30 trillion reasons to make Big Oil pay up

Since the mid-1980s, the 25 largest oil and gas companies around the world have fought climate policies tooth and nail, making US$30 trillion in the process, according to a study published Thursday.

The analysis from German-headquartered Climate Analytics also calculated the climate-related damages from the emissions of the oil and gas companies and found those 25 fossil fuel companies were responsible for approximately US$20 trillion worth of destruction. In other words, the “carbon majors” responsible for the crisis at hand knowingly spent decades that could have been used to avoid disastrous global warming to make so much money they could have paid their “fair share” of climate-related damages and still pocketed US$10 trillion, according to the report.

Among the 25 companies raking in trillions of dollars over the years while torching the planet are firms with significant Canadian footprints. ExxonMobil, including its Canadian subsidiary Imperial Oil, was ranked as the fourth-largest contributor to the climate crisis, having caused US$1.2 trillion in damage while making an equivalent amount in profit. Shell, which controls a 40 per cent stake in LNG Canada — the country’s largest-ever investment in fossil fuels — was found to be the sixth-largest contributor to climate change. Responsible for US$1.1 trillion in damage over the years, it made US$900 billion in profit. Other companies with Canadian, or planned Canadian operations, include ConocoPhillips (with business in the oilsands and the Montney gas field), Petronas (invested in LNG Canada), and BP, Chevron and Equinor that all are planning new projects in Newfoundland and Labrador’s offshore oil industry.

“These oil and gas majors have known about climate change for decades, yet they have doubled down on their business model,” said lead author Carl-Friedrich Schleussner in a statement. “They have reaped massive financial gains, while climate change has intensified and left vulnerable peoples, and particularly developing countries, footing the bill.”

At a time when the damage from climate change is undeniable, unprecedented and will continue to worsen as long as fossil fuels are burned, as much as 96 per cent of 700 companies, analyzed by German environmental non-profit Urgewald, are exploring or developing new oil and gas fields. Additionally, 1,023 companies are planning to build new liquified natural gas (LNG) terminals, pipelines or gas-fired power plants, all of which lock in fossil fuel use and undermine the Paris Agreement’s target of 1.5 C above pre-industrial levels.

The studies come in the context of oil and gas companies' unprecedented windfall. Last year around the world, fossil fuel companies posted record profits, and the Canadian oil and gas sector was no different. In 2022, Canadian-headquartered oil and gas companies like Suncor and Canadian Natural Resources, as well as the Canadian arms of international energy majors like Shell and ExxonMobil, posted profits approaching $40 billion. For the five Canadian firms that make up the Pathways Alliance (Suncor, Cenovus, MEG, Imperial and Canadian Natural Resources), the companies returned $29 billion to shareholders in the form of increased dividend payments and share buybacks.

Using this flood of cash, oil and gas companies in Canada are plotting a dramatic expansion to their business that will mean even more greenhouse gases released into the atmosphere, where they will accumulate and push the planet’s temperature to more dangerous levels. A study from Oil Change International published in September found Canada is on track to be the second-largest fossil fuel expander, behind the United States, by 2050. On its own, Canada’s planned fossil fuel expansion represents 10 per cent of the world’s expansion plans, creating the equivalent greenhouse gas emissions of 117 coal plants run for decades.

Collision course

The findings from Climate Analytics and Urgewald underscore the collision course countries are on as the annual UN climate negotiations approach. In late November, world leaders will gather in Dubai for COP28 where phasing out fossil fuel production and paying for climate-related loss and damages are set to be contentious issues for negotiators.

Last year, countries agreed to set up a loss and damage fund to compensate poorer countries for climate-related loss and damages they suffer disproportionately from but the fund does not yet have money or a strategy to disperse it. Practically, that means this year negotiators will focus on who should put cash in the pot, and how much they owe.

Previously, UN Secretary General António Guterres called on rich countries to impose windfall taxes on oil and gas companies and use that money to capitalize the loss and damage fund. Similarly, Barbados Prime Minister Mia Mottley is advocating for her Bridgetown Initiative that seeks to use private sector and multilateral development bank funds to increase the amount of emergency cash available to poor countries in times of crisis.

“We believe the non-state actors, the stakeholders and the oil and gas companies and those that facilitate them need to be brought into convocation between now and COP28,” she said last year. “How do companies that make $200 billion in profits in the last three months not expect to contribute at least 10 cents in every dollar in profit into a loss and damage fund?”

This year’s negotiations are being led by a petrostate that has tapped other major fossil fuel producers, like Canada, Australia and Norway, to facilitate influential discussions, causing many close watchers of climate diplomacy to believe this year will be rife with greenwashing. According to Urgewald’s data analysis, the United Arab Emirates state-owned oil company (Abu Dhabi National Oil Company/ADNOC), of which COP28 president Sultan Al Jaber also serves as president, has larger oil and gas expansion plans than any other single company on the planet.

In fact, ADNOC recently announced a massive gas project called Hail and Ghasha that is located in a nature reserve, which is home to endangered species and is the biggest marine reserve in the Arabian Gulf.

To make this year’s negotiations around paying for loss and damage a success, faith-based advocacy network KAIROS Canada is urging Canada to “explicitly recognize” the country’s historic role in driving the climate crisis. It also wants Ottawa to commit significant new funds for loss and damage in the Global South, and increase other climate finance commitments earmarked for reducing emissions and adapting to climate change from $5.3 billion over five years to $1.8 billion annually.

“The recommendations made, if followed, could go a long way at addressing climate-related loss and damage, promoting equity and justice for all, particularly the vulnerable communities in the Global South,” said KAIROS Canada programs director Barbara Mangwende in a statement.