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We know who’s profiting from emissions - let’s bill them

Research published last month in the journal Climatic Change may provide an essential building block in proving corporate liability for current and future climate change damage. Researcher Richard Heede…

Climate lawyers suggest a clean and healthy future could be paid for with litigation. EPA/RADEK PIETRUSZKA

Research published last month in the journal Climatic Change may provide an essential building block in proving corporate liability for current and future climate change damage.

Researcher Richard Heede found that 90 entities are responsible for an astounding 63% of global carbon emissions. Heede’s eight-year project discovered that Chevron, ExxonMobil, Shell, BP and ConocoPhillips have contributed 12.5% of global carbon emissions.

The research is the first time historic sources of greenhouse gas emissions have been analysed to identify the most significant contributors, named in the research as the “Carbon Majors”.

Heede’s pioneering methodology focuses upon producers rather than emitters. “Producers” are those who extract and sell products (in this case, fossil fuels) whose normal use results in polluting greenhouse gas emissions.

Overall, 10% of emissions attributed to the oil, natural gas, and coal producers are emissions from company operations. About 90% are embodied in products marketed to consumers worldwide.

Identifying the big players

Heede’s research debunks the myth that everyone (and therefore no one) is responsible for climate change.

In fact, a few dozen entities are responsible for the lion’s share of greenhouse gas emissions in the atmosphere. Historic or cumulative emissions drive climate change. Therefore, Heede’s analysis lays the groundwork for apportioning responsibility for climate change.

Interestingly, around half of the emissions have occurred over the past 25 years. To put this in perspective, the UN Framework Convention on Climate Change (UNFCCC) was agreed to in 1992, which is now 21 years ago.

Arguably, the Carbon Majors have accelerated their production and sale of products with the knowledge of their harmful effects on the global atmospheric commons.

Many of the Carbon Majors have even been accused of engaging in campaigns of disinformation concerning the science of climate change. The Carbon Majors spend billions to lobby politicians to ensure their continued operational existence and profits.

As climate litigation develops, as with tobacco litigation, there is a high likelihood that many of these Carbon Majors may have to pay compensation or be prevented from carrying on harmful activities. The extractive industry itself may suffer its own economic losses from planned projects that are halted or delayed.

Who pays for the damage?

The damages associated with climate change are increasing in seriousness. The science of attribution of weather and climate is slowly becoming more certain.

In 2009, research by the Global Humanitarian Forum found that climate change is causing 300,000 deaths a year. Economic losses due to climate change were estimated at $125 billion a year - more than worldwide humanitarian aid.

Early estimates of the damage caused by Typhoon Haiyan place costs around US$15 billion ($16 billion). But whether this damage can be attributed to climate change is a difficult question in science and law.

Although it is difficult, the issue is not going to go away. In fact, paying for damages was an important focus of the recent UN climate talks in Warsaw.

Adaptation and mitigation were the initial streams of international climate activity. Now paying damages has been added as a third stream. The Warsaw International Loss and Damage Mechanism was established as a crucial step forward in these talks.

The mechanism seeks to address loss and damage - including damage from extreme and slow-onset events - to developing countries from climate change. The mechanism is designed to strengthen dialogue, coordination, coherence and synergies among all relevant stakeholders.

Carbon Majors will have to make a meaningful contribution to the loss and damage process. They need to provide resources and leadership, financial support, technology transfer and expertise.

The Carbon Majors should no longer influence government decision making from behind closed doors. Instead, they need to talk openly with the international community about their contribution to climate change. They need to be held accountable through the Loss and Damage Mechanism.

Climate litigation: The final frontier?

Climate litigation has been gaining increasing momentum around the world. Cases have been brought in Australia, the US, Europe, New Zealand and elsewhere.

One of the hurdles faced by applicants in climate cases is that the direct emissions associated with fossil fuel projects are arguably insignificant when viewed within the context of global emissions. But in a groundbreaking Australian case, the applicant Peter Gray was successful in arguing that the climate change impacts from the use of a product were to be taken into account in the assessment for the project.

An important message from Heede’s research is that the Carbon Majors are not only directly responsible for climate damage, but that their contribution can be measured, and they are capable of paying damages.

It is correct to say that society is dependent on their products, but each of our individual emissions are negligible. And it is difficult to comprehend how any fair and equitable agreement on climate change can take account of all of the differing economic and financial circumstances across the world.

But we now know that these 90 entities are the big players in town. They have the financial resources to respond, and it is time for them to take responsibility and do so.

Join the conversation

44 Comments sorted by

Comments on this article are now closed.

  1. Justine Philip

    PhD candidate

    Thanks for this article Keeley, can we request the companies themselves stand up and take responsibility for the environmental impact of their industries? As a starting point, we should ask General Motors to gift the Holden factories to the people of Australia. We have the necessary infrastructure and capacity to manufacture and assemble cars, so it would be a kind step in the right direct, take over the Holden plants before they are dismantled, and utilise the workforce and machinery towards the development and manufacture of electric/alternative energy cars.

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  2. Mark Pollock

    Analyst

    I imagine these 90 "entities" (is "entity" some new form of "hate speech"?) are already paying sufficient tax on their activities. The author seems to want to increase this to force them out of business. No doubt that would suit her agenda.

    What then for the billions of people who are happy to use the goods these "entities" produce - namely cheaper power? What are they going to do when the wind don't blow? Sit around and shiver in the dark?

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    1. Craig Myatt

      Industrial Designer / R&D

      In reply to Mark Pollock

      Actually technology allows us to be able to now have renewable energy like solar, wind, wave and geothermal to power devices like heaters. (And we will be able to cover baseload with current and emerging technologies.) We also have a large stock of knowledge in the thermal design of housing so that just about any property in Australia could be designed with minimal heating or cooling, using up to date architectural and thermal design principles. If you must have mechanical cooling or heating, soon to be released technologies allow virtually 100% renewable energy air conditioning. No need to shiver in the dark.

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    2. Mark Pollock

      Analyst

      In reply to Craig Myatt

      Excellent. No need to worry them. These polluting "entities" will soon have no customers for their earth destroying products and we can all relax.

      Just on a technical point, any idea when I can plug into, say, a geothermal grid?

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    3. Craig Myatt

      Industrial Designer / R&D

      In reply to Mark Pollock

      The company Geodynamics has just completed a proof of concept project of 1MW in the Cooper Basic in South Australia. This firm is working toward commercialisation of its 'hot rocks', so that it will likely supply customers in the Cooper Basin with power, once its technology is on the grid. There is likely to be very great momentum within the geothermal field soon, given that Australia is geologically stable, and has some of the best geothermal resources, readily available, anywhere in the world. Geothermal can supply base load power, too. Why burn coal to heat water for power turbines, when we can access natural sources of hot water?

      How hot:
      http://www.agea.org.au/geothermal-energy/australian-projects-overview/

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    4. Greg North

      Retired Engineer

      In reply to Craig Myatt

      " No need to shiver in the dark. "
      That's all very well for those in the population that can afford rebuilding or using modern technologies Craig and that will likely be a very small percentage of the population.

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    5. John Newlands

      tree changer

      In reply to Craig Myatt

      That's a lousy megawatt after a decade of effort and I believe hundreds of millions in public and private funding. That plant also appears to be at least 200 km from any transmission line in the east Australian grid. At this point geothermal in Australia doesn't look like a winner..

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    6. Andrew Winter

      -

      In reply to Mark Pollock

      Actually most of these companies are well set up to avoid taxation.

      Not force them out of business. Force them out of the business of fossil fuels.

      And as for the people that are happy to use these goods, screw them, I want my children to enjoy a planet that has a climate somewhat resembling that in which we live now.

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    7. Andrew Winter

      -

      In reply to Greg North

      Those that cannot afford rebuilding or modern technology, such as the 1.3 billion people without electricity on whose behalf you so nobly speak, can't really afford anything. They certainly can't afford 6C temperature rise.

      In many locations though (and yes I have personally seen this, not reporting second hand) they can afford to pool resources into community generated renewable energy.

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    8. Craig Myatt

      Industrial Designer / R&D

      In reply to Greg North

      We cannot afford not to:

      "Economic losses due to climate change were estimated at $125 billion a year - more than worldwide humanitarian aid." (!)

      and....

      "Early estimates of the damage caused by Typhoon Haiyan place costs around US$15 billion ($16 billion)."

      And this was on Australia's doorstep. I am sure, if Australia can afford to pay an average of $534,000 for a house in major cities, these costs are tiny by comparison. (REIA figures)

      Australians also paid over $22 billion for petrol used in our cars in 2012!

      http://www.abs.gov.au/ausstats/abs@.nsf/mf/9208.0 (Petrol)

      http://www.bree.gov.au/documents/publications/energy-in-aust/energy-in-australia-2012.pdf (energy use)

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    9. Craig Myatt

      Industrial Designer / R&D

      In reply to John Newlands

      The size of the plant reflected the stage it is up to in the development of their technology, which was a pilot plant, doing proof of concept. Noting that I am not across the details of the Geodynamics project specifically, in general Research and Development terms, this type of plant is normally done both to test the concept at near production scale, and to demonstrate to potential backers, that it can operate, so can attract money to scale up, as well as developing skills in the firm. We need to be investing in this type of technology, and why would we be consistently throwing money to dig up fossil fuels (capital which has risk of becoming 'stranded') if we can instead put it into sensible, long term growth industries like geothermal, which also mitigate the risk of the large expenditures mentioned in the article?

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    10. Henry Verberne

      Former IT Professional

      In reply to Mark Pollock

      No Mark it is not a new form of "hate speech" merely user-pays, polluter pays- unless they clean up their act. Nothing I have seen and researched says it can't be done.

      This is in the finest traditions of economic rationalism: put a price on the deleterious impacts of detrimental activities, giving the emitter every incentive to reduce such activities. The logic is impeccable.

      Assuming you will disagree, fine, prove us wrong.

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    11. Greg North

      Retired Engineer

      In reply to Andrew Winter

      I agree Andrew, there is likely more scope with many people in undeveloped regions to develop community renewable systems rather than attempt duplication of what exists in more developed and urban communities.
      People in undeveloped regions are also likely more adaptable to surviving with climatic extremes though sustained droughts and floods obviously will knock some about.
      How the developing countries cope with expected population explosions and their desires once accustomed to a little power is another matter.

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    12. Greg North

      Retired Engineer

      In reply to Craig Myatt

      Craig, I realise that house prices in capital cities are what some would consider astronomical, to the extent that home ownership is declining as a percentage of our population.
      You do have to wonder sometimes just where real estate money cones from, that aside from people over mortgaging themselves.
      And yep, we have a country with large distances that people often enough travel in autos or other vehicular travel and even plenty of travelling involved in commuting because of the urban sprawl and…

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  3. Greg North

    Retired Engineer

    " Climate lawyers suggest a clean and healthy future could be paid for with litigation. "
    That'd be right, of course we could ask who is going to profit from litigation.

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    1. Henry Verberne

      Former IT Professional

      In reply to Greg North

      Great Greg, you continue in the finest traditions of the hand wavers who seem to find a negative in every positive attempt to address the problems of climate change and sustainability.

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  4. Comment removed by moderator.

  5. John Newton

    Author Journalist

    Keely, you write this as if it is news: I think we already know this. Now what?

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  6. Judith Conway

    retired

    At least, Greg North, the lawyers will be able to pay for the goods and services that have become more expensive because the cost of litigation have been passed on to the consumers.

    There are huge hidden costs associated with our consumption - we have been living in a golden age, but sooner or later these hidden costs will have to be added to the price tags. Perhaps then we will consume less and demand will go down?

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    1. Greg North

      Retired Engineer

      In reply to Judith Conway

      Exactly Judith and yet those of us ahead of the curve already likely do our bit to consume less when fortunate enough to live in more climate friendly locations, breezes for airconditioning cooling and extra layers for the short colder times helps lower electricity use for starters.

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  7. Laurie Strachan

    Writer/photgrapher

    I'm struggling to find anything in this article other than old news and wishful thinking. We already know that most air pollution is caused by fossil fuels and we know who produces them - and that includes Australia's coal miners.
    We may like to think that these producers should be behaving in ways they are not but what is going to make them change? And what is going to replace them? When you've got those answers, let us know.

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  8. Sandor von Kontz

    farmer

    For quite s long time I was hoping, that the issue of who can be held liable for the damage done by climate change willcome up. I do think though, that politicians who fail to implement meanigful action against climate change should be addded to the mix. We would see a change quickly once the first politician was convicted of crimes against the future of humanity.

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  9. Daniel Boon

    logged in via LinkedIn

    Politicians billing their financial backers? Not bloody likely.

    The major parties (and pretend Independents - ones who can pay for expensive campaigns) need to be voted out ... until such time ... it won't happen ...

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  10. John Perry

    Teacher

    A succinct and reassuring article. The comments section here will undoubtedly attract the scoffers, almost certainly in the majority, but the likelihood of polluters being made to pay, not only for their profits but for the externalities they manage to sneak out of paying, is becoming a certainty. Rage against it as much as you want.

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    1. Paul Prociv

      ex medical academic; botanical engineer

      In reply to John Perry

      And so the price of their products will go up, and the costs of the energy-generators and transporters etc. will also go up accordingly, and so we end-users will all end up paying more. Just another carbon tax . . .
      As many above have explained so lucidly, especially that Onion article (see Mark Duffett's comment), we're all responsible, and we'll all pay, one way or another. It's the tragedy of the commons, all over again.

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    2. John Perry

      Teacher

      In reply to Paul Prociv

      "Just another carbon tax"

      Funny, I don't recall paying more because of the carbon tax. And the Onion article is parody, as is the entire Onion site, which makes it very thought-provoking for me. And the "tragedy of the commons" is a much-quoted and little-understood line. Keep raging, Paul.

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    3. Henry Verberne

      Former IT Professional

      In reply to Paul Prociv

      "And so the price of their products will go up, and the costs of the energy-generators and transporters etc. will also go up accordingly, and so we end-users will all end up paying more. Just another carbon tax".

      In the short term maybe but it will make their relatively high polluting product less competitive with renewable energy.

      That is the economic rationale.

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  11. john tons

    retired redundant

    In responding to this piece the focus for some has been on climate change but we need to lift our eyes for one of the critical weakness of global economies is that the externalities are not factored in the costs of many business activities - with the result that the prices we pay are not an accurate reflection of the costs associated with these products. If businesses were required to factor in the externalities then we will find that many products will end up costing more and indeed some products may become uneconomic to produce; but at the very least we are not leaving a legacy to our children that they will have to pay to clean up.

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  12. John Newlands

    tree changer

    Recall the recent attempts to get anti-coal activist Ian Dunlop on the board of BHP. That company is said to be the 7th biggest emitter. The bid was supported by some trendy superannuation funds (eg California teachers) but failed. The fact is these big companies have to make a return on profit comparable or better than government bonds. if coal, oil and gas is where the money is that's what the big companies have to do whether they believe in AGW or not. Therefore it comes back to people's expectations including investment yields.

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    1. Craig Myatt

      Industrial Designer / R&D

      In reply to John Newlands

      One of the foundations of pricing/valuing firms like BHP, or their shares, or the future value of projects, is to factor in risks. If you have heard of beta values for industries, this relates to the risk for share in that industry. Generally as risk rises, returns become less reliable, and that would be a key problem for a firm like BHP, usually considered a 'blue chip' investment: as the risk of projects rise, so does the cost of capital to fund projects.

      Once risks like the potential for…

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  13. Comment removed by moderator.

  14. Mark Lawson

    senior journalist at Australian Financial Review

    I see I'm coming late to the piece, but there are a couple of problems I should point to. First, the article talks about litigation and references an Australian decision. That was an application to make the developer go through an additional step. It wasn't about damages. There is no way that actions for damages could be allowed for climate effects, and that was quite clear from the recent conference. Activists may try to start them but that's their problem. A UN agreement may allow for it but that's…

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    1. Andrew Winter

      -

      In reply to Mark Lawson

      http://www.theguardian.com/environment/2013/feb/14/funding-climate-change-denial-thinktanks-network

      I think you'll find Mark that "basically done little more than ignore the greenhouse fuss" is an incorrect statement. It is not "bits and pieces" but rather a sustained campaign.

      Your ignorance is a little concerning for a journalist, but probably understandable given the nature of your publication.

      Some alternative media sources that you may wish to peruse (I know, it's not the Economist, but you'll be ok)

      http://www.abc.net.au/unleashed/2775298.html

      http://www.crikey.com.au/2012/02/15/leaked-docs-from-climate-denying-think-tank-reveal-strategy/

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    2. Mark Lawson

      senior journalist at Australian Financial Review

      In reply to Andrew Winter

      Andrew - go back and look at the Guardian article you cited. Read your sources. That article, assuming its correct, confirms exactly what I was saying. the resources companies aren't into it at all. those are private individuals and the amounts involved are still small.. the climate change dept in Aus alone turned over more than $120M (before it was merged). Greenpeace turns over more than 400 million Euro globally. The money flowing into green movements is truly stupendous.

      Now go and look at the first item you cited. the lobbying amounts. They seem very high - I suspect the activists who compiled it are including marketing budgets which is different - in any case that's lobbying which may or many not have anything to do with Greenhouse matters. Lobbying occurs for all sorts of reasons.

      In short, you've contradicted your own case. Glanced at the ABC link but that seems to be about climate science which is not relevant here. You'll have to do a lot better than that.

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  15. Margaret Stewart
    Margaret Stewart is a Friend of The Conversation.

    Teacher

    1. scapegoat
    (n.) A scapegoat is an event person or object that is used to lay the blame on for all that goes wrong, regardless of the contributions of others. (Urban dictionary)

    Quote “ Heede’s analysis lays the groundwork for apportioning responsibility for climate change.”

    Identifying certain companies as responsible for climate change may well help us focus on emission reduction, however scapegoating limits the actions a community is prepared to accept or consider.

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  16. Michael Shand
    Michael Shand is a Friend of The Conversation.

    Software Tester

    Whoa, wait a minute - isn't this what we had originally under the carbon tax?

    making the big polluters pay?

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  17. Gavin Lee

    Environmental Manager

    Seems to me that the idea of litigation is just an extension of the Product Stewardship concept ... or maybe it is pinko/commo/femmo/lesbo/lefto/greeno plot to send us back to the stoneage!

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  18. Alex Cannara

    logged in via LinkedIn

    Bill then for the >1.5 trillion tons of CO2 already in the environment from 150+ years of selling their products. Bill them for the Oxygen their products were/are useless without as well.
    ;]
    Reality's expensive.

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  19. David Arthur

    resistance gnome

    I've been seeing the necessity of ceasing fossil fuel use for some decades - longer than most of my fellow geese commenting here - but am somewhat sceptical regarding the politics of empty posture that absolves consumers of all liability.

    So let's all stop consuming the products of these evil corporations, and go for the more expensive renewable alternatives. I can't afford that, can you?

    My guess is, lots of us might hate having to consume these products, but we can't really afford to do otherwise. After all, if I stop consuming Jet A1 fuel, that's all the more for someone else who doesn't give a rat's about their childrens' inheritance (ie the world).

    So instead of doing all this posturing and finger-pointing at these "evil corporations", how about we just put consumption taxes on the offending products, then increase the rate of those taxes until the "evil corporations" become "planetary heroes" by providing us with safe, clean Jet A1 made from algae?

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