In 2022 Aramco announced what its CEO called “probably the highest net income ever recorded in the corporate world.”

Supply disruptions resulting from the illegal invasion of Ukraine by Russia - the largest gas supplier to Europe - led to huge spikes in price for gas, which then bled into demand for other fossil fuels, tightening energy markets around the world and pushing up prices for goods across supply chains.

Meanwhile, unprecedented disasters fuelled by climate change made the case for a robust funding mechanism for loss and damage more pressing. The 2022 United Nations’ climate conference saw a breakthrough, with the agreement to establish both a new fund for loss and damage and new funding arrangements.

In this report we explore who could pay for loss and damage through the lens of responsibility for historic emissions, and the financial gains generated from selling oil and gas.

We use a well-established methodology - the social cost of carbon - to calculate damage estimates from the 25 biggest emitting oil and gas companies in the world from 1985 to 2018, and compare it with the financial gains made over the same period. We look at Scopes 1, 2 and 3 emissions in our estimate of the total damages resulting from emissions attributable to fossil fuel companies.

To account for the potential responsibility of other actors such as consumers and policymakers, we also explore an established approach that uses a clean third split between producers, emitters and policymakers. We refer to this as partial damage allocation.

Between 1985 and 2018, we estimate partial damages of the combined CO2 emissions from 25 companies - oil and gas carbon majors - of about 20 trillion USD. Over the same time period, their financial gains were about 50% larger - roughly 30 trillion USD.

Carbon majors could have paid for their damages and still made 10 trillion USD.

The dirtiest dozen

The dirtiest dozen of the carbon majors account for about 15 trillion USD in damages and 21 trillion USD in gains.

Carbon majors figures — Estimated partial damages linked to emissions attributable to the 12 highest emitting fossil fuel companies and their respective financial gains between 1985-2018 by company and country in 2020 USD trillions.

Saudi Arabia, Russia, Iran, China and the United Arab Emirates are home to the largest state-owned carbon majors with both the largest financial gains and damages incurred. Of the private companies, ExxonMobil, Shell, BP, Chevron and TotalEnergies were responsible for the highest damages and saw the biggest financial gains.

For a subset of seven carbon majors including Aramco, Exxon Mobil, and Shell, we provide estimates for 2022. These seven carbon majors together amassed 497 billion USD in financial gains in 2022 compared to 260 billion USD in partial damage estimates. In other words, financial gains were almost twice the estimated partial damages.

Self-perpetuating fossil wealth

Several countries channel parts of their fossil fuel gains into some of the biggest sovereign wealth funds world-wide. The sheer size of the funds, and their returns, points to the persistence of fossil-accumulated wealth well beyond extraction.

The United Arab Emirates is home to the biggest combined sovereign wealth funds in the world. Half of its funds could pay for the damages associated with its oil and gas industry, and it would still have 700 billion USD in wealth.

The United Nations Secretary General and leaders of vulnerable countries have called for the use of windfall taxes to redistribute huge profits from carbon majors (which look set to continue) for loss and damage funding. Governments that are home to these carbon majors, or perhaps the companies themselves, could well be called on to contribute to a loss and damage fund. It’s clear they are good for it.

Loss and damage

Publications

The impacts of multiple tropical cyclone events and associated precipitation on household income and expenditures

Climate change-fueled tropical cyclones have already reduced household incomes across the Philippines by 7% on average, according to a new study. This figure rises to more than 20% in some provinces.

The 1.5°C limit and risks of overshoot

This briefing looks at what the 1.5°C limit means in terms of adaptation and loss and damage for the most vulnerable countries and regions. It finds that slowing down warming is critical to buy us time to adapt and also to avoid irreversible loss and damage. Even if warming rises above 1.5°C (overshoot) we can bring it down again with ambitious emissions reductions.

Le seuil de +1,5°C et le risque de dépassement de ce seuil

Ce rapport examine ce que la limite de 1,5 °C signifie en termes d'adaptation et de pertes et dommages pour les pays et régions les plus vulnérables. Il constate qu'il est essentiel de ralentir le réchauffement pour nous donner le temps de nous adapter et pour éviter des pertes et des dommages irréversibles. Même si le réchauffement dépasse 1,5 °C, nous pouvons le faire baisser à nouveau en réduisant les émissions de manière ambitieuse.

Climate justice and loss and damage: perspectives from the global south

This article outlines the loss and damage debate through a climate justice lens with particular emphasis on Small Island Developing States and Least Developed Countries. It examines the latest developments of the new loss and damage fund including operationalisation.

Coastal loss and damage for small islands

This commentary on a paper in Nature Sustainability reviews how the study quantifies the impacts of sea-level rise on small island states and estimates the impacts in terms of cost, land loss and population exposure across all small islands worldwide.

The effects of political knowledge use by developing country negotiators in Loss and Damage negotiations

This article traces how developing country negotiators used knowledge to further their interests in loss and damage negotiations from 2003 to 2013.

Risks of synchronised low yields are underestimated in climate and crop model projections

This study finds that the jet stream – air currents in the upper atmosphere – can synchronise extreme weather caused by climate change, resulting in crop failures in multiple countries at the same time.

Research agenda for the loss and damage fund

This piece in Nature discusses what research could contribute to the design of the loss and damage fund.

Houses built on the mountains just outside of Port-au-Prince, Haiti

Climate justice and loss and damage: Hurricane Dorian, Haitians and human rights

Haitian communities were the locus of the majority of deaths and missing people attributed to the 2019 Hurricane Dorian and faced a series of distributional, procedural and recognition injustices. We investigate the historical factors and contemporary conditions of Haitian communities in The Bahamas that resulted in significant inequities, disproportional impacts and infractions of human rights.

Boat, beach, building in Arnos Vale, Saint Vincent and the Grenadines by Winston Chen

Assessment of adaptation potentials in the context of climate change: the case of tropical cyclones in the Caribbean

This report looks into the application of a natural catastrophe model that calculates climate risk and potential of adaptation in the Caribbean.

Loss and damage implications of sea-level rise on Small Island Developing States

This review assesses the regional nature of sea-level rise for Small Island Developing States, highlights associated impacts and risks, and reviews limits to adaptation and resultant economic and non-economic loss and damage.

Making sense of the politics in the climate change loss & damage debate

This article looks at the politics of loss and damage and inquires into negotiators' perceptions of the most contentious issues surrounding loss and damage negotiations.

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Carbon majors’ trillion dollar damages