Climate Change: Making Polluters Pay

Some 6,000 people living on the Carteret Islands off Papua New Guinea are being driven off the islands by rising sea levels and associated land loss, salt water inundation and food insecurity. It is expected that ultimately 50 percent of the island population will need to be resettled by 2020, foregoing life as they knew it.

“Climate change is taking away our security form the place where we grew up,” said Ursula Rakova, a resident of Papua New Guinea who was involved in creating the first community developed voluntary relocation program in the Caterets. “We want to move 1500 families, but we need financial help.”

Loss and Damage at COP 21

As has been widely reported, the Carterets are hardly alone, as the UN-sponsored Congress of Parties 21, the long-running series of meetings on climate change that culminated in the landmark climate agreement in Paris , demonstrated, low-lying islands face growing risk all over the planet.

The Asian Development Bank, in two wide-ranging reports in 2013, said that as many as 2 million people in 23 of the Asia-Pacific region’s developing member countries are at risk from rising sea levels, severe storms and intensified drought that could jeopardize US$864 billion in assets, including three major conurbations – the Pearl River Delta, Shanghai and the Kyoto-Osaka region in Japan – which are particularly at risk from rising sea waters.

In a 104-page report, titled Economics of Climate Change in the Pacific, ADB researchers predicted net negative impacts of climate change by 2050 regardless of which economic and model is used. If the world stays on the current fossil-fuel intensive growth model, the researchers warn, climate change cost in the Pacific is estimated to reach 12.7 percent of annual GDP equivalent by 2100.

There is no mention of a financial mechanism to address the issue of loss and damage – i.e. the impacts of climate change that are beyond people’s ability to adapt. So those homes and communities have already been affected by climate change will get no specific help to make up for those impacts.

An equitable financing solution

Climate finance is already inadequate, with a huge gap between what is needed and what is provided. With increased frequency and intensity of natural disasters, the amount money needed to compensate for loss and damage of the climate vulnerable people is constantly rising. The question is where would the funds come from? CJP proposed at COP 21 that the fossil fuel industry – which is responsible for more than two thirds of global emissions - should pick up the bill.

“Just 90 fossil fuel producers are responsible for 2/3 of global carbon emissions… making massive profits in the process, meanwhile the world’s poorest communities bear the true costs of climate change. A fossil fuel levy is an important part of turning this outrageous situation around,” says Kate Raworth, senior visiting research associate, environmental change institute, Oxford University.

Two of the biggest fossil fuel companies alone –Chevron and ExxonMobil–made US$50 billion in profit in 2014 alone. According to Climate Justice Program (CJP) estimates, that’s approximately how much loss and damage least developed countries are facing right now due to climate change. This will likely increase to US$70-100 billion by 2050. These costs are born by countries that have contributed very little emissions and poor, vulnerable people at the frontline of climate change.

While economic costs are taken into account, the non-economic costs of climate change impacts are also substantial. “There is no way we can compensate people for losing their culture,” said Julie Ann-Richards of the CJP.

The Carbon Levy Mechanism

The CJP Carbon Levy proposal draws from precedents such as the International Oil Pollution Compensation Fund, the oil spill compensation regime that collects levies from companies that ship oil internationally which are used as compensation in the incidence of oil spills. It states that the fossil fuel industry should be made to pay a carbon levy into the loss and damage mechanism, every time they undertake extraction.

A carbon levy would provide a new source of finance – additional to aid budgets – that could help fill the climate finance gap. This levy would need to increase each year to take into account the increasing costs of fossil fuels. It could start at a low level – US$2 per tonne of carbon would raise $50 billion each year.

The Way Forward from Paris

Recognition of Loss and Damage in the Paris agreement has been a step in the right direction. Now it is time to turn promises to action by channeling funds for loss and damage. Vulnerable people need to know they are not going to be left to deal with loss and damage on their own, and that fossil fuel companies are being held responsible. Implementation of a Carbon Levy system would address the injustice of fossil fuel companies making obscene profits and poor people paying for climate change.

Sohara Mehroze Shachi (soharamehroze@gmail.com) is one of the winners of the GCCA Climate Tracker Adopt a Negotiator Fellowship for COP 21. She is currently working as a development professional in Bangladesh on climate change, environment and disaster management.