Climate Change: Fossil Fuel Companies' Spending Power

Fossil fuel companies are huge polluters, contributing to global warming and climate change. In 2018, 89% of global CO2 emissions came from fossil fuels and industry, with coal, oil, and gas being the three types of fossil fuels. The burning of these fuels releases large amounts of carbon dioxide, a greenhouse gas, into the atmosphere, trapping heat and causing global warming. A small number of fossil fuel producers, including ExxonMobil, Shell, BP, and Chevron, are responsible for a large proportion of emissions. These companies have been accused of greenwashing and misleading the public through advertising campaigns that focus on clean energy while continuing to primarily invest in oil and gas. In addition to their direct impact on the environment, fossil fuel companies also spend millions on lobbying to obstruct climate policy and influence climate legislation. The subsidies for fossil fuels have also surged to a record $7 trillion, with consumers not paying for over $5 trillion in environmental costs last year.

Fossil fuel subsidies surged to a record $7 trillion

Fossil fuel subsidies have reached a record-breaking $7 trillion, according to the International Monetary Fund (IMF). This surge in subsidies can be attributed to the global energy price spike caused by Russia's invasion of Ukraine and the economic recovery from the pandemic, which prompted governments to support consumers and businesses. As a result, subsidies for oil, coal, and natural gas have reached 7.1% of global gross domestic product, exceeding annual government spending on education and healthcare.

The rise in fossil fuel subsidies is particularly concerning given the urgent need to address climate change. The World Meteorological Organization has reported that July was the hottest month on record, underscoring the necessity of reducing human-induced climate change. The majority of subsidies are implicit, as environmental costs are often not reflected in fossil fuel prices, especially for coal and diesel. Consumers did not account for over $5 trillion in environmental costs last year, and this figure is projected to grow as developing countries increase their consumption of fossil fuels.

The elimination of explicit and implicit fossil fuel subsidies is estimated to have significant benefits. Firstly, it would prevent 1.6 million premature deaths annually by reducing air pollution and mitigating climate change. Secondly, it would generate $4.4 trillion in additional government revenue, which could be used to fund public goods such as education, healthcare, and clean energy. Lastly, it would contribute to reducing global warming by putting emissions on track to meet global targets.

However, removing fuel subsidies is a complex issue that requires careful planning and implementation. Vulnerable households may be negatively impacted by higher energy prices, so governments must design and communicate reforms that clearly outline the benefits of the changes. Additionally, increased revenues should be used to compensate these households and fund public goods.

With global energy prices receding, now is the ideal time to phase out explicit and implicit fossil fuel subsidies to create a healthier and more sustainable future for the planet.

Fossil fuel firms owe $209 billion a year for climate damage

Fossil fuel companies have long been identified as huge polluters, contributing significantly to global warming and climate change. A 2017 report by the Carbon Majors Report and the Climate Accountability Institute revealed that just 100 companies have been responsible for over 70% of the world's greenhouse gas emissions since 1988. This includes investor-owned companies such as ExxonMobil, Shell, BP, and Chevron. Despite the urgent need to reduce emissions, these companies have continued to pursue fossil fuel projects, risking wasting trillions of dollars and threatening investor returns.

The impact of fossil fuels on climate change is undeniable. The burning of fossil fuels releases carbon dioxide and other greenhouse gases, trapping heat in the atmosphere and leading to global warming. The Intergovernmental Panel on Climate Change (IPCC) has confirmed that emissions from fossil fuels are the dominant cause of this warming. In 2018, a staggering 89% of global CO2 emissions originated from fossil fuels and industry.

To address this issue, researchers from the University of Milan-Bicocca and the Center for Climate Accountability have proposed a multi-billion dollar reparations scheme. Their study, published in the journal One Earth, identifies 21 coal, oil, and gas companies that should be held accountable for the damage caused by their greenhouse gas emissions. These companies, including Saudi Aramco, ExxonMobil, Shell, BP, and Chevron, have contributed significantly to the surge in global emissions between 1988 and 2022. The study estimates that these companies owe $209 billion per year in compensation for the extreme weather events and other climate change impacts predicted to occur worldwide between 2025 and 2050.

The proposed reparations scheme is not intended to substitute climate finance under the United Nations (UN) but to complement existing mechanisms. The researchers argue that fossil fuel companies have a moral responsibility to remedy the climate harm they have caused, especially considering their history of climate denial and misinformation. While the scheme does not take into account the full extent of the damage, including lost ecosystem services, extinctions, and loss of human lives, it is still considered a starting point for discussions on financial duty.

The issue of fossil fuel companies' responsibility for climate change is gaining traction, with nations vulnerable to climate change calling for polluting companies to pay for the loss and damage caused. As the world moves towards renewable energy and sustainable practices, it is crucial to hold these companies accountable and ensure a just transition to a greener future.

100 companies responsible for 71% of emissions since 1988

According to a 2017 report by the Carbon Disclosure Project (CDP), 100 companies have been responsible for 71% of global greenhouse gas emissions since 1988. The report, titled "CDP Carbon Majors Report 2017", shines a light on the role of companies and investors in tackling climate change. The year 1988 was chosen as the starting point because it was when the Intergovernmental Panel on Climate Change (IPCC) was established and the first time that human responsibility for climate change was officially recognised.

The CDP report found that more than half of global industrial emissions since 1988 could be traced to just 25 corporate and state-owned entities. ExxonMobil, Shell, BP, and Chevron are among the highest-emitting investor-owned companies during this period. The report also revealed that 32% of emissions come from public investor-owned companies, highlighting the importance of investors in the transition to a sustainable economy.

The Carbon Majors Report, published in collaboration with the Climate Accountability Institute, is based on a database of publicly available emissions figures. It aims to improve transparency among fossil fuel producers and help investors understand the emissions associated with their fossil fuel holdings. According to Pedro Faria, technical director at CDP, the report "pinpoints how a relatively small set of fossil fuel producers may hold the key to systemic change on carbon emissions."

If fossil fuel extraction continues at the same rate over the next 28 years as it did between 1988 and 2017, the report warns that global average temperatures could rise by 4 degrees Celsius by the end of the century. This would likely lead to catastrophic consequences, including substantial species extinction and global food scarcity risks.

While the report focuses on the role of fossil fuel producers, it is important to note that it does not include all worldwide emissions. For example, deforestation emissions, which represent a significant portion of emissions, are not taken into account. Nonetheless, the CDP report has been instrumental in shifting the debate on climate change responsibility from individuals to the private investors, states, local communities, and companies that have the power to drive systemic change.

Fossil fuel advertising and greenwashing

Fossil fuel companies are spending large sums of money on advertising and greenwashing campaigns, while simultaneously contributing significantly to climate change. In 2019, BP spent millions on an advertising campaign promoting its low-carbon energy and cleaner natural gas initiatives. However, it was revealed that over 96% of BP's annual expenditure still goes towards oil and gas, highlighting a disconnect between their advertising and actual practices. This issue is not unique to BP, as other fossil fuel companies engage in similar greenwashing tactics.

Greenwashing refers to the deceptive practice of portraying a company's products, services, or policies as environmentally friendly when they are not. Fossil fuel companies have a long history of climate denial and misinformation, which has impeded global progress in mitigating climate change. Despite scientific evidence and warnings from organizations like the Intergovernmental Panel on Climate Change (IPCC), these companies have continued to prioritize short-term profitability over the urgent need to reduce emissions.

The Carbon Majors Report revealed that just 100 companies, including ExxonMobil, Shell, BP, and Chevron, have been responsible for more than 70% of the world's greenhouse gas emissions since 1988. These emissions have severe consequences, including global food scarcity risks and substantial species extinction. Researchers have estimated that the top 21 fossil fuel companies owe $209 billion per year in compensation for the extreme weather events and other climate change impacts predicted to occur between 2025 and 2050.

To influence climate policy and delay regulatory action, fossil fuel companies also engage in lobbying. It is estimated that five key oil and gas companies and trade associations spent almost $115 million per year on obstructive climate-influencing activities. When extrapolated across the entire fossil fuel industry, this spending could reach $500 million annually.

The issue of fossil fuel subsidies further complicates the matter. In 2022, global fossil fuel subsidies reached $7 trillion, or 7.1% of global GDP. These subsidies are intended to protect consumers by keeping prices low, but they have significant negative consequences. They contribute to air pollution, hinder progress towards slowing climate change, and benefit higher-income households more than lower-income households. Removing these subsidies could significantly reduce global carbon dioxide emissions and generate additional revenue for governments.

Fossil fuel companies' spending on obstructive climate policy lobbying

Fossil fuel companies have been criticised for their spending on obstructive climate policy lobbying. In 2016, five key representative oil and gas companies and trade associations spent a combined total of almost $115 million per year on obstructive climate influencing activities, with the American Petroleum Institute, ExxonMobil, and Shell being the highest spenders. This included lobbying to expand oil and fossil gas production and infrastructure, as well as pushing back on key policies aimed at reducing emissions and tackling climate change.

The InfluenceMap report, which analysed each company's lobbying activity and intensity of engagement, found that US-based fossil fuel companies dominated the 2022 list of the world's most obstructive organisations when it came to climate policy. Chevron and ExxonMobil took the top two spots, followed by fellow US energy producers ConocoPhillips, Marathon Petroleum, Valero Energy, and Phillips 66. These companies have been accused of capitalising on the Ukraine invasion by pushing for oil and gas expansion, rather than supporting the transition to clean energy.

The report also highlighted the negative influence of certain companies in the transport sector, with Toyota, Lufthansa, and BMW opposing policies designed to phase out the internal combustion engine. German chemicals giant BASF was also noted for its active lobbying to expand oil and fossil gas production and push back on EU policies aimed at reducing emissions.

While some fossil fuel companies have made commitments to addressing climate change, there is a disconnect between their public statements and their actions, as they continue to lobby against specific policies designed to achieve emissions reductions. This obstructive behaviour has significant consequences for global efforts to mitigate climate change and transition to cleaner energy sources.

Overall, it is estimated that the fossil fuel and other industrial sectors may be spending around $500 million annually on obstructive climate policy lobbying. This highlights the need for increased transparency and accountability among these companies and their trade groups, as their actions have a significant impact on the scope and effectiveness of climate policies.

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