A new study puts a price tag on climate damages owed by top companies such as Saudi Aramco, ExxonMobil, Shell, BP, Chevron, and other leading fossil fuel producers
According to a new study published in the journal One Earth, 21 largest fossil fuel producers globally will be collectively responsible for $5.4 trillion in expected economic costs from climate change over 2025-2050, or $209 billion annually on average.
The study called Time to pay the piper quantified annual payment owed by the top 21 fossil fuel companies from 2025 to 2050 for the expected extreme weather and other climate change damages caused by its operational and product emissions from 1988 to 2022, i.e. future damages due to historical emissions.
For instance, Saudi Aramco, which has the largest emissions over 1988-2022 from direct & product-related sources, is attributed annual liabilities of $43 billion. However, this is low compared to the company’s 2022 revenues of $604 billion and profits of $161 billion. Exxon, the leading investor-owned company, is attributed annual reparation payments of $18 billion—compared to revenues of $399 billion and profits of $56 billion in 2022.
According to the study, after accounting for non-fossil fuel sources of warming, future economic damages due to fossil fuel emissions are estimated at $69.6 trillion 2025-2050. The study conservatively attributed one third of these climate costs to the global fossil fuel industry, and one third each to governments and consumers.
The global fossil fuel industry has thus been found responsible for $23.2 trillion in expected GDP loss from climate change impacts over 2025-2050, or $893 billion per year.
To calculate the responsibilities of individual firms, the authors referred to their emissions since 1988, the year the IPCC was established, arguing that “since 1988, claims of scientific uncertainty about the consequences of carbon emissions are untenable.” About half of the warming experienced so far has happened since that date, and climate change impacts experienced in the coming decades will, in large part, be driven by emissions produced since the late 1980s.
Based on their share of emissions over 1988-2022, the 21 largest oil, gas and coal firms are therefore responsible for $5,444 billion in expected lost GDP over 2025-2050, or $209 billion per year.
Fossil fuel companies’ average annual reparations, 2025–2050 (billion US$, current). Adam Nieman, Real World Visuals, for Climate Accountability Institute.
The authors exempted four companies in low-income countries and halved their calculated liability for companies in six middle-income countries. One of the four exempted companies is India-based Coal India, responsible for 2.33% of cumulative global emissions between 1988-2022.
Lead author Marco Grasso, professor at the University of Milan-Bicocca said, “The proposed framework for quantifying and attributing reparations to major carbon fuel producers is grounded in moral theory and provides a starting point for discussion of the financial duty owed by the fossil fuel industry to climate victims” and hoped that this work “will inform future efforts to direct payments from fossil fuel companies to harmed parties.”
Co-author Richard Heede, co-founder and director of Climate Accountability Institute said, “This is only the tip of the iceberg of long-term climate damages, mitigation, and adaptation costs, insofar as our measure of GDP loss to 2050, while substantial, ignores the value of lost ecosystem services, extinctions, loss of human lives and livelihoods, and other components of well-being not captured in GDP.”
As an incentive to early action, the authors proposed that companies could be eligible for reduced reparations if they rapidly stop producing polluting fuels or meet their verified net-zero targets.