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A Breakdown Of Why The Fossil Fuel Industry Owes Trillions In Climate Reparations

The largest companies in the fossil fuel sector are responsible for financial costs valued at $209 billion annually from 2025 to 2050, according to a new study published in the scientific journal One Earth.

​Fossil fuel plant at sunset.

Fossil fuel plant at sunset.

Aida Cuenca

MADRID — We know the names of the companies responsible for environmental damage. We know what they spend and what they earn each year from fossil fuels. We even know how much other companies and banks invest in those very companies. What has not been quantified, until now, is what each of these companies must pay for future damages caused by their history of greenhouse gas emissions.

Saudi Aramco, ExxonMobil, Shell, BP: in total, the world's 21 largest fossil companies will be responsible for an estimated $5.4 trillion (almost €5 trillion) in economic damage due to climate change over the next 25 years, from 2025 to 2050. That's an average of some $209 billion every year, according to a paper by Marco Grasso, a professor of Political Geography at the University of Milan-Bicocca, and Richard Heede, Director of the Climate Accountability Institute (CAI), published in the scientific journal One Earth.

The researchers calculated the companies' obligations by analyzing their individual history of emissions collected in the Carbon Majors database between 1988, the year the IPCC was created, and 2022 — a period responsible for approximately half of global warming experienced so far.

"The proposed framework for quantifying and attributing reparations to large carbon fuel producers is based on moral theory and provides a starting point for discussion of the fossil fuel industry's financial duty to the victims of climate change," says Grasso, who hopes that this work "will serve as a basis for future efforts to direct payments from fossil fuel companies to injured parties."

In billions of U.S. dollars: 2022 earnings and the estimated cost per year, for the next 25 years

Climate damage costs that fossil companies would have to bear per year are far lower than their 2022 profits

Saudi Aramco tops the debt list

Thus, Saudi Aramco, the company with the highest emissions during those years, could be responsible for $43 billion per year between 2025 and 2050. The oil company ExxonMobil, which has known how global warming would affect the planet since the 1970s, could owe reparations of $18 billion a year — a tiny figure compared to the $56 billion in profits it made in 2022.

Global fossil fuel industry is responsible for a projected loss of $23.2 trillion to GDP

Beyond these 21 companies, the global fossil fuel industry is responsible for a projected loss of $23.2 trillion to the Gross Domestic Product (GDP) due to the effects of climate change over the next 25 years — a figure that rises to $69.6 trillion over the same period if sources of climate warming other than fossil fuels are taken into account.

A climate activist holds a banner reading ''ING Uit Fossiel'' (ING Out of Fossil).

Climate activists of Extinction Rebellion protest at ING Bank locations across the Netherlands.

James Petermeier/ZUMA

Trillions in damage

In total, the economic damage from climate change is estimated to amount to $99 trillion between 2025 and 2050, of which fossil fuel emissions are responsible for $69.6 trillion, according to a consensus survey of 738 climate economists. As an incentive to act as quickly as possible, the study's authors propose that companies should be eligible for a reduced penalty if they quickly stop producing polluting fuels or meet their verified net-zero emissions targets.

"This is only the tip of the iceberg of long-term climate damage, mitigation and adaptation costs, as the GDP loss calculation until 2050, while substantial, ignores the value of lost ecosystems, extinctions, loss of human life and livelihoods, and other components of well-being not captured in GDP," warns Heede.

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The Problem With Always Blaming Climate Change For Natural Disasters

Climate change is real, but a closer look at the science shows there are many factors that contribute to weather-related disasters. It is important to raise awareness about the long-term impact of global warming, but there's a risk in overstating its role in the latest floods or fires.

People on foot, on bikes, motorcycles, scooters and cars navigate through a flooded street during the day time.

Karachi - People wade through flood water after heavy rain in a southern Pakistani city

Xinhua / ZUMA
Axel Bojanowski


BERLIN — In September, thousands of people lost their lives when dams collapsed during flooding in Libya. Engineers had warned that the dams were structurally unsound.

Two years ago, dozens died in floods in western Germany, a region that had experienced a number of similar floods in earlier centuries, where thousands of houses had been built on the natural floodplain.

Last year saw more than 1,000 people lose their lives during monsoon floods in Pakistan. Studies showed that the impact of flooding in the region was exacerbated by the proximity of human settlements, the outdated river management system, high poverty rates and political instability in Pakistan.

There are many factors that contribute to weather-related disasters, but one dominates the headlines: climate change. That is because of so-called attribution studies, which are published very quickly after these disasters to highlight how human-caused climate change contributes to extreme weather events. After the flooding in Libya, German daily Frankfurter Allgemeine Zeitung described climate change as a “serial offender," while the Tageszeitung wrote that “the climate crisis has exacerbated the extreme rainfall."

The World Weather Attribution initiative (WWA) has once again achieved its aim of using “real-time analysis” to draw attention to the issue: on its website, the institute says its goal is to “analyse and communicate the possible influence of climate change on extreme weather events." Frederike Otto, who works on attribution studies for the WWA, says these reports help to underscore the urgent need for climate action. They transform climate change from an “abstract threat into a concrete one."

In the immediate aftermath of a weather-related disaster, teams of researchers rush to put together attribution studies – “so that they are ready within the same news cycle," as the New York Times reported. However, these attribution studies do not meet normal scientific standards, as they are published without going through the peer-review process that would be undertaken before publication in a specialist scientific journal. And that creates problems.

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