A new source of finance for loss and damage: Big carbon producers
Julie-Anne Richards, Climate Justice Programme
A new and innovative source of finance to pay for loss and damage has been proposed by the Climate Justice Programme (CJP) and the Heinrich Boell Foundation (HBF). CJP and HBF propose that the world’s biggest fossil fuel entities pay a levy – based on their emissions to date and on future extraction of fossil fuels – to the international Loss and Damage Mechanism.
Billions of people in poor communities are innocent victims in the climate change equation. They pollute the least, yet they are already suffering from loss and damage caused by climate change, through impacts such as the devastating effect of super-Typhoon Haiyan on the Philippines. These impacts have already gone beyond the ability of communities to adapt. It is expected that loss and damage from climate change will increase dramatically in the poorest parts of the world.
A scientific paper released last year found that almost two-thirds of global carbon emissions can be traced back to just 90 big polluters: the world’s biggest oil, gas and coal producers, and cement manufacturers. These entities include Chevron, ExxonMobil, Saudi Aramco, BP, Gazprom, and Shell.
These big carbon producers have made massive profits from extracting and selling the fossil fuels that cause climate change, without paying for the damage from the extreme weather events and other impacts their products are causing. In the decade from 2002 to 2012, the top five global oil and gas companies alone made more than US$1 trillion in profits. The application of an international levy on their profits would provide a fair method of making the world’s richest pay to protect the most vulnerable.
To safeguard the climate we must phase out fossil fuels by mid-century. The big polluters have a moral and legal responsibility to pay reparation for the loss and damage caused by emissions traced back to them. Adding a levy to the extraction of fossil fuels can help meet these goals and provide a relatively simple solution to the problem of sourcing finance.
The International Mechanism for Loss and Damage has been agreed, and discussions on how it will work are underway. But the current level of climate finance under discussion by the international community is already highly inadequate for mitigation and adaptation efforts – without taking loss and damage into consideration.
Loss and damage is a key issue for vulnerable countries who want to see reference to it in the draft text. There’s a strong need for “innovative finance,” in all areas. Meeting the challenge of loss and damage will require new solutions, and this is one. Having big polluters pay reparation for the loss and damage they are causing is an option that could unlock the discussions on loss and damage – as rich countries would not need to entirely fund it from national tax revenue.
The concept of introducing a levy on big carbon producers is based on the “no harm” principle in international law and the principles of transboundary harm, and is also in line with the polluter pays principle. It is consistent with the UN Framework Convention on Climate Change (UNFCCC) and is informed by precedents from other fields developed in line with the Rio Declaration on Environment and Development (1992) – including the oil spill compensation regime, the nuclear damage regime, and the biosafety regime.
This funding would be used to assist the poorest and most vulnerable communities suffering the worst impacts of climate change. This reparation from big carbon needs to be part of a general phase-out of fossil fuels.
Money cannot bring back that which is irreplaceable, nor can it provide justice. However, if we direct attention to those who have contributed to causing the climate crisis and who have profited from it at the same time, can we not hold them accountable for it, stop them from doing further harm in the future, and force them to pay their fair share of the financial burden?
Our full discussion paper is available at www.climatejustice.org.au