From climate justice to climate liability

Many people have dismissed last month’s UN Climate Change Conference, COP27, as a failure, owing to the lack of progress on pledges made during the COP26 summit in 2021, and the absence of clear commitments to phase out fossil fuels. ore broadly, the COP process itself has been criticized as inadequate and ultimately unworkable, given its reliance on unanimity among all parties. But COP27 did produce one notable breakthrough: The world’s advanced economies, including the US and the EU, finally accepted some responsibility for the “loss and damage” caused by climate change.In the bureaucratic language of the conference’s final communique, they agreed “to establish new funding arrangements for assisting developing countries that are particularly vulnerable to the adverse effects of climate change in responding to loss and damage.” A special committee comprising 24 countries was established to determine how the new fund will be financed, managed and distributed. Their conclusions are due to be presented at the COP28 summit in the UAE toward the end of next year.
Yet, given that the Republicans will soon have control of the US House of Representatives, it is hard to believe that the US will be putting much cash on the table. There is also uncertainty about whether China will be a major contributor — although it is now a leading source of emissions, the UN still considers it a “developing” country.
COP27 produces one notable breakthrough: The world’s advanced economies finally accepted some responsibility for the “loss and damage” caused by climate change. Finally, while the EU has accepted, in principle, that the countries most responsible for climate change should help to bear its costs, Europe is heading into a recession, which will most likely limit contributions from EU member states.
China’s involvement is especially important because the EU has set Chinese contributions as a condition for its own participation. Therefore Gordon Brown, the former British prime minister, has warned that we could end up with a “fund without funders.” As real as that danger is, however, it should not diminish the importance of what governments agreed to during COP27. The developed world’s acceptance of responsibility for the effects of climate change establishes grounds for reparations, and indicates a degree of liability that will now be tested in courts around the world. “Climate justice” will evolve from a powerful slogan into a live legal issue. If climate change is the result of emissions, past and present, and if it is driving the increased incidence and severity of extreme weather, it means, for example, that the flooding this year in Pakistan and creeping desertification in North Africa can be attributed to the actions of those who caused the emissions. But who, exactly, is liable? The governments of the developed world have accepted that they are partly accountable. But responsibility, and therefore liability, might also be attributed to the companies that produced, sold, and profited from the products that generated the emissions.
Energy companies can try to argue that until the 1980s or 1990s, there was no scientific consensus on the adverse climatic effects of burning hydrocarbons. But from the 1990s onward, that defense cannot stand. The age of potential liability therefore began about 30 years ago, when the Intergovernmental Panel on Climate Change and other bodies began to build a body of credible scientific research. Now, the age of real climate liability is upon us.
For the companies involved — particularly those subject to the laws and political decisions of advanced economies — such liability is an existential threat. It is analogous to the 1998 Master Settlement Agreement that resolved the conflict between the tobacco industry and 46 US state attorneys general over responsibility for the medical costs associated with smoking.
But where that settlement required the companies to pay a total of $206 billion over 25 years, the bill for climate change and its associated costs will be much higher. The risks are global and they continue to grow because emissions continue to rise. In fact, the worst is yet to come — and the potential costs are almost beyond calculation.
There will be ferocious legal battles, to be sure. But simply by accepting responsibility for the global costs of climate change, in principle, the parties to the UN Framework Convention on Climate Change have let the genie out of the bottle. Fossil-fuel companies and their investors will not be able to claim that they were not warned.
True, COP27 left many participants and observers disappointed. Climate scientists, activists and others are understandably dismayed that the urgency of climate change is still being ignored, and that more immediate issues such as the cost-of-living crisis and Russia’s war in Ukraine are crowding out the attention of policymakers and the public.
But the reality is that COP27 will probably be remembered as a watershed moment. Now that the developed world has finally accepted a degree of financial responsibility for the loss and damage caused by climate change, the broader climate debate will henceforth turn on the question of liability. And that, in turn, could fundamentally change the main protagonists’ incentives.