Industrialized countries owe roughly $170 trillion for CO2 emissions

Researchers say industrial nations causing excessive CO2 emissions could end up paying a staggering $170 trillion in compensation or reparations by 2050. This is to help meet climate change targets. That’s close to $6 trillion annually. It’s about seven percent of the yearly global Gross Domestic Product (GDP). Low-emitting countries, having to speed up their decarbonization, would receive the money as compensation.

Climate-vulnerable countries experience losses and damages due to others’ excessive CO2 emissions. Therefore, financial redress becomes crucial in international climate change negotiations. Last year’s COP 27 talks in Egypt agreed to set up a Loss and Damage Fund for countries impacted by climate change.

Evidence-based CO2 compensation scheme

Today, researchers, led by a University of Leeds academic, published a significant study. They examined how an evidence-based compensation scheme could operate across almost 170 countries. 

An interactive website (https://goodlife.leeds.ac.uk/atmospheric-appropriation/) also accompanies the study. This site enables users to explore which countries could receive compensation and how much. Moreover, it shows which countries may need to pay. 

This scheme is groundbreaking. It’s the first to hold countries accountable for their historical excessive CO2 emissions. They must fund compensation as a result (see image here).

Dr Andrew Fanning, Visiting Research Fellow at the University of Leeds‘ Sustainability Research Institute, led the study. He’s also Research & Data Analysis Lead at Oxford’s Doughnut Economics Action Lab. 

Different levels of compensation outlined

“For the world to avoid the worst impacts of climate change, all countries must urgently stop burning fossil fuels,” Dr Fanning said. “But not all countries have contributed equally to this problem.”

The study, titled “Compensation for atmospheric appropriation,” was published today in the journal Nature Sustainability. 

The research reveals significant figures. For example, the UK might have to pay $7.7 trillion for excessive CO2 emissions by 2050. This amount translates to nearly $3,500 per person annually until 2050. The US could have to pay $80 trillion in total, or more than $7,200 per person per year until 2050.

Innovative system for assessing losses

Contrarily, India, a historically low carbon emitter, could receive compensation. The total could reach $57 trillion, or nearly $1,200 per person annually until 2050.

The compensation system is rooted in the idea that the atmosphere is a commons. It’s a natural resource that everyone should use fairly and sustainably.

To assign a monetary value to the losses incurred by low-carbon emitting countries, the researchers first gathered the most recent global ‘carbon budgets’ from the Intergovernmental Panel on Climate Change (IPCC). A carbon budget indicates how much carbon could be released into the atmosphere to meet a specific climate target. For example, to keep global warming to 1.5 degrees Celsius. Starting from 1960, that carbon budget equates to 1.8 trillion tons of CO2.

Next, the researchers calculated an equality-based ‘fair share’ of that total carbon budget for 168 countries. This was based on population size. They compared each country’s fair share allocation against how much CO2 that country has released historically from 1960. Also, an ambitious scenario where it decarbonizes from current levels to ‘net zero’ by 2050.

Some countries were within their fair share allocation. Others, especially the industrialized nations of the global North, significantly overshot their allocation. This means they have used other countries’ fair shares of the atmospheric commons. For instance, the UK has used 2.5 times its fair share, and the US more than four times its fair share. In contrast, India has used just under one quarter of its fair share.

How to assign a monetary value to excess emissions

Using carbon prices from the latest IPCC scenarios, the researchers managed to assign a monetary value to each country’s excess emissions. They calculated this in a world that respects the 1.5-degree climate target. 

The total amount came to $192 trillion (with a range of between $141 trillion and $298 trillion). The global North is responsible for 89 percent, or $170 trillion, and the remaining sum comes from high-emitting countries in the global South, such as oil-rich states like Saudi Arabia and the United Arab Emirates.

This money, under the proposed scheme, would be divided among low carbon-emitting countries. The division is based on how much of their fair share allocation they stand to lose.

“We find 55 countries would sacrifice more than 75% of their fair shares, including most of sub-Saharan Africa and India,” Dr Fanning noted. “Our results show this group of low-emitting countries would be entitled to receive an average compensation of $1,160 per capita per year, in a world that keeps global warming below 1.5 degrees.”

Meanwhile, countries sacrificing less of their fair shares would be entitled to less compensation. The researchers found 13 countries that would lose less than 25 percent of their fair shares under their net-zero scenario. China falls under this category. It would be entitled to receive $280 per capita per year, on average.

How to price the losses from low-emitting countries

Professor Jason Hickel, from the Institute of Environmental Science and Technology of the Autonomous University of Barcelona (ICTA-UAB), is a co-author of the study. He remarked, “Climate change reflects clear patterns of atmospheric colonization. Social movements and negotiators from the global South have long argued that countries producing excessive emissions owe compensation or reparations for climate-related damages.”

These damages impact poorer countries disproportionately. These countries have contributed little or nothing to the crisis.

“Atomospheric appropriation” cost

“Our study focuses only on compensation owed for atmospheric appropriation,” Professor Hickel continued. “This should be considered additional to broader questions about the costs of transition, adaptation, and damages.”

He also highlighted class inequalities within nations. The wealthy classes with high consumption rates and disproportionate power over production and national policy hold much of the responsibility for excess emissions. According to Hickel, these individuals should bear the costs of compensation.

More about the inequality of CO2 emissions across nations

The effects of climate change are far-reaching and disproportionately impact nations across the globe. Interestingly, the inequities in CO2 emissions are a significant aspect of this. Here’s more on the subject.

Historical Inequity

Wealthy, industrialized nations have historically been responsible for a large portion of CO2 emissions. Countries like the US, UK, and those in the European Union industrialized early, using fossil fuels extensively, leading to large carbon footprints. Contrastingly, many developing nations have contributed far less to historical CO2 emissions.

Present Inequity

Even now, the per capita CO2 emissions differ widely between developed and developing nations. For instance, per capita emissions in the US and Australia are significantly higher than those in India or most African nations. Yet, these countries are often under international pressure to reduce their emissions, despite their lower contributions and ongoing development needs.

Climate Cost

The irony of climate change is that while the most significant contributors often face fewer immediate consequences, nations contributing the least to global emissions often bear the brunt of the effects. Developing countries in regions such as Africa, Southeast Asia, and the Pacific Islands face severe threats from rising sea levels, more intense droughts, heatwaves, and storms – despite having contributed minimal emissions.

Financial Burden

The cost of transitioning to cleaner energy sources is substantial, and the countries that most need to make these changes often have the fewest resources to do so. Moreover, they have to bear the costs of adapting to climate change – like building sea walls or developing drought-resistant crops.

Compensation and Climate Justice

Recognizing these inequities, there’s a growing call for climate justice. The idea is that countries historically responsible for the majority of CO2 emissions should assist those now suffering from climate change’s effects. This assistance can come in the form of compensation, technology transfer, or help in implementing green policies.

Consumption vs. Production Emissions

An interesting point is the difference between emissions produced locally versus those tied to consumption. For instance, a wealthy country might import goods from a less developed nation. The emissions occur in the less developed nation, but it’s essentially the wealthier nation’s consumption driving them.

Inequality within Nations

Besides the inequality between nations, there’s a significant disparity within countries. Generally, wealthier individuals and households have much higher carbon footprints due to their consumption patterns and lifestyle than less affluent individuals. This fact highlights the importance of addressing inequality at all levels in the fight against climate change.

Climate change is a complex issue intertwined with historical inequities, economic disparities, and socio-political dynamics. Effectively addressing it requires recognizing these complexities and working towards comprehensive, fair solutions.

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