Governments have been told they need to ensure that energy companies keep to their promises on efforts to reduce fossil fuel use and contribute to the funds to ensure global climate resilience.
International think tank Climate Analytics today published its latest report which found global climate damages from emissions associated with the top 25 oil and gas ‘carbon majors’ between 1985 and 2018 are estimated at US$20 trillion compared to the $30 trillion they earned over the same period.
The report said the top three emitters are Saudi Arabia’s Aramco, Russian government-owned Gazprom, the National Iranian Oil company, and the top investor-owned companies are ExxonMobil, Shell, BP and Chevron. The list also includes the company led by the president of this year’s international climate negotiations at COP28: the Abu Dhabi National Oil Company.
“These oil and gas majors have known about climate change for decades, yet they have doubled down on their business model. They have reaped massive financial gains, while climate change has intensified and left vulnerable peoples, and particularly developing countries, footing the bill,” said lead author Dr Carl-Friedrich Schleussner.
The authors used a middle of the road estimate for the social cost of carbon ($185 per tonne of CO2) to calculate the damage estimates. Oil majors were attributed with a third of the damages, sharing responsibility equally with governments and consumers.
In 2022 energy prices increased significantly, and the financial gains for oil and gas companies reached record highs. Aramco announced what its CEO called “probably the highest net income ever recorded in the corporate world.”
For 2022, authors said they were able to gather data for a subset of seven carbon majors including Aramco, Exxon Mobil, and Shell, showing that financial gains were almost twice the estimated damages caused by their emissions that year – $497 billion compared to $260 billion.
The report also compares damages to sovereign wealth funds, which were largely created using profits from fossil fuel extraction.
The United Arab Emirates, host of this years’ COP28, is home to the biggest combined sovereign wealth funds. Half of its funds could pay for the damages caused by the emissions associated with its oil and gas industry between 1985 and 2018, and it would still have $700 billion in wealth.
“Since their establishment, these funds have grown to such an extent that it’s clear that ‘fossil wealth’ is now perpetuating itself. But the other legacy of this wealth is climate devastation,” said report author Dr Marina Andrijevic.
The report added Last year at COP27 all governments acknowledged that there was a need for new sources of funding for loss and damage. Mia Mottley, the Prime Minister of Barbados, specifically called for a 10% tax on oil and gas company profits to pay into a loss and damage fund.
“After last year’s super profits some of these companies are walking back their climate commitments, showing that we can’t rely on them to do this on their own – certainly not at the pace that we need. Governments should step in and tax polluters to pay for the loss and damage they are causing. We also need a firm commitment in the COP28 outcome to phase out fossil fuels to keep 1.5°C alive,” concluded Schleussner.