Climate “Loss and Damage:” Who Should Pay in the Face of Disaster
2022 marked yet another year of devastating climate disasters, including a flood that left one-third of Pakistan under water[1] and a severe drought in the Horn of Africa that threatened tens of millions with food insecurity.[2] Set against this backdrop, the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27) added the issue of climate “loss and damage” to its agenda for the first time, establishing a fund to remedy the impact of climate disasters paid for by industrialized countries most responsible for them.[3]
After decades of pressure from climate-vulnerable island nations, the creation of the fund served as an official acknowledgment of the fundamental injustice that countries that contribute the least to climate change often bear the brunt of its destruction.[4] However, this tentative first step provided no clear guideline on how the fund would be financed[5], and controversy soon arose as countries grappled with their historical and social responsibility in relation to one another.[6] Despite being the largest net emitter of greenhouse gasses, China has stated that it will not contribute to the fund, explaining that China is also a developing nation and that the West should be principally liable for the cumulative pollution of today.[7] As the largest cumulative emitter[8], the United States does not appear enthusiastic about the fund, either. In addition to being one of the few non-parties to the Kyoto Protocol and the first country to withdraw from the Paris Agreement in 2020, the United States resisted the notion of compensation for loss and damage at both COP26 and COP27 before the European Union finally agreed to a fund with limitations.[9]
Previously at the 2009 climate summit in Copenhagen, wealthy countries pledged to contribute $100 billion a year to less wealthy countries by 2020 to combat climate change. Yet, even this modest proposal became empty promises as the funds consistently fell below target.[10] To prevent the loss and damage fund from suffering the same fate, an alternative approach is needed to avoid complex comparisons and blame-shifting among countries.
Although citizens of developed countries may be reluctant to pay for the wrongs committed by their ancestors, especially if they believe their countries have already changed course towards a more sustainable future, the increasing social awareness of climate change has shifted the focus onto corporations. It has been reported that 100 companies are responsible for 71% of global emissions, and taxing them according to their climate impact would provide the funds needed for compensating the loss and damage suffered by affected developing countries.[11]
At the domestic level, a carbon tax on corporations has already been proven effective at curbing emissions. For example, the emission reductions due to carbon pricing in Canada have been estimated to be significantly larger compared with other policies such as a coal phase-out and clean fuel standards.[12] To ensure that multinational corporations are held accountable for the climate impact of their global activities, countries need to coordinate through bilateral or multilateral tax treaties and implement a relatively uniform taxation scheme for carbon emissions that avoids a “race to the bottom.”
Rather than engaging in the politically charged discussion of how much each country should pay in the face of disaster, countries should instead look beyond the confines of national borders and develop a common scheme so that the main drivers of climate change, multinational corporations, pay their fair share to the victims.
Lillian Wang is a staff member of Fordham International Law Journal Volume XLVI.
[1] See Christina Goldbaum & Zia ur-Rehman, In Pakistan’s Record Floods, Villages Are Now Desperate Islands, N.Y. TIMES (Oct. 12, 2022), https://www.nytimes.com/2022/09/14/world/asia/pakistan-floods.html.
[2] See Denise Chow, 2022 Was the Year of Drought, NBC NEWS (Dec. 31, 2022), https://www.nbcnews.com/science/environment/2022-was-year-drought-rcna62410.
[3] See Press Release, U.N. Climate, COP27 Reaches Breakthrough Agreement on New “Loss and Damage” Fund for Vulnerable Countries (Nov. 20, 2022), https://unfccc.int/news/cop27-reaches-breakthrough-agreement-on-new-loss-and-damage-fund-for-vulnerable-countries?.
[4] Sharm El-Sheikh, Should rich countries pay for climate change in poor ones?, THE ECONOMIST (Nov. 24, 2022), https://www.economist.com/international/2022/11/20/a-new-un-fund-for-loss-and-damage-emerges-from-cop27?.
[5] Id.
[6] Kate Bartlett, How China and Africa Fit in Debate Over “Loss and Damage” Fund, VOA NEWS (Nov. 18, 2022), https://www.voanews.com/a/cop27-how-china-and-africa-fit-in-debate-over-loss-and-damage-fund-/6840339.html.
[7] Id.
[8] El-Sheikh, supra note 4.
[9] Kyoto Protocol to the United Nations Framework Convention on Climate Change, Dec. 11, 1997, 2303 U.N.T.S. 162.; Press Release, Michael Pompeo, Secretary of State, On the U.S. Withdrawal from the Paris Agreement (Nov. 4, 2019), https://2017-2021.state.gov/on-the-u-s-withdrawal-from-the-paris-agreement/index.html; Lisa Benjamin, COP27 Produces a Historic Result for Vulnerable Countries: A Loss and Damage Fund, JUST SECURITY (Dec. 2, 2022), https://www.justsecurity.org/84356/cop27-produces-a-historic-result-for-vulnerable-countries-a-loss-and-damage-fund/.
[10] Jocelyn Timperley, The broken $100-billion promise of climate finance–and how to fix it, NATURE (Oct. 20, 2021), https://www.nature.com/articles/d41586-021-02846-3.
[11] Tess Riley, Just 100 companies responsible for 71% of global emissions, study says, THE GUARDIAN (July 10, 2017), https://www.theguardian.com/sustainable-business/2017/jul/10/100-fossil-fuel-companies-investors-responsible-71-global-emissions-cdp-study-climate-change.
[12] Ian Parry, Now is the time to impose carbon taxes across the global economy, THE ECONOMIST (Nov. 16, 2022), https://impact.economist.com/sustainability/net-zero-and-energy/now-is-the-time-to-impose-carbon-taxes-across-the-global-economy-ian-parry.
This is a student blog post and in no way represents the views of the Fordham International Law Journal.