What Happens if Oil Companies Are Forced to Pay for Climate Damage
Successful lawsuits cost the tobacco industry hundreds of billions. We asked experts about the likelihood of energy giants meeting the same fate.
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This flip originally appeared on VICE Canada.
When the cities of San Francisco and Oakland sued five of the world's biggest oil companies in late September for radically altering Earth's climate, raising sea levels, and causing billions of dollars in potential damage to each city, it was hard to tell how seriously to take the whole thing. Was the lawsuit simply political theater designed to shame fossil fuel overlords, or could it actually drive profound legal change?
The stakes are astoundingly huge. The cost of rebuilding from Hurricanes Harvey and Irma— disasters many scientists agree were made more destructive from climate change—could top $190 billion in the US. And Puerto Rico is in the middle of a $72 billion humanitarian crisis caused by Hurricane Maria. San Francisco and Oakland now belong to a growing wave of plaintiffs alleging that big oil—a group including such companies as Exxon, Chevron, Shell, BP, and ConocoPhillips—is legally liable for these costs, as well as future damages its industry wreaks upon the world.
No lawsuit of this type has yet succeeded. The legal requirements are too complex. The fossil fuel industry is too strong. Political leaders like Donald Trump don't even recognize climate change exists. This June, Exxon dismissed an investigation into its efforts to block climate action by New York's Attorney General as a "political witch hunt." Litigation is a potential nuisance for Exxon, but not an existential danger.
Yet some observers think that could soon change. They believe there are new and powerful strategies for suing big oil to be explored. US state courts could pass legislation making oil companies legally liable for the atmospheric chaos caused by their profit model. Or they could wait for an oil company to lose a legal battle in a foreign country and then enforce the ruling in the US.
"Litigation is not going to solve the climate crisis," said Michael Byers, a researcher of international law at the University of British Columbia and co-author of a recent journal article in the Washington Journal of Environmental Law & Policy describing the scenarios above. "But it will add another source of pressure that will do increasing amounts of damage—both economic and reputational—to these big [oil] companies."
If and when those companies are successfully sued, they could be on the hook for hundreds of billions of dollars. Exxon alone was responsible for $19.6 billion worth of global climate damages in 2010 according to Byers's research, an estimate that could rise to $138.6 billion a year by 2030. Successful litigation could help drive big oil out of business, accelerate the rise of low-carbon competitors and remove a major source of global emissions—things that would make us considerably less screwed when it comes to climate change. "It could also be the factor that pushes [oil companies] into a serious transition to renewable energy sources," Byers said, causing "the CEOs to reevaluate their business plan."
VICE contacted several experts in environmental law to assess the likelihood of something like this actually happening. Though some of them had doubts about the pace and scale of change described in Byers's article, they had no issue with its basic assumptions. Financial costs of natural disasters are growing. The science linking them to climate change is improving. Climate lawsuits are proliferating. And the odds of litigation succeeding are getting better all the time.
But suing the living daylights out of big oil remains maddeningly difficult. Say you were attempting to get Exxon to pay for damages caused by Hurricane Harvey. First, you'd have to convince a judge that the destruction of Harvey was made measurably worse by rising global temperatures—that is, assuming you could even persuade a court to consider the case. And then you would need to prove that Exxon itself, as opposed to all the other sources of greenhouse gas emissions across the planet, is legally responsible for the hurricane's destruction. "In the US right now, there are lots of legal impediments," Byers argued. "It's unclear if any case could succeed."
But people used to say the same thing about suing tobacco companies. For years those companies denied the link between smoking and cancer. Anyone seeking to sue them had to meet complex legal requirements. That all changed when Florida enacted the Medicaid Third Party Liability Act in 1995, which made it possible for the state to demand billions of dollars in public health costs due to cigarettes. "It cleared away most of the impediments to successful tobacco litigation," Byers said. Other states soon followed. And in late 1998, the four largest tobacco companies agreed to pay a $240 billion settlement. "They realized the jig was up," he said.
To Byers, the lesson is clear. "If climate liability is difficult or impossible to litigate under the current legal system, then change the law," he and two co-authors wrote in their recent journal article. New legislation could remove many of the barriers delaying and obstructing lawsuits against oil companies. It could, for instance, set guidelines for what evidence is required to link climate disasters to the fossil fuel business model. Or spell out how financial damages should be paid. That may not sound like much. But if such legislation were adopted by a state like California, it would "drop all the barriers," to lawsuits, Byers said. "The lawyers will flood in."
Some experts agree. Law professors from the University of Calgary and Dalhousie University published an article earlier this year in the Georgetown Environmental Law Review looking at whether "comparisons between tobacco and climate change liability withstand scrutiny." The professors concluded "that while there are some important differences between these two contexts, from a legal perspective the comparison is actually quite apt." And not only that: They argue that new legislation designed with the goal of accelerating climate lawsuits is "both likely and feasible."
But others are skeptical. Florida on its own didn't take down big tobacco. Large cash settlements were only possible after "Congress stepped in and created federal legislation to address the problem," said Michael Burger, the executive director of Columbia University's Sabin Center for Climate Change Law. Even if states did move to adopt tobacco-inspired laws, they'd face resistance from federal Republicans who don't believe in climate science. "I do not think there is any realistic probability that the United States Congress will pass legislation making it easier to litigate fossil fuel companies for climate damages in the foreseeable future," Burger has concluded.
But such changes may come from other countries instead. When Byers and his co-authors did a broad survey of the climate litigation literature, they found that very few experts had considered this possibility. "Everyone is focused on US law," he said. His team found evidence suggesting that if a foreign court were to hold Exxon or any other multinational oil company liable for climate damages, that judgment could then be enforced in the US. "You can have a case that's initiated in India or Bangladesh, places that are feeling the impacts of climate change," Byers argued.
It isn't just a theoretical possibility. Such cases are already in motion. The Human Rights Commission of the Philippines is currently investigating 50 of the planet's biggest greenhouse gas polluters—including oil majors like Exxon, Chevron, Shell, and BP—for their contribution to disasters like Typhoon Haiyan, which killed more than 6,000 Filipinos and caused $14 billion in damages. If those emitters are someday found liable for these costs, Byers believes a US court could force them to pay up. "Exxon may think it's legally protected in the United States," he said. "But it's not."
Lindene Patton is a bit a more hesitant. She's a member of the Washington, DC–based firm Earth & Water Law. Patton believes it's entirely feasible that a country like the Philippines could rule against big oil. But enforcing that ruling in the US could be just as hard as filing domestic litigation. "This is a complex undertaking," she said. It's not an impossible one though. The science linking extreme weather events to climate change is "moving very quickly," she said. "While there is some discussion about details, there is also much agreement about what's happening in the atmosphere." As science improves, so will the odds of litigation succeeding.
That's why observers like Michael Robinson-Dorn are closely following the lawsuit filed against big oil by San Francisco and Oakland last month. New scientific estimates suggest that Exxon, Chevron, and BP alone may have caused over six percent of the rise in global sea levels over the past century. "As the information continues to be collected, it's fairly obvious the percentage of the contribution that those major oil companies… have made to this problem," said Robinson-Dorn, executive director of the environmental law clinic at the University of California-Irvine. Add to it the fact Exxon has known for decades its business model is worsening climate change.
The attorneys in charge of the litigation against big oil in California aren't simply attempting to make a political statement. They are fighting to win. "That lawsuit in particular I would not think of as theater," Robinson-Dorn explained. "The threads are all coming together at the right time." If it succeeds—and as we've seen above, that is still far from likely—it would profoundly alter our legal landscape. It could make Exxon, Chevron, and ConocoPhillips alone liable for $340 billion in climate damages a year by 2030, either forcing their industry out of business or into a serious shift towards cleaner energy. Either outcome could help stave off planetary catastrophe. Robinson-Dorn thinks it's not a matter of if litigation starts to push us along this path, but when. "These sorts of [lawsuits] are going to lead to change," he said.
Geoff Dembicki is author of Are We Screwed? Follow him on Twitter.