Climate Change

World’s top 21 fossil fuel companies owe $5,444 billion in climate reparations, study says

Coal India Limited was exempted from paying for damages as India’s Gross National Income per capita income is below $4000, researchers said

By Seema Prasad
Published: Monday 22 May 2023
Saudi Aramco owes climate reparations to the tune of $1,110 billion. Photo: iStock

A new study for the first time holds the world’s 21 largest fossil fuel companies morally accountable for their share of carbon emissions by quantifying the money owed in climate reparations.

An amount of $5,444 billion with a yearly average of $209 billion would be disbursed over a 26-year period between 2025 and 2050, according to the analysis published in the journal One Earth. 

ExxonMobil, Saudi Aramco, and Shell—the companies most often accused of delaying action on climate change—would have the first, third, and fourth highest reparations, the paper stated.

Harjeet Singh, head of global political strategy, at Climate Action Network International, told Down to Earth:

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. For decades, fossil fuel companies have engaged in denial, disinformation, and delay to distract attention from their role as the main perpetrators of the climate crisis.

The study, authored by Marco Grasso from the Department of Sociology and Social Research at the University of Milan and Richard Heede from the Climate Accountability Institute, said, “This is the moral rationale for reparations in the form of financial rectification by fossil fuel companies in the context of climate change.”

“In the case of the carbon fuel industry, reparations require that companies relinquish part of their tainted wealth to provide affected subjects with financial means for coping with climate harm, consistent with the climate justice movement’s core demand that fossil fuel companies repay their impacts debt,” they elaborated.

Of the twenty-one companies identified, investor-owned and state-owned companies headquartered in wealthier nations were categorised as “high requirement” (HR) as they were responsible for a higher proportion of emissions.

Fossil fuel companies’ annual average reparations 2025-2050

Source: Time to pay the piper: Fossil fuel companies’ reparations for climate damages

The HR companies and the amount they should owe between 2025 and 2050 are:

  • Saudi Aramco in Saudi Arabia ($1,110 billion)
  • ExxonMobil in the United States ($478 billion)
  • Shell in the United Kingdom ($424 billion)
  • British Petroleum Company in the UK ($377 billion)
  • Chevron in the US ($333 billion)
  • Abu Dhabi National Oil Company ($318 billion)
  • Peabody Energy in the US ($285 billion)
  • TotalEnergies in France ($243 billion)
  • Kuwait Petroleum Corp in Kuwait ($243 billion)
  • ConocoPhillips in the US ($208 billion)
  • Broken Hill Proprietary in Australia ($208 billion)

State-owned companies headquartered in less-wealthy countries were deemed as ‘low requirement’ companies and their financial obligation over the same time period would be:

  • Gazprom in the Russian Federation ($522 billion)
  • Pemex in Mexico ($192 billion)
  • PetroChina in China ($188 billion)
  • Rosneft in the Russian Federation ($116 billion)
  • Iraq National Oil Co ($109 billion)
  • Petrobras in Brazil ($101 billion)

Exempting Coal India

State-owned companies in poorer countries were categorised as ‘exempted’ from paying for their emissions, namely Coal India Ltd, National Iranian Oil, Petroleos de Venezuela and Sonatrach in Algeria.

Singh told DTE, “Unlike western fossil fuel entities, exempting Coal India Ltd was necessary because in India, coal is used to serve the energy needs of millions of poor people and hence the exemption was rightly justified.”

“In our analysis, including India, fossil fuel companies in countries with less than $4000 per capita Gross National Income were exempted from paying. We have to think of the social and economic value these fossil fuel entities add to their countries, even in terms of tax revenues,” Grasso told DTE.

“We conservatively start the clock for climate reparations in 1988, the year the Intergovernmental Panel on Climate Change was established and when NASA scientist James Hansen testified before the US Senate that the human signal in climate change had been detected,” the researchers explained.

According to the study, Coal India contributed 26,208 metric tonnes of carbon dioxide equivalent (MtCO2e) of cumulative emissions between 1988 and 2022, equivalent to 2.33 per cent of global emissions.

How did they do it

Grasso explained to DTE how they arrived at their calculations. “A group of 738 global economists estimated that $99 trillion will be the total cost of damages caused by climate change between 2025 and 2050. We calculated the proportion of global cumulative fossil fuel emissions from methane and carbon dioxide between 1988 to 2018 was at 70.37 per cent.”

“And the 70 per cent of $99 trillion is $69.68 trillion, which is the total climate damage attributable to fossil fuels,” Grasso told DTE.

“We argue that there are three groups of agents who contributed to climate change. Producers are basically those who extract, refine and sell fossil fuels to the global market. Emitters, who are consumers. Political authorities, who can make important decisions. As we could not find a scientific way to divide the $69.68 trillion between these three groups, we divided them in three equal quotas of climate damages of $23.2 trillion,” Grasso explained further.

“We further calculated that the top 21 fossil fuel companies contributed almost 35.9 per cent of fossil fuel emissions and the commensurate proportion of climate damages was at $8.33 trillion (35.9 per cent of $23.2 trillion). We apportioned the sum according to these companies’ global cumulative emissions between 1988 and 2022,” Grasso told DTE.

This proposed global reparations scheme is not meant to replace the United Nations Framework Convention on Climate Change (UNFCCC)’s Green Climate Fund and the recently established Loss and Damage Fund at COP27. It is proposed to complement them, the researcher added.

“Our work aims to lay the groundwork for further investigation into the role of the fossil fuel industry in climate change and should not be understood as a fully-fledged policy proposal,” the paper emphasised.

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