
A proposal has been made for fossil fuel companies to pay reparations totalling billions of dollars as compensation for the environmental harm caused by their greenhouse gas emissions.
For the first time, researchers have quantified the financial liability of major fossil fuel producers such as Saudi Aramco, ExxonMobil, Shell, BP, and Chevron. According to their study published in the journal One Earth, these 21 coal, oil, and gas companies should pay $209 billion per year to compensate for the projected climate change impacts and extreme weather events that are expected to occur worldwide between 2025 and 2050.
The study, led by Professor Marco Grasso from the University of Milan-Bicocca and Richard Heede from the Center for Climate Accountability, builds upon the Carbon Majors study conducted in 2013, which assessed the historical carbon emissions attributed to the fossil fuel industry. By combining data from the Carbon Majors database, which monitors emissions from major polluters, and a survey of 738 climate economists, the researchers estimate that global economic damages caused by climate change will reach $99 trillion between 2025 and 2050. Of this amount, they attribute a conservative $23.2 trillion annually in GDP losses to the coal, oil, and gas industry, with the remaining damages assigned to non-fossil fuel polluters, governments, and consumers. The study specifically focuses on the 21 largest fossil fuel companies, suggesting they should collectively pay $209 billion per year.
Saudi Aramco tops the list with an attributed annual payment of $43 billion, reflecting its significant emissions between 1988 and 2022. However, this amount is described as "substantial but low" compared to the company's $161 billion profit in the previous year. Exxon follows with an estimated annual reparation payment of $18 billion.
The study exempts four state-owned fossil fuel companies from low-income countries, namely National Iranian Oil Co, Coal India, Petroleos de Venezuela, and Algeria's Sonatrach. Additionally, the liability for companies in six middle-income countries is halved. This approach aims to avoid penalizing individuals in poorer countries who are more vulnerable to the impacts of climate change and have historically contributed less to greenhouse gas emissions.
The researchers acknowledge that the estimated sums do not encompass the full value of lost ecosystem services, extinctions, loss of human lives and livelihoods, and other aspects of well-being not captured by GDP. They emphasize that the proposed reparations are just the beginning and more comprehensive assessments of long-term climate damages, as well as mitigation and adaptation costs, are needed. The study takes into account emissions starting from 1988 when claims of scientific uncertainty regarding the consequences of carbon emissions became untenable.
While the researchers propose a reparations scheme, they do not view it as a substitute for climate finance provided by the United Nations (UN). However, given the insufficient funding from the UN's Green Climate Fund and the delayed implementation of the loss and damage fund agreed upon at COP 27, the researchers suggest that money from fossil fuel companies should complement existing mechanisms.
Lead author Marco Grasso hopes that the study will contribute to future discussions on directing payments toward affected parties, stating that the proposed framework for quantifying and attributing reparations to major carbon fuel producers is grounded in moral theory. Several nations vulnerable to climate change, including Barbados, have been advocating for polluting companies to bear the financial responsibility for loss and damage caused by climate change. While the researchers acknowledge that a reparations scheme would not absolve the industry from legal action, they suggest that companies paying reparations and demonstrating significant progress in reducing emissions could potentially defer or avoid being named as defendants in future lawsuits.
As an incentive for action, the researchers propose that companies could receive reduced payments if they promptly stop producing polluting fuels or achieve verified net-zero targets.
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92 w
This is what the ECOCIDE law should be tackling. It goes without saying that this culprits should pay for damage caused to the environment.
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95 w
Its high time for them to take responsibility and take action for sustainable future.
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95 w
This is a very interesting study, and I truly hope it will be taken into account by policymakers.
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95 w
I wonder if this will be top of the agenda in COP 28🙄 I'll not get my hope's up...
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95 w
Accelerating the transition to net zero greenhouse gas (GHG) emissions is urgently required to contain the risks of climate change.