Climate Change: Time to Pay the Piper?

The scientist-authors have written an opinion piece in One Earth, a peer-reviewed journal. Before getting to the gist of their argument, it is worthwhile to note that they have a clear bias. Two passages make this clear, with my emphasis added.

“In the case of the carbon fuel industry, reparations require that companies relinquish part of their tainted wealth to provide affected subjects with financial means for coping with climate harm, consistent with the climate justice movement’s core demand that fossil fuel companies repay their impacts debt.

…

We argue that fossil fuel producers contributed to climate harm through their operational and product emissions, have a documented history of climate denial and of discourse and practices of delay, disinformed the public and their shareholders on climate science and corporate risks, are complicit in slowing down or defeating climate legislation, and must be held accountable for climate harm by paying reparations.”

This is an advocacy article, so there is always a bias, and I welcome the fact that it is apparent rather than shrouded in some conflict-of-interest statement. But if fossil fuel producers must be accountable for climate harm, shouldn’t they also be rewarded for the good those carbon fuels provide? Do the consumers of those fuels bear some culpability? We hold consumers responsible for using sin taxes on tobacco, alcohol, and the new recreational choice, marijuana.

The analysis

Their work begins with a caveat; it is only a starting point laying the groundwork for further investigation and a fully formed policy. They chose to ignore several thorny issues of implementation:

• Identification of climate victims
• Mechanism to compel payment of reparations
• The governance and distribution of those reparations
• “The political feasibility of the approach developed”

Building policy requires a firm foundation; this analysis, in my view, sets its sites on what attorneys call “deep pockets” while excluding major concerns and constraints – it stands, for the most part, on ethical grounds, which are inherently ambiguous.

Setting 1988 as a starting date [1], they argue for reparations based on the ethics of do no harm, seeking “disgorgements proportional to their [fossil fuel companies] historical emissions understood as the measure of their contribution for climate harm …” Those reparations are not evenly assessed; the principle of need requires that more should be taken from those who have and more given to those who have not. To that end, the wealthy pay their full share, the less wealthy pay half, and the poor pay nothing – the degree of wealth determined by where companies are headquartered. Here is the breakdown.

A few countries stand out. Russia, the second largest producer, gets a 50% pass because the country is poor; China, ranked sixth, also receives a 50% reduction. So the fact that 56.8% of China’s energy comes from coal isn’t a consideration. Does anyone believe that we will agree to this distinction?

“There is no objective basis to disentangle the different weight of these three groups and for the sake of simplicity we propose that producers, emitters, and political authorities have equal one-third shares of responsibility, and thus an equal quota of climate damages of $23.2 trillion.”

If I understand correctly, these reparations by producers will be matched by those of us consuming fossil fuel energy (emitters) and by our governments. This raises the most significant concern; now that we have justly apportioned the reparations, who actually pays? You know the answer, it would be us. The government prints money, but all of its funding comes from taxpayers, so the state contribution will be subject to the whims of our tax codes. Who will fund the reparations from the “tainted revenue” of producers? Will it be the executives or the shareholders, or will most of those reparations be passed along to the emitters (consumers)? Industry and transportation are the two greatest consumers of fossil fuels in the U.S. Can we foresee them “eating” those costs or passing them on to the ultimate end user, you and I? 

I ran across an article in The Conversation about lawsuits filed by 24 cities and states against Big Oil. “Unwilling to have their taxpayers bear the full brunt of these costs, the city and county sued Sunoco LP, Exxon Mobil Corp. and other big oil companies in 2020. … At stake in all of these cases is who pays for the staggering cost of a changing climate.”

These cases will be litigated for some time, but after all the legal delays, appeals, mumbo-jumbo, and mediation, who will actually pick up the tab?

Real-world economics says that it might be shareholders, taxpayers, or investors, but that obscures the real-world fact that all those people are you and you alone. Depending upon how many “hats” you wear, taxpayer, Big Oil consumer, pensioner, and shareholder will ultimately determine how much you pay the piper.

[1] 1988 was chosen as the year the UN’s Intergovernmental Panel on Climate Change was established, and “NASA scientist James Hansen testified before the US Senate that the human signal in climate change had been detected.”

Source: Time to pay the piper: Fossil fuel companies’ reparations for climate damages One Earth DOI: 10.1016/j.oneear.2023.04.012