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Fossil Fuel Companies Owe $5.4 Trillion In Reparations, Study Says

Above Photo: An oil refinery next to houses in Wilmington, California, where an extremely high percentage of residents have suffered from cancer. Citizen of the Planet / Education Images / Universal Images Group via Getty Images.

‘Polluters Can No Longer Hide From Their Crimes.’

The biggest fossil fuel companies in the world owe at least $209 billion in yearly climate reparations to communities that suffered the brunt of the calamities caused by the climate crisis, a new study has concluded.

While substantial, the researchers consider theirs to be a conservative cost estimate, as it did not put a price tag on the loss of lives or income, additional wellbeing considerations or extinction of species and other types of biodiversity depletion not reflected in gross domestic product calculations, reported The Guardian.

The study said the 21 biggest polluters have collectively caused $5.4 trillion in sea level rise, drought, wildfires, glacial melt and other climate-related disasters. They include ExxonMobil, Chevron, Shell, BP, TotalEnergies and Saudi Arabia’s state oil company, Saudi Aramco.

“Human-caused climate change has long been acknowledged as essentially an ethical issue that threatens humanity and ravages the planet. While the Global North’s historical carbon emissions have exceeded their fair share of the planetary boundary by an estimated 92%, the impacts of climate breakdown fall [disproportionately] on the Global South, which is responsible for a trivial share — Africa, Asia, and Latin America contribute only 8% — of excess emissions,” the authors wrote in their analysis.

The research is the first time the economic burden of companies that have made exorbitant profits from climate-damaging fossil fuels has been assessed.

The paper, “Time to pay the piper: Fossil fuel companies’ reparations for climate damages,” was published in the journal One Earth.

The researchers said fossil fuel companies’ history of misinformation and climate denial has stymied global efforts to mitigate the climate crisis and that they have a “moral responsibility” to right the climate damages they have caused with their legacy of fossil fuels and greenhouse gas emissions, Climate Change News reported.

The argument presented by the paper calls on the fossil fuel companies to use some of the “tainted wealth” they have accumulated to compensate those who have suffered most, reported The Guardian.

“Fossil fuel companies have a moral responsibility to affected parties for climate harm and have a duty to rectify such harm. Moral theory and common sense — as well as international environmental agreements through the polluter pays principle embodied in article 16 of the 1992 Rio Declaration, which calls for the ‘internalization of environmental costs’ — demand that historical wrongdoing must be rectified,” the authors wrote in the study.

The authors used the carbon majors database as the platform for their study. The database has been keeping track of the emissions of gas and oil companies since 1988, which was the year the Intergovernmental Panel on Climate Change (IPCC) was established. Following the foundation of the IPCC, claims of scientific uncertainty concerning the climate crisis no longer held water.

“As increasingly devastating storms, floods and sea level rise bring misery to millions of people every day, questions around reparations have come to the fore,” said Harjeet Singh, head of global political strategy at Climate Action Network International, a group of almost 2,000 civil society groups across 130 countries, as The Guardian reported. “This new report puts the numbers on the table – polluters can no longer hide from their crimes against humanity and nature.”

Economic damages from the climate crisis worldwide from 2025 to 2050 are projected to be about $99 trillion. More than 700 climate economists have said that emissions from fossil fuels are the cause of $69.6 trillion of that amount.

According to the study, about a third of these predicted climate costs can be attributed to governments, a third to the fossil fuel industry worldwide and a third to consumers, which means the fossil fuel industry is responsible for at least $893 billion annually, or $23.2 trillion total, for the next quarter-century.

About 50 percent of global warming to date has occurred since 1988, when James Hansen, a NASA scientist, testified before the U.S. Senate on humanity’s role in climate change.

It is a widely held view that the richest one percent of the global population is responsible for double the greenhouse gas emissions of the poorest half of the world, who suffer the lion’s share of climate harms.

According to the study, if the largest fossil fuel corporations were made to pay reparations, Saudi Aramco, which produced the most emissions of any state-owned company, would owe $43 billion per year, or a little more than a quarter of its profits from last year. ExxonMobil, which had profits of $56 billion last year, would be liable for $18 billion annually. BP and Shell, which made $68 billion combined in 2022, would have to pay $30.8 billion each year.

Four companies from low-income countries were exempt, and the liability for six fossil fuels companies in middle-income countries was cut in half under the moral reasoning that it would allow them to be able to afford more in taxes in order to contribute in other forward-thinking ways.

The proposed framework for quantifying and attributing reparations to major carbon fuel producers is grounded in moral theory and provides a starting point for discussion of the financial duty owed by the fossil fuel industry to climate victims,” said Marco Grasso, a professor at the University of Milano-Bicocca, who was a co-author of the study, as The Guardian reported.

Erika Lennon, a senior attorney at the Center for International Environmental Law’s energy and climate program, said the framework could also be useful for courts in ascribing responsibility for these climate harms and in assessing damages.

“The case is clear for oil and gas companies to pay reparations for the harm their fossil fuels have caused. Not only has their dirty energy wrecked the climate, they have [in many cases] spent millions of dollars on lobbying and misinformation to prevent climate action,” said Mohamed Adow, director of Power Shift Africa, a climate and energy think tank based in Kenya, as reported by The Guardian.

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