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September 10, 2017 | Clawing Back Oil Co Profits Obvious Fund for Climate Damages

Danielle Park

Portfolio Manager and President of Venable Park Investment Counsel ( Ms Park is a financial analyst, attorney, finance author and regular guest on North American media. She is also the author of the best-selling myth-busting book "Juggling Dynamite: An insider's wisdom on money management, markets and wealth that lasts," and a popular daily financial blog:

Today, a peer-reviewed paper in the journal Climatic Change shows how scientific evidence can help apportion responsibility for climate damages among fossil fuel producers. For the first time, the study quantifies the amount of sea level rise and increase in global surface temperatures that can be traced to the emissions from specific fossil fuel companies.  It concludes that nearly 30% of the rise in global sea level between 1880 and 2010 resulted from emissions traced to the 90 largest carbon producers.  While six percent resulted from emissions traced to ExxonMobil, Chevron and BP, the three largest contributors.  This is precisely the type of causation nexus that courts can use to apportion responsibility for damages.

Up until recently the default assumption has been that costs of climate damages and adaptation should be borne by taxpayers, through flood insurance programs, federal disaster relief funds and the like, as well as by affected individuals, families and private businesses.

But Lawsuits filed this summer by three coastal California communities against ExxonMobil, Chevron, BP and other large fossil fuel companies argue that it is the companies who profit from selling the harming products that should bear the cost of damages from rising seas.

There is now copious evidence that fossil fuel companies have known for decades that their products contributed substantially to climate change, and they engaged in a coordinated campaign to publicly disparage climate science in order to avoid limits on emissions.  See Big oil must pay for climate change.  Now we can calculate how much:

Many, even within the fossil fuel industry itself, are arguing they can still change course, but it is hard to justify the immediate cost to shareholders when just using the atmosphere as a waste dump and leaving impacted communities, taxpayers and future generations to deal with the consequences appears to be a risk-free alternative. But, as we found in the 2008 financial crisis, allowing companies to make private profits while society at large underwrites the risk ends badly for everyone.

It may take tens to hundreds of billions of dollars to support disaster relief and recovery among Gulf coast communities affected by Hurricane Harvey. ExxonMobil, Chevron and BP have collectively pledged only$2.75m.

As scientists further identify the role that climate change has made to exacerbating this tragedy, courts of law and public opinion should judge whether they are paying their fair share.

The era of corporations and shareholders extracting profits by leaving the massive health and clean up costs of their activities on the public purse is coming to a close of necessity. With debt and IOU’s now piled high in households and governments worldwide and clean up costs compounding globally, clawing back money from those who profited from creating the damage is an obvious course.

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September 10th, 2017

Posted In: Juggling Dynamite

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