CLIMATE CHANGE: 

“DIRECT COMPENSATIONS ARE NECESSARY TO REINVEST IN RENEWABLE ENERGY AND EFFICIENCY”

 

Fossil Fuel Companies Owe Climate Repairs of $209 Billion a Year, Study Finds One Earth’s groundbreaking analysis is the first to quantify the economic burden caused by individual companies

 

FINES

 

The world’s major fossil fuel companies owe at least $209 billion in annual climate reparations to compensate communities most harmed by their polluting business and decades of lies, a new study estimates.

Well-known BP, Shell, ExxonMobil, Total, Saudi Arabia’s state oil company and Chevron are among the 21 biggest polluters responsible for $5.4 trillion (£4.3 trillion) in droughts, wildfires, rising sea levels. sea ​​and melting glaciers among other climate catastrophes expected between 2025 and 2050, according to a groundbreaking analysis published in the magazine One Earth.

 

It is the first time researchers have quantified the economic burden caused by individual companies that have extracted, and continue to extract, wealth from planet-warming fossil fuels.

 

Amid a growing debate over who should bear the economic cost of the climate crisis, the document, titled Time to Pay the Piper, makes a moral case for the carbon corporations most responsible for climate collapse to use some of their “tainted wealth” to compensate victims.

The study finds this to be a substantial but conservative price tag, as the methodology excludes the economic value of lives and livelihoods lost, species extinction and other biodiversity losses, as well as other components of well-being that are not included in GDP.

 

“This is just the tip of the iceberg of long-term climate damages, mitigation and adaptation costs.” 

 

The study was based on the Carbon Majors database, which records emissions from individual oil, gas and coal companies since 1988, the year the Intergovernmental Panel on Climate Change (IPCC) was established, and industry claims on scientific uncertainty about the climate crisis became unsustainable.

 

TECHNOLOGY: POLLUTION PAYS

 

The contribution of technology with increasingly large solutions that meet the needs gives rise to the moment to install a single price with an international reference, so that its disbursement is directional to the market needs in order to eliminate the penalties and call them direct investments. projects within the portfolio of offers, this will benefit companies in transition to improve their emissions and have an incentive, along with gains in guarantees of energy supplies in their production chain and thus increase their efficiency. 

Technologies like those from Globant that come to collaborate with companies to modify old bad habits and monitor the performance of established emissions reduction plans are an example to follow the path of transparency and moving away all subjectivity from greenwashing.

 

The creation of an evidence-based “polluter pays” price has been welcomed as an important step towards achieving climate justice for communities and countries that have contributed the least, but are losing the most as The weather is falling apart.

 

“As increasingly devastating storms, floods and sea level rise cause misery for millions of people every day, questions about reparations have come to the forefront.”  The creation of an evidence-based “polluter pays” price has been welcomed as an important step towards achieving climate justice for communities and countries that have contributed the least, but are losing the most as The weather is falling apart.

 

“As increasingly devastating storms, floods and rising sea levels cause misery for millions of people every day, questions about reparations have come to the fore,” said Harjeet Singh, head of global political strategy. of Climate Action Network International, a group of almost 2,000 people.   civil society groups in 130 countries.

 

“This new report puts the numbers on the table: polluters can no longer hide from their crimes against humanity and nature.”

 

SIMULTANEOUS REACTIONS AROUND THE WORLD

 

In the painfully slow world of international climate talks, the question of who should pay to address climate impacts has predominantly focused on the role and responsibility of nation states. 

 

This view is widespread, as the richest 1% of the world’s population is responsible for twice the amount of greenhouse gasses as the world’s poorest 50%, who suffer the brunt of the damage.

So far, rich countries in the global north are seen as having promised too little, and delivered even less, for climate adaptation efforts in poorer countries.

 

REPARATIVE DEMANDS

 

Demands for reparations have been increasing as the planet’s warming climate inflicts death and destruction at an increasingly rapid pace.

 

COP27: 

 

Is it correct to speak of ‘reparations’?

Last year at the UN COP27 summit, after decades of pressure from the climate justice movement, states agreed to establish a “loss and damage” financing fund that should eventually partially compensate poor countries for the irreparable and inevitable economic and non-economic costs of extreme damages.  slow-onset weather events and climate disasters, such as rising sea levels and melting glaciers.

 

CRUCIAL AGREEMENT 

 

The deal in Egypt came after unprecedented floods left a third of Pakistan underwater, drought left 37 million people in the Horn of Africa facing hunger and famine, and heat waves across Europe are likely to have caused more than 20,000 deaths.

 

The new study, which reframes the international climate finance debate by focusing on the financial responsibility of fossil fuel companies for climate damage, could help move the dial in negotiations over loss and damage, according to Margaretha Wewerinke-Singh, a professor of sustainability law associate.  at the University of Amsterdam.

 

“This evidence and the underlying methodology could provide policymakers and negotiators with a concrete framework for assigning responsibility for climate-related costs to the world’s largest historical polluters.” Wewerinke-Singh said.

 

DAMAGES THAT CAN BE USED AS INVESTMENTS AND CHANGE THE STATUS OF THE COMPROMISED COMPANIES

 

This means that the fined companies can revert by financing real and current projects, to channel their debts into real assets that will provide scalability of renewables to the region and even to the companies themselves by closing an exception deal for advance purchase. 

 

HISTORY

 

Overall, the global economic damages expected from the climate crisis are estimated at $99 trillion between 2025 and 2050, of which fossil fuel emissions are responsible for $69.6 trillion, according to more than 700 climate economists.

The study conservatively attributes one-third of these future climate costs to the global fossil fuel industry, and one-third to governments and consumers.

 

SYNTHESIS:

This means the global fossil fuel industry is to blame for at least $23.2 trillion of climate-related economic losses expected over the next 25 years, or $893 billion annually.

The price of climate damages owed by the worst 21 oil, gas and coal producers is based on each company’s operations and product-related emissions since 1988, and the economic situation of their home countries. 

 

About half of the warming experienced so far has occurred since 1988, when NASA scientist James Hansen testified about the human role in climate change in front of the US Senate.

 

CONCLUSION:

Companies could pay for repairs:

¹.  Saudi Aramco, the state-owned company with the largest emissions, would owe $43 billion annually, equivalent to just over a quarter of its 2022 profits.

².  ExxonMobil would owe $18 billion in annual repairs, compared with record profits of $56 billion in 2022.

The British oil giants 

³.  Shell and 

⁴.  BP, which together earned $68 billion for shareholders last year, would be collectively responsible for $30.8 billion in annual climate repairs, according to the study.

 

NOTE 1: The studies exempt four companies from low-income countries (India, Iran, Algeria and Venezuela) and reduce by half the liability of six producers from middle-income countries (Russia, China, Mexico, Brazil and Iraq), using the moral argument that this will allow them to pay more taxes and make other progressive contributions.

 

The proposed framework for quantifying and attributing reparations to major carbon fuel producers is based on moral theory and provides a starting point for implementing the financial duty owed by the fossil fuel industry to climate victims, to In this way, companies obtain a real status of truly committed to mitigating climate change.

 

As climate litigation progresses in jurisdictions around the world, it is hoped that evidence-based methodology can also help courts attribute blame and calculate damages.

 

CHANGE OF STATUS: FROM DEBT TO INVESTMENT

 

It is a very important complement and not a substitute for climate financing, it is another tool for environmental policy spaces in which solutions are discussed, but it is clear that this measure would help fill the enormous gap [left] by the states to cover the scale and costs of climate damage, but particularly of supporting renewables in growth for a faster transition.

 

The idea is not to find blame or hold fossil fuel companies responsible for their trillions of dollars in climate impacts, but rather to show their commitment by cooperating in the energy transition with their contributions and without fines. 

 

NOTE 2: Fossil fuel companies named in the study provided comments. 

Shell said: “The energy system is the result of society’s choices about everything from transportation to land use over many decades.”

 

Tackling a challenge as big as climate change requires unprecedented collaboration in which everyone has a role to play. 

For our part, we are reducing our own emissions and working closely with our customers to help them reduce theirs.

 

NOTE 3: Fossil fuels received £20 billion more UK support than renewables since 2015

 

AUTHOR:

DIEGO BALVERDE

ECONOMIST

EUROPEAN CENTRAL BANK