Fossil fuel plant at sunset.
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.
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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