Canadian oil and gas companies could be liable for billions of dollars of damages per year for their contribution to climate change caused by toxic greenhouse gas emissions, according to a study published Thursday.

The study looked at five oil and gas companies currently trading on the Toronto Stock Exchange — Encana, Suncor, Canadian Natural Resources, Talisman, and Husky — and found they could presently be incurring a global liability as high as $2.4 billion annually.

“Climate change is increasingly discussed not as some far-off threat but in terms of current realities,” said the 62-page study — Payback Time? What the internationalization of climate litigation could mean for Canadian oil and gas companies.

Published by the Canadian Centre for Policy Alternatives and West Coast Environmental Law (WCEL), the study found data showing the global financial cost of private and public property and other damage associated with climate change in 2010 has been estimated at $591 billion, rising to $4.2 trillion in 2030.

“That number is expected to increase dramatically in the coming years,” said the study written by Andrew Gage, WCEL staff counsel and University of British Columbia professor Michael Byers.

“In Canada, the National Roundtable on the Environment and the Economy has estimated that climate change will cost $5 billion annually by 2020. Given these significant costs, attention will inevitably shift to the issue of compensation and liability. In short, who will pay for the costs and damages caused by climate change, as well as the necessary adaptive measures?”

Fossil fuel companies and other large-scale greenhouse gas producers have contributed, globally, to trillions of dollars of damages related to climate change, Gage said in an accompanying media release.

“As with tobacco companies in the 1980s, these producers are confident the law will not hold them responsible for these damages,” Gage added.

“But rising levels of climate damage, increasing scientific evidence about the links between emissions and the damage they cause, and an emerging public debate about who is financially responsible for this damage, could change the situation very quickly.”

The most serious risk to Canadian companies is not litigation in Canada, the media release said. “Because the impacts and causes of climate change are global, climate damages litigation could take place in, and apply the laws of, any of the countries where damage occurs.”

Byers, Canada Research Chair in Global Politics and International Law, said substantial shifts will be required of large-scale greenhouse gas producers and their investors if they hope to manage the risk of climate damages litigation.

Those shifts include “moving away from fossil fuels, and supporting the adoption of international agreements that could link the reduction of liability risk to the provision of financial assistance or future emission reductions.”

The study concluded that the potential for climate damages litigation is global in scope.

“Cases could be brought in a large number of countries, under a wide range of legal theories, then enforced in Canada or other countries in which greenhouse gas producing companies have assets,” the study said.

“As a result, these companies and their shareholders are exposed to significant legal and financial risks — and these risks will only grow.”

In a telephone interview, Gage told DeSmog Canada that he is not aware of any successful climate damages litigation anywhere in the world, even in the highly litigious U.S.

“This is very new and in very early days but it is evolving fairly rapidly,” he said. “I would think there would be lawsuits of this type outside the U.S. within a couple of years but we’ll have to see.”

In a related commentary in Thursday’s Globe and Mail, Gage and Byers said climate change is no longer a distant threat.

“Canadian oil and gas companies could soon find themselves on the hook for at least part of the damage,” they wrote. “For as climate change costs increase, a global debate has begun about who should pay.”

They also noted Nobel Peace Prize laureate Desmond Tutu recently called on global leaders to hold those responsible for climate damages accountable.

“Just 90 corporations – the so-called carbon majors – are responsible for 63 per cent of CO2 emissions since the industrial revolution,” Tutu was quoted as saying. “It is time to change the profit incentive by demanding legal liability for unsustainable environmental practices.”

Image Credit: Zack Embree

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This is a guest post by Andrew Gage, Staff Counsel and head of the Climate Change program at West Coast Environmental Law, and Michael Byers, the Canada Research Chair in Global Politics and International Law at the University of British Columbia. This article originally appeared in the Globe and Mail.

Climate change is no longer a distant threat. Peer-reviewed science has already linked climate change to drought in Texas and Australia, extreme heat in Europe, Russia, Japan, and Korea, and storm-surge flooding during Hurricane Sandy and Typhoon Haiyan.

Climate change is already causing about $600-billion in damages annually. Here in Canada, the National Roundtable on the Environment and the Economy estimated that climate change will cost Canadians $5-billion annually by 2020.

Canadian oil and gas companies could soon find themselves on the hook for at least part of the damage. For as climate change costs increase, a global debate has begun about who should pay.

Nobel Peace Prize laureate Desmond Tutu recently called on global leaders to hold those responsible for climate damages accountable. “Just 90 corporations – the so-called carbon majors – are responsible for 63 per cent of CO2 emissions since the industrial revolution,” Tutu said. “It is time to change the profit incentive by demanding legal liability for unsustainable environmental practices.”

So far, the fossil fuel industry has successfully opposed litigation for climate damages, brought in the United States by victims of hurricanes and sea level rise. But new areas of litigation often fail at first; in the 1980s, tobacco companies were still boasting that they “have never lost a case to a consumer, have never settled, and do not expect that picture to change.” As the tobacco industry learned, changes to the interpretation and application of laws sometimes occur quite rapidly.

Nor is litigation in the U.S. or Canada the only thing the fossil fuel industry should worry about. It is becoming increasingly likely that companies could be sued by victims of climate change overseas, in countries with quite different legal systems. There, they might face lawsuits based on constitutional rights to a healthy environment, strict liability for environmental harm, or any number of other legal principles that don’t currently exist in Canadian law.

Once a foreign court has ordered a Canadian company to pay for climate damages, that order is a debt – which Canadian courts can be asked to enforce. Chevron is currently fighting court actions in Canada, the United States and Brazil that seek to enforce a $9.5-billion award handed down by the supreme court of Ecuador – for pollution caused by oil spills.

Moreover, new laws could be introduced to facilitate climate litigation. When Canadian provinces encountered impediments to their ability to sue tobacco companies for public health costs, they eliminated those impediments by passing new laws. It’s not hard to imagine countries impacted by climate change enacting new laws to clarify the liability of greenhouse gas producers.

Five companies traded on the Toronto Stock Exchange are among the “carbon majors” – Encana, Suncor, Canadian Natural Resources, Talisman, and Husky currently are collectively responsible for about $2.4-billion a year of global climate damages.

Canadians are broadly supportive of the “polluter pays” principle – the idea that those who cause pollution should pay for the harm. But because climate change has seemed far off, there has been relatively little discussion about who should pay. It has been assumed – by industry, politicians, even some environmental activists – that oil and gas companies can continue producing with impunity, at least until a global climate agreement is reached.

But rising climate costs cannot be born only by taxpayers and by those who suffer the impacts of climate change. We believe that a new global awareness of the moral and legal responsibilities of the carbon majors will lead to a wave of climate litigation. Foreign lawsuits – with damage awards that are potentially enforceable in Canada – will be difficult and expensive to defend.

Image Credit: Zack Embree

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.