Fossil Fuel Giants: Should They Pay for Climate Damages?

UN Bonn Climate Change Conference
Vermont leads the charge to hold fossil fuel companies accountable for climate damages, as UN and IEA warn global energy targets are off track

The UN and the International Energy Agency (IEA) reveal we are not on track to meet climate goals. Ahead of COP29, UN Secretary General António Guterres demands oil companies pay damages.

UN Secretary General António Guterres

“The battle for 1.5 degrees will be won or lost in the 2020s under the watch of leaders today,” António said in a World Environment Day address. “It all depends on the decisions those leaders take, or fail to take, especially in the next 18 months. It's climate crunch time.”

Climate Goals Unmet

António has a clear message for fossil fuel giants.

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“I call on advertising and PR companies to stop taking on new fossil fuel clients, from today, and set out plans to drop your existing ones,” he stated. “And I urge every country to ban advertising from fossil fuel companies, and every news media and tech company to stop taking fossil fuel advertising.”

Polluters to foot the bill? Vermont takes action

Vermont is leading the charge, addressing damage caused by climate change. The state experienced devastating summer flooding and other extreme weather, destroying communities, roads and houses.

As a solution, Vermont is holding fossil fuel companies accountable for the damage.

Destruction caused by climate change in Vermont 2023. Credit: NASA

“For too long, giant fossil fuel companies have knowingly lit the match of climate disruption without being required to do a thing to put out the fire,” said Paul Burns, Executive Director of the Vermont Public Interest Research Group.

“Finally, maybe for the first time anywhere, Vermont is going to hold the companies most responsible for climate-driven floods, fires and heat waves financially accountable for a fair share of the damages they’ve caused.”

A new legislation mandates the Vermont state treasurer, in consultation with the Agency of Natural Resources, to compile a report on the costs incurred by the state and its people due to greenhouse gas emissions from 1 January, 1995 to 31 December, 2024. This report will cover public health, natural resources, agriculture, economic development, housing and other areas.

Destruction caused by climate change in Vermont 2023. Credit: AP

Using federal data, the polluter-pays model will determine the amount of greenhouse gas emissions attributed to each fossil fuel company.

Unsurprisingly, the oil and gas industry opposes this move. “The legislation retroactively imposes costs and liability on prior activities that were legal, violates equal protection and due process rights by holding companies responsible for the actions of society at large; and is preempted by federal law,” argued the American Petroleum Institute.

Scott Lauermann, Senior Manager, Media Relations and Rapid Response at the American Petroleum Institute, added: “This punitive new fee represents yet another step in a coordinated campaign to undermine America’s energy advantage and the economic and national security benefits it provides.” 

Global energy investments and COP29 expectations

Despite significant investments in clean energy, the IEA reports that global efforts still fall short of COP28 climate goals.

Dr Fatih Birol, the IEA’s Executive Chairman, emphasised: “By delivering on the goals agreed at COP28 – including tripling renewables and doubling energy efficiency improvements by 2030 – countries worldwide have a major opportunity to accelerate progress towards a more secure, affordable and sustainable energy system.

Fatih Birol, Executive Director of the IEA

“The IEA will continue to support governments around the world in efforts to achieve this.”

In 2024, global investment in clean energy is set to nearly double that in fossil fuels. Total energy investment worldwide is projected to surpass US$3tn, with US$2tn directed towards clean technologies such as renewables, electric vehicles, nuclear power, grids, storage, low-emissions fuels, efficiency improvements and heat pumps. The remainder, slightly over US$1tn, will go to coal, gas and oil.

“Clean energy investment is setting new records even in challenging economic conditions, highlighting the momentum behind the new global energy economy,” Fatih noted. “For every dollar going to fossil fuels today, almost two dollars are invested in clean energy.

“The rise in clean energy spending is underpinned by strong economics, continued cost reductions and considerations of energy security. But more must be done to ensure that investment reaches where it is needed most, particularly in developing economies lacking affordable, sustainable, and secure energy today.”

Working toward COP29

As COP29 approaches, leaders worldwide will gather to address climate action and legislate to meet Paris Agreement warming targets. 

As COP29 President-Designate Mukhtar Babayev recently stated at the Bonn Climate Change Conference: “Our future rests on us coming together to build the fair and ambitious solutions needed to cut greenhouse gas emissions and build a resilient world.”

Energy discussions at COP29 will include high-level dialogues with the IEA. 

“The Global Stocktake found that adaptation efforts are not on track to achieve our long-term goals,” said COP29 Lead Negotiator Yalchin Rafiyev. “The COP29 Presidency acknowledges this urgency and is emphasising the importance of adaptation in all its engagements.”

COP29 faces scrutiny over its leadership, following COP28's Presidency by Dr Sultan Al Jaber, head of the Abu Dhabi National Oil Company. Environmentalists question whether these leaders can make the firm decisions demanded by the UN and IEA.

“I believe that COP29 will be a litmus test for the Paris Agreement and global climate action,” Yalchin stated.

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