A new study suggests fossil fuel companies should also pay for the effects of the climate crisis — and the bill is astronomical. Researchers looked at greenhouse data on emissions linked to the 21 most polluting companies and found they owe $209 billion in annual reparations for predicted climate impacts.
Richard Hedde, director of the Climate Accountability Institute, a research group focused on fossil fuel companies’ emissions, and Marco Grasso, from the University of Milan-Bicocca, used a survey of over 700 economists to estimate the future economic damage of the climate crisis — a figure that reaches $99 trillion between 2025 and 2050.
Of this total, the researchers attribute $23.2 trillion per year to the entire coal, oil and gas industry. They then focused on the 21 largest fossil fuel companies and estimated they owe collectively $209 billion annually. The largest amount corresponds to Saudi Aramco, Saudi Arabia’s oil company, responsible for $1.1 trillion in total or $42.7 billion per year.
Other big players follow in the ranking, such as Russia’s state-owned Gazprom, ExxonMobil, Shell, BP and Chevron. The study didn’t include four state-owned companies in low-income countries (Sonatrach from Algeria, National Iranian Oil, Coal India and PDVSA from Venezuela) and halved the liability of companies in six middle-income countries.
“Fossil fuel producers contributed to climate harm through their operational and product emissions and have a documented history of climate denial,” the researchers wrote in the journal One Earth. “They are complicit in slowing down or defeating climate legislation and must be held accountable for climate harm by paying reparations.”
The role of fossil fuel companies
Fossil fuel companies are not only responsible for producing and selling products that have caused the climate crisis, the researchers argue, but to make matters worse the executives at these companies intentionally delayed efforts to phase out fossil fuels. “They successfully shaped the public narrative on climate change through disinformation,” they write in the paper.
The study looked at emissions starting from 1998 as that’s when “claims of scientific uncertainty about the consequences of carbon emissions [became] untenable”, they said, as when the Intergovernmental Panel on Climate Change (IPCC) was created. The figures are only the tip of the iceberg as they don’t consider aspects of well-being not captured by GDP, they said.
The numbers might seem big, but the companies in question can actually afford this, as The Guardian explains. Saudi Aramco would owe $43 billion per year, which is equivalent to a quarter of its profits last year. ExxonMobil would owe $18 billion, less than half of its profits last year, while BP would owe $30.8 billion, also less than half of its profits in 2022.
“Payment of reparations can help address market failures, such as reduced competitiveness of renewables compared to heavily subsidized fossil fuels, increase cost of companies’ products, restrict expansion of their carbon business, induce them to leave reserves in the ground, and engender greater difficulty in capitalizing and insuring new carbon projects,” they wrote.
It’s not the first time fossil fuel companies are asked to pay for climate damages, as Inside Climate News explains. Prime Minister of Barbados Mia Mottley proposed a tax on oil, coal and gas production that would go to create a fund to help developing countries recover from the climate crisis. Cities, states, and countries have also filed lawsuits against fossil fuel companies.
The study can be accessed here.