The world’s leading fossil fuel companies, including BP, Shell, ExxonMobil, Total, Saudi Aramco, and Chevron, will be collectively responsible for $5.4 trillion in climate-related damages from 2025 to 2050, according to a groundbreaking study published in the journal One Earth.
The study, titled ‘Time to Pay the Piper,’ conducted by the Climate Accountability Institute, quantifies the annual climate reparations owed by these companies to communities most affected by their polluting activities.
It calculates that these firms owe at least $209 billion per year to compensate for the harm caused by droughts, wildfires, sea-level rise, melting glaciers, and other climate catastrophes.
This analysis marks the first time researchers have measured the economic burden imposed by individual companies that profit from extracting and burning fossil fuels.
The researchers used the carbon majors database, which tracks emissions from oil, gas, and coal corporations since 1988, to establish a foundation for attributing financial responsibility.
The study’s methodology, developed by co-author Richard Heede, considers the economic costs but excludes the value of lost lives, livelihoods, species extinction, biodiversity loss, and other well-being factors not captured in GDP.
The study argues that this estimated cost is likely conservative, representing only a fraction of climate change’s long-term damages, mitigation, and adaptation expenses.
The authors propose that fossil fuel companies, which have profited immensely from their activities, should utilize some of their ‘tainted wealth’ to compensate those most affected.
Creating an evidence-based framework for assigning a ‘polluter pays’ price tag is a significant step toward achieving climate justice. Harjeet Singh, head of global political strategy at Climate Action Network International, stated that the report’s figures expose the crimes against humanity and nature committed by polluters.
Mohamed Adow, director of Power Shift Africa, called on oil and gas companies to pay reparations for the damage caused by their fossil fuel extraction and their efforts to impede climate action.
The issue of climate impact costs has predominantly focused on the responsibility of nation-states but demands for reparations have intensified as the consequences of climate change escalate.
At the recent Cop27 summit, countries agreed to establish a ‘loss and damage’ financing fund to partially compensate poorer nations for the unavoidable costs of extreme weather events and slow-onset climate disasters.
The study’s findings could influence discussions on loss and damage negotiations, providing policymakers and negotiators with a concrete framework to allocate responsibility to historical polluters.
The total economic damages from the climate crisis are estimated at $99 trillion from 2025 to 2050, with fossil fuel emissions accounting for $69.6 trillion. The study attributes one-third of these costs to the global fossil fuel industry, with governments and consumers each responsible for one-third.
The study reveals the financial liability of individual fossil fuel companies. For example, Saudi Aramco would owe $43 billion annually, ExxonMobil $18 billion, and Shell and BP collectively liable for $30.8 billion per year.
The study exempts some companies in low-income and middle-income countries based on moral arguments, aiming to allow them to contribute more through taxation and other means.
The researchers hope their evidence-based methodology will assist courts in attributing blame and calculating damages in ongoing climate litigation.
They argue that it complements the discussions on climate finance, filling the substantial gap left by states in covering the scale and costs of climate harm. The fossil fuel companies mentioned in the study were contacted for comment, with Shell emphasizing the need for collaborative efforts in addressing climate change, while Saudi Aramco declined to comment.
This study quantifies the annual climate reparations owed by major fossil fuel companies. It presents a moral case for them to compensate the communities most impacted by their activities. It aims to contribute to discussions on climate justice, loss and damage negotiations, and potential legal actions against these companies.
