Climate Change: Oil and gas majors could have paid for their share of climate loss and damage and still earned $10trillion – new report

Global climate damages from emissions associated with the top 25 oil and gas ‘carbon majors’ between 1985 and 2018 are estimated at 20 trillion USD compared to the 30 trillion USD they earned over the same period, according to a new report released by international think tank Climate Analytics.

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: 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 USD 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.

2022 super profits

In 2022 energy prices skyrocketed, 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 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 USD compared to 260 billion USD. 

 

Self-perpetuating fossil wealth 

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’ international climate negotiations, 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 USD 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.

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.

 

African NGOs call to stop proliferation of coal, oil and gas at African Union summit

More than 25 organisations, networks and community resistance groups from Africa and around the world have called on African governments to prevent the proliferation of coal, oil and gas in Africa.

They also want leaders to ensure efforts to address fossil fuels match those which have helped reduce the danger from nuclear weapons.

The communiqué signed by the group criticized the deliberate proliferation of coal, oil, and gas in Africa, contrary to scientific evidence and highlighted the contradiction between planned fossil fuel expansion and globally agreed climate targets.

They also condemned the way some African governments were avoiding scrutiny from civil society groups and even violently targeting environmental activists and human rights defenders in some places.

Representatives from the different NGO groups who attended an Africa Energy Leaders Summit on Climate Change, Energy, and Energy Finance in Addis Ababa last week included MELCA-Ethiopia, Oil Change Africa, Health of Mother Earth Foundation, Oxfam, Friends of the Earth, the deCOALonize Campaign and Power Shift Africa.

The rise of fossil fuels as a major threat to human wellbeing and safety was reflected in last month’s 2020 Global Risks Report from the World Economic Forum which, for the first time, saw environmental dangers fill the top five places on the list.

Weapons of mass destruction used to feature highly but it’s now classed as much less likely thanks in part to nuclear non-proliferation treaties. Now the fossil fuel driven climate crisis, which disproportionately affects Africans, is listed as the world’s major threat.

The group specifically called on African leaders to: “Put an end to fossil fuel development; to manage the decline of existing production of oil, gas, and coal; and to rapidly initiate a transition to clean and safe renewable sources of energy that fully supports access to energy for those who currently lack it.” They also ask them to “publicly condemn and reject the double standards advanced by fossil fuel companies and their allied interests, which result in the discriminatory treatment of Africa and her peoples.”

Mohamed Adow, Director of climate and energy think tank Power Shift Africa said: “The fossil fuel industry represents an existential threat to Africa and the world – and to have chance of meeting the Paris Agreement goal of limiting warming to below 1.5C degrees, international cooperation is required to prevent the proliferation of coal, oil and gas, at the scale and speed required to stabilise the Earth’s climate.

“African countries investing in fossil fuels risk creating stranded assets, and an unmanaged and disorderly transition from fossil fuels. We can either intentionally develop new ways to meet our energy needs without increasing our emissions or altogether lose the window of opportunity to ensure a safe climate and a sustainable future.

“That’s why African civil society are calling for African states and institutions to take a lead in the creation of a fossil fuel non-proliferation treaty in order to advance the interests of our continent and its people.”

Omar Elmawi, Coordinator for the deCOALonize Campaign said: “The abundance of renewable energy like wind, solar and geothermal make it possible for Africa to leapfrog dirty fossil fuels like coal that countries in the west had to rely on for their development. Coal and other fossil fuels has lost the war to renewable energy on both environmental and economic grounds. It’s the reason developed countries, including China, are now shutting their coal plants in favour of clean energy.

That is why Africa should tap into its vast renewable energy resources that can power the continent without harming its people or the environment.”

Nthabiseng Matsoha, Earthlife Africa's Researcher and Energy Policy Officer said "Africa has long been pillaged and exploited for its resources, with little benefit to its people. Now, as the world embraces the energy transition away from fossil fuels to low-carbon solutions, there is potential to disrupt existing power dynamics. Its high time the continent’s renewable energy potential benefitted ordinary people. This is especially important as we move towards a 'just transition' to a decarbonised world. Community ownership models should be explored, to not only benefit but empower."

African journalists empowered to exert oversight on extractive industry

Efficient management of revenues generated from the extractive industry – oil, gas and mining – could help improve health care and education of the poor as well as serve as catalyst for economic growth.

This is achievable in emerging African economies if journalists are able to play an effective advocacy and oversight role over the sector.

To achieve this goal, a training program targeting journalists drawn from Ghana, Tanzania and Uganda has opened in Kampala, Uganda to expose participants to the critical issues surrounding the exploitation, management and utilization of oil, gas and mineral resources in their respective countries.

The 5^th fellowship session is to introduce the participants to the fundamental issues concerning the exploitation, utilization, benefits, and challenges of oil, gas, and mineral resources, enriched with a global perspective.

It is organized by Revenue Watch Institute (RWI), in conjunction with Ghana’s PenPlusBytes and the Africa Centre for Media Excellence (ACME).

Media Program Officer with RWI, George Lugalambi, at the course opening enjoined journalists to vigilant on issues of transparency, effective management and accountability in the extractives.

The ten-day training is under the theme: “Strengthening Media Oversight of the Extractive Sectors: Reporting on Oil, Gas and Mining”. It is designed to help journalists develop the knowledge and skills to stimulate and feed public debate on how best to ensure that the proceeds from natural resources are used to serve the interests of a country and its citizens.

“The extractive sector revenues are important for wealth creation and poverty reduction in Africa. However, this promise can only be realized if all stakeholders especially the media are given the capacity to play an oversight role and we are delighted that this week in Kampala, we are going to support the knowledge and skills set of 30 journalists to enable them play this crucial role effectively,” stated Kwami Ahiabenu II, President of Penplusbytes.

 

The training programme begun in 2011 with the aim of increasing the quantity and quality of oil and gas stories. It has so far built the capacity of about 70 journalists to enable them play the critical role of helping inform and engage citizens, CSOs and parliament to effectively hold government and companies in the sector accountable

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Story by Kofi Adu Domfeh