As world leaders wrangle over how much industrialised countries should pay vulnerable developing nations to adapt to climate meltdown, a new study has for the first time put a dollar value on the environmental destruction wrought by the world’s biggest fossil fuel companies.
Man-made climate change will cost US$99 trillion in loss and damage by 2100 as the planet heats up, and the fossil fuel industry is responsible for US$70 trillion of the wreckage from melting glaciers, wildfires and other climate-related calamities, a study by United States-based research group Climate Accountability Institute has calculated.
If firms such as British oil major Shell, United States-based ExxonMobil and Middle Eastern giant Saudi Aramco were held accountable for their climate impact, they should pay US$23.2 trillion in reparations for the loss and damage projected between 2025 and mid-century – or $893 billion a year.
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The reparations were calculated according to the historical responsibility for the greenhouse gas emissions of the world’s 21 biggest fossil fuels firms, and the tactics they have used to stall the energy transition since 1988 – the year a clear link was made between fossil fuels and climate change and the Intergovernmental Panel on Climate Change was set up to address the issue.
Fossil fuel firms with the largest share of global emissions, 1988-2022
Saudi Aramco - Saudi Arabia
Gazprom - Russia
National Iranian Oil Co
Coal India - India
ExxonMobil - US
Shell - UK
BP - UK
PetroChina - China
Chevron - US
Abu Dhabi National Oil Co - UAE
Peabody Energy - US
Petroleos de Venezuela
Sonatrach - Algeria
TotalEnergies - France
Kuwait Petroleum Corp
Rosneft - Russia
Iraq National Oil Co
ConocoPhillips - US
Petrobras - Brazil
BHP Billiton - Australia
Source: Grasso and Heede, Time to pay the piper: Fossil fuel companies’ reparations for climate damages
The proposed reparations scheme would complement the loss and damage climate finance fund negotiated for climate-vulnerable countries at the COP27 talks last November, and form a working framework to inform future efforts to direct payments to those worst affected by climate breakdown, the study suggested.
The report’s authors, Marco Grasso and Richard Heede, said that the reparations estimates are conservative, as they do not factor in losses felt by climate-vulnerable communities, climate-related health and wellbeing costs, or the economic value of species extinction and biodiversity loss.
The companies featured in the report could afford the estimated climate liabilities, even though they run into trillions of dollars.
ExxonMobil would be liable for $18 billion in annual climate reparations, but the world’s largest private-sector energy major made a record annual net profit of $56 billion in 2022 after Russia’s invasion of Ukraine turbo-charged oil prices.
The 2022 profits made by the world’s largest oil company, state-owned Saudi Aramco, are four times the company’s calculated climate reparations, of $43 billion. Saudi Aramco earned $160 billion in net income last year – more than any firm in corporate history.
The study exempted four companies in low-income countries which historically have borne less responsibility for climate change, including India’s state-owned coal firm Coal India, which ranks forth in the list of companies with the highest share of emissions since 1988.
Some companies, such as PetroChina and Russia’s Gazprom, should pay half reparations as China and Russian are considered upper-middle income countries and less responsible for climate change than wealthier nations.
The due climate payments would decrease over time to reflect the firms’ changing business models as they pivot towards renewable energy.
In response to the study, environmental campaign group Greenpeace called on fossil fuel companies to acknowledge their role in historical carbon emissions, stop expanding extraction operations and cough up for the economic and non-economic loss and damages caused by climate wreckage.
The study emerges a year after the Philippines’ Commission on Human Rights found that there are legal grounds to hold carbon-intensive corporations to account for climate disasters such as typhoon Haiyan, which caused the Philippines US$3 billion in economic damage and left more than 6,300 dead in 2013.
The research also comes less than a year after another study found that while 60 per cent of the communications of five of the world’s biggest oil and gas firms talk about sustainability, only 12 per cent of their investments are going into renewable energy.