Climate Liability Lawsuits Threaten Global Climate Action: Study


Legal claims could be brought to international arbitration following climate liability lawsuits involving foreign oil and gas companies and threaten the global green energy transition, according to a new study.

A growing number of oil and gas companies are filing lawsuits around the world in an effort to block measures to limit global warming, which could have devastating consequences for global climate action and policy if successful.

Fossil fuel investors have begun to turn to private international tribunals, arguing that governments’ climate change policies are unlawfully undercutting their profits. In these so-called investor-state dispute settlements, companies seek compensation.

In the United States, the question of whether climate liability suits are a matter for state or federal courts has long been debated, and whether fossil fuel companies should be paid for their global warming emissions or be compensated for their losses due. to climate policies. Currently, the 10th United States Circuit Court of Appeals has said that these cases are still up to state judges, which has been echoed by other federal appeals courts.

Oil giants Suncor Energy and Exxon Mobil recently suffered loss in lower court when Boulder, Colorado and two other countries successfully sued fossil fuel companies in 2018 for climate damages and they “covered up and misrepresented” the dangers of using fossil fuels by the public. But, on June 8, 2022, companies asked the Federal Court to review the decisionwhich they hope could potentially work in their favor.

“Given the stakes of the climate change litigation, the issues presented here are among the most significant jurisdictional issues currently pending in federal courts,” the companies’ petition states.

A recent report on investor-state dispute settlement actions found that when such cases were decided on the merits, fossil fuel investors were successful 72% of the time, earning an average of US$600 million in compensation.

A separate study just appeared in the magazine Science predicts that more claims for investor-state disputes are expected as the oil and gas sector currently faces a loss of US$1 trillion from oil and gas reserves stranded due to climate policy changes . These losses would likely increase if nations continued to develop other oil and gas supplies to wean themselves off Russian fossil fuels after the invasion of Ukraine. Ultimately, taxpayers would bear the cost of these lawsuits, according to the newspaper.

Besides the significant financial implications, the emerging trend of climate liability lawsuits would affect the development of climate-related policies. The Intergovernmental Panel on Climate Change (IPCC) has also recognized that such cases could cause states to forbear or delay measures to phase out fossil fuels.

For example, in 2017, Canadian oil and gas company Vermilion threatened to use the investor-state dispute complaint to sue the government after then-French environment minister Nicolas Hulot drafted a law to end fossil fuel extraction by 2040. As a result, French legislation was watered down to allow for new oil and gas explorations even after 2040.

To solve this problem, governments must stop promoting the expansion of fossil fuels in the first place. “Delay climate action by granting new permits [for oil and gas expansion] both increases the risk of exceeding 1.5 degrees Celsius of warming and launching ISDS cases,” said Kyla Tienhaara, lead author of the study. Science paper. While there is a wide range of actions they could also take, “it comes down to simple political will.”

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