A recently published study concluded that fossil fuel companies owe climate reparations over $200 billion a year to compensate communities damaged by their pollutive activities. This line of thinking is ethically and legally questionable while also counterproductive in promoting green activities.
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We know that burning fossil fuels damages the environment and causes climate change. However, many people are involved in this process, which raises the question of how much moral and legal responsibility each person must bear.
Consider the following simple illustration of a German power station burning coal to provide electricity for use by consumers. Shareholders of a coal mining firm hired a management team to operate the company, who then purchased mining machines from a heavy manufacturing business and hired workers to mine the coal with the assistance of those machines.
This coal was then transported by land and sea transfer until it reached a coal power plant. The coal power plant is owned by a group of shareholders who also hired managers and workers to burn the coal and produce electricity. That electricity was then consumed by people’s everyday activities, from cooking dinner to operating a work computer to charging their smartphone.
That’s a lot of people. If we retrospectively decide that this entire supply chain has caused negligent environmental damage, and those affected deserve compensation, who should pay? Is it the shareholders of the coal mining company? Is it the coal miners? Is it the truck drivers who transported the coal? Is it the CEO of the power plant? Is it the electrical engineer who maintains the power network? Is it the physicist who devised the scientific equations that operate the power station? Is it the person who is using their computer for work? Or is it their boss for compelling them to use their computer?
While the above may seem complicated, it is actually a massive over-simplification. Morally, every one of those people bears responsibility, because if any of them were to be removed, then the entire chain would collapse. I can’t cook my dinner without the supply of electricity generated by the coal miner’s work, nor could the coal miner mine the coal without the demand generated by me needing to cook my dinner.
The aforementioned paper by Dr. Marco Grasso and Dr. Richard Heede, published in the journal OneEarth, has determined that there is a simple answer to the question of where the moral and legal responsibility lies: it is exclusively with the shareholders of the fossil fuel extraction companies. Everyone else is an innocent bystander helplessly watching as the callous coal, oil, and gas companies propagate their evil plans.
Why did the paper’s authors – and more importantly the pro-green media that is excitedly disseminating the paper’s conclusions – decide to absolve everyone else of any responsibility and to place it entirely on the shoulders of the owners of fossil fuel extraction companies?
The proximate cause is that this group represents the richest link in the chain – a group whose considerable bank balances have recently swelled as energy prices have risen post-COVID. If we are going to conduct a shake-down, then it makes sense to start with the richest people available.
Naturally, it is sometimes the case that the wealthiest people are the most culpable, both morally and legally. The fossil fuel extraction companies certainly bear responsibility, but a lot less than the sum total of the blame. Everyone who consumes electricity – which is to say everyone in the world – is also responsible and should pay their fair share, too. That would amount to a complex question that can be answered, but it takes hard thinking, not the easy option of arbitrarily blaming one party.
But beneath the proximate cause lies the more troubling, underlying cause. Some armchair pro-green activists are constantly pursuing an unattainable dream: the painful adjustments required to arrest and reverse climate change can be avoided by 99 percent of the population if we just make the one percent cough up enough cash. Only the greedy monsters need to suffer a decline in their living standards, and the rest of us can still live the same way and feel good about ourselves. The narrative presented by Dr. Grasso and Dr. Heede, and amplified by the media, perpetuates this myth.
The reality is that confronting climate change requires us to suffer a significant decrease in our living standards until someone comes up with some new, path-breaking technologies – a genuine possibility that is yet to materialize. Fewer flights, less meat, fewer showers, less cryptocurrency, and so on. Anyone who is trying to convince you otherwise is being dishonest.
Ironically, taking the paper’s recommendations at face value will be highly counterproductive and precipitate an unprecedented economic crisis. Fossil fuel extraction companies will rightly conclude that it is no longer worth the trouble, leaving thousands of power plants across the world without the most essential raw material. The result will be an energy crunch the world has never seen, causing untold death and destruction as everything from schools to hospitals to elderly care homes suspend their activities.
Notably, I am not suggesting that everything should just go on as it currently is. Instead, we must understand how demanding a specific party pay reparations will affect its future activities. We also need to apportion moral responsibility using a more sophisticated system than finding the people who are simultaneously the richest and the least agreeable and singling them out.
There is a massive field of economics that deals with precisely how to motivate socially responsible behavior using a variety of instruments, including taxation, legislation, and awareness. The recommendations are based on theory and evidence drawn from actual implementation. You won’t find Dr. Grasso and Dr. Heede’s suggestion anywhere in that literature because it’s a bad idea.
Omar Al-Ubaydli (@omareconomics) is a researcher at Derasat, Bahrain.
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