Polluters Pay!

Carbon Majors and the

International Loss & Damage

Mechanism

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Poor people suffering worst of climate change with few resources.

Fossil fuel entities profiting from products that cause climate change.

International law & precedents in other fields.

Fossil fuel industry fund the Intnl Loss & Damage Mex

Climate change loss and damage – here now

• Typhoon Haiyan killed 6,300 people, 4 million lost their houses and caused $2 billion of damages in the Philippines.

Prolonged drought in the Horn of Africa ending 2011: 13.3 million people food shortages, total losses of $12.1 billion in Kenya alone.

Pacific Islands sea level rise: stealing land, stable food crops impeded, fresh water becoming salty, relocation only option.

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Scale of loss and damage

• Costs of loss and damage substantial but difficult to be exact.

• Non-economic losses: life, health, culture, nature.

• Current order of magnitude of economic losses due to weather related disasters is ~$100bn pa1.

• Mid range estimate of loss and damage in 2060 $1.2 trillion2.

1 ~$100billion per year extrapolated from Munich Re in World Bank (2013). Weather events in all countries, not all events climate change related. Does not include non-economic losses.2 Measured in 2000 US dolllars. Source: Dr Chris Hope in Parry et al 2009, pp100-111

Mitigation and adaptation reduce loss & damage

Current mitigation on track for 3.7° - 4.8°C temperature increase by 2100

Source: Mitigation: IPCC WGIII AR5 Summary for Policy Makers. Adaptation: Schalatek et al 2012 and IIED briefing 2012.

1.5-1.7oC

4.1-4.8oC

3.1-3.7oC

2.3-2.9oC

Temp increase by 2100

100

450

5

Adaptation fundsestimate low

Adaptation fundsestimate high

Funds committed

Funds for adaptation far short of need

Carbon Majors profiting from products that cause climate change

Photo credit: davis – Fotalia.com

Carbon Majors responsible for 63% emissions

• Carbon Majors published Nov 2013.

• Ground-breaking.

• From ‘everyone is responsible and hence no one is responsible’ to a world in which the coal, oil and gas

extracted and cement manufactured by only 90 entities is responsible for the majority (63%) of greenhouse gas emissions.

2010emission

s MtCO2e

Cumulative 1854-2010

MtCO2e

Percent of global

1751-2010

Chevron 423 51,096 3.51%

ExxonMobil 655 46,672 3.21%

Saudi Aramco 1,550 46,033 3.17%

BP 554 35,837 2.47%

Gazprom 1,371 32,136 2.22%

Shell 478 30,751 2.12%

National Iranian Oil Company

867 29,084 2.01%

Pemex 602 20,025 1.38%

ConocoPhillips 359 16,866 1.16%

Carbon Majors include:• share-holder

owned entities• state-owned

entities• states.

Full list in report.

Top 9 extant investor and state owned entities shown here.

Fossil fuel industryclimate cost

• 2013 profits: Chevron: US$21.4bn; ExxonMobil: US$32.6bn; BP: US$23.5bn;Shell: US$16.7bn.

• Saudi Aramco generates more than US$1bn revenue per day.

• Fossil fuel corporations plan to continue with this approach …

Source: Taxpayers for Common Sense (decade profits); company announcements (2013 profit); Forbes 2013 (Saudi Aramco)

Fossil fuel corporations plan to continue

Shell May 2014:

“fossil fuels continuing to play a major role in the energy system – accounting for 40-60% of energy supply in 2050” with “high energy prices” ExxonMobil March 2014:

“highly unlikely” that governments will restrict fossil fuels to reduce GHG emissions by 80%.“the world will require all the carbon-based energy that ExxonMobil plans to produce”

Legal basis and precedents

Photo credit: US Coast Guard – 100421-G-XXXXL

Legal liability for loss and damage

• Polluter-pays principle – those in control of a polluting activity should be held liable for any harms caused by the activity.

• No harm rule – responsibility to ensure that activities do not cause damage to the environment beyond national jurisdiction and obligation to minimise risk.

• Where harm is caused an obligation to cease harmful conduct and make full reparation: restitution, compensation and satisfaction.

Legal framework for loss and damage: UNFCCC Article 4.8The Parties shall give full consideration to what actions are necessary under the Convention, including actions related to funding, insurance and the transfer of technology, to meet the specific needs and concerns of developing country Parties arising from the adverse effects of climate change … especially on:

a) Small island countries;

b) Countries with low-lying coastal areas;

c) Countries with arid and semi-arid areas, forested areas and areas liable to forest decay;

d) Countries with areas prone to natural disasters;

e) Countries with areas liable to drought and desertification;

f) Countries with areas of high urban atmospheric pollution;

g) Countries with areas with fragile ecosystems, including mountainous ecosystems;

i) Landlocked and transit countries.

Further, the Conference of the Parties may take actions, as appropriate, with respect to this paragraph.

Legal framework for loss and damage

UNFCCC Article 4.8

• funding, insurance and the transfer of technology for the adverse effects of climate change especially on a range of loss and damage type impacts including natural disasters, desertification, low-lying coastal areas and small island countries.

Warsaw International Mechanism on Loss & Damage

• enhance knowledge and understanding of comprehensive risk-management approaches

• strengthen dialogue, coordination

• enhance action and support, including technical support and mobilising finance

Warsaw International Loss and Damage Mechanism

Functions:

• enhance knowledge and understanding of comprehensive risk-management approaches to address loss and damage;

• strengthen dialogue, coordination, coherence, and synergies; and

• enhance action and support, including technical support and mobilising finance.

Legal framework for loss and damage: ILC Draft Principles on Transboundary Harm

Principle 4: Prompt and adequate compensation (UN General Assembly 2006):

• Each State should take all necessary measures to ensure that prompt and adequate compensation is available for victims of transboundary damage caused by hazardous activities located within its territory or otherwise under its jurisdiction or control.

• Including the imposition of liability on the operator or, where appropriate, other person or entity. Such liability should not require proof of fault [strict liability].

• Including the requirement on the operator or, where appropriate, other person or entity, to establish and maintain financial security such as insurance, bonds or other financial guarantees to cover claims of compensation.

• In appropriate cases, these measures should include the requirement for the establishment of industry-wide funds at the national level.

• In the event that the measures under the preceding paragraphs are insufficient to provide adequate compensation, the State of origin should also ensure that additional financial resources are made available.

Abridged very slightly for space reasons

Key precedents

1. Oil spill compensation

2. Nuclear accident regime

3. Biosafety liability

Precedent: International oil pollution compensation funds (IOPC Funds)

• Financed by levies based on oil transported.

• Governments monitor and submit information to IOPC.

• Fund is used for compensation (strict liability) for:

– property damage; costs of clean-up operations; economic losses by fishermen or those engaged in mariculture; economic losses in the tourism sector; and costs for reinstatement of the environment

• Anyone from a member state can claim compensation.

Our proposal:

Carbon Majors fund the International Loss and Damage Mechanism

Photo credit: Russell Watkins/Department for International Development

Funds from Carbon MajorsOne-off payment based on historical emissions

Funds from Carbon Majors Ongoing levy, per tonne of coal, barrel of oil, cubic metre of gas extracted, or per tonne of cement manufactured

$$

via GCF or specific L&D Fund

International Mechanism for Loss and DamageEstablish the mechanism, undertake activities, pay insurance premiums, and fund vulnerable countries and communities

$$$Most vulnerable countries and communities - capacity-building- knowledge- and

technology-sharing- building resilience

and reducing risk- disaster recovery- compensation

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Funds from Annex II countriesWhere other funds fall short

Key considerations

• All fossil fuel entities (not just top 90)

• Equity principles ** NEW & IMPROVED **

– Opt-out process for developing countries based on equity principles

• Fossil fuel phase out

– Increase levy over time

– Levy on top of existing levies, royalties, taxes

Key considerations

• Where to set the levy?

– We have not calculated exact levies per tonne of coal, barrel of oil, or cubic metre of gas

– Suggested starting point of ~$2 per tonne of CO2

– Would raise ~$50bn per year

– Increase 5-10% each year.

• We plan to continue to develop this concept and look forward to input from government, civil society and academia: http://goo.gl/7Dbdfs.

Questions, questions, questions ….

Warsaw International Loss and Damage Mechanism functions• Enhance knowledge and understanding of comprehensive risk-management

approaches to address loss and damage associated with the adverse effects of climate change, including slow-onset impacts;

• Strengthen dialogue, coordination, coherence, and synergies among relevant stakeholders;

• Enhance action and support, including finance, technology, and capacity-building, to address loss and damage associated with the adverse effects of climate change, so as to enable countries to:

– Assess the risk of loss and damage; systematically collect and share data on climate impacts;

– Design and implement country-driven risk-management strategies and approaches, including risk-reduction, risk-transfer, and risk-sharing mechanisms;

– Implement comprehensive climate risk-management approaches;

– Promote an environment that encourages investment and involvement of stakeholders;

– Involve vulnerable communities and populations, civil society, the private sector, and others in the assessment of and response to loss and damage .

90 entities responsible for 63% emissions

Carbon Majors’ emissions by ownership

• 56 are crude oil and natural gas producers,

• 37 are coal extractors (including subsidiaries of oil & gas companies), and

• 7 are cement producers.

• Investor-owned = 315 GtCO2e (50 entities)

• state-owned = 288 GtCO2e (31 entities),

• nation-states = 312 GtCO2e (9 entities).

Carbon Majors: emissions by A1 / NA1

• Of the 85 extant entities, 54 are headquartered in Annex I countries, and 31 in non-Annex I nations.

• A1/NA1 emissions = roughly 50/50 split.

• Geographic spread of investor-owned companies

– USA 21,

– Europe 17: five in the UK, three in Germany, two in France, Italy and Switzerland, 1 in Netherlands, Spain, Austria

– Canada 6,

– Russia 2

– Australia, Japan, Mexico, South Africa 1

Carbon Majors: oil, gas, coal and cement

• 50 investor-owned, 31 state-owned, and 9 nation-state producers of oil, natural gas, coal, and cement.

• 56 are crude oil and natural gas producers, 37 are coal extractors (including subsidiaries of oil & gas companies), and 7 are cement producers.

• emissions of 315 GtCO2e have been traced to investor-owned entities, 288 GtCO2e to state-owned companies, and 312 GtCO2e to nation-states.

• one-half of CM emissions have occurred since 1984/86

GHG emissions accelerate despite reduction efforts. Most emission growth is CO2 from fossil fuel combustion.