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Opinion: Who pays for climate change damages?

A discussion of the case of the Peruvian farmer vs RWE

Chris Hilson, Professor of Law, and Associate, Walker Institute, University of Reading

It has recently been reported that a Peruvian farmer from the town of Huaraz, in the Andes mountains, is seeking to sue German energy company RWE for its contribution to climate change. The farmer claims that his house is at risk of flooding from Palcacocha Lake, as the glaciers that feed the lake continue to melt in response to warming.

Based on a 2013 paper in the journal Climate Change, the farmer is arguing that RWE, as a major European emitter, has a 0.47% responsibility for climate change. This means that it should therefore pay for 0.47% of the overall cost of protecting the village from glacial flooding, which amounts to around €20,000.

Is litigation like this a good thing? On the plus side and whatever the outcome, such a case, with its David and Goliath overtones, usefully raises the profile of the effects of climate change on a wide range of communities globally. Coming before the crucial UN Climate Change Conference in Paris later in 2015, this can only be welcomed.

Nevertheless, one might question whether the courts are the best place to determine how and where climate adaptation measures should be taken and who should pay for them. Instead, it might be better for the UN Climate Summit in Paris this December to consider extending the Adaptation Fund and much larger Green Climate Fund (GCF) to include a compulsory levy on private sector energy intensive industries. As things stand, these funds are financed principally by donations from developed country governments.

Currently the only private sector involvement is via the GCF’s Private Sector Facility, which aims to encourage private sector investment in low carbon, climate resilient projects, rather than imposing a compulsory charge or levy.

After the recent financial crisis, some may feel that it’s time for the private sector to take on its share of responsibility. Climate change litigation of the liability type aims at this, but it may end up hitting too few targets.

The recent Peru case is not the only example of poor communities at risk from climate change deciding to sue for damages. In 2009 in Kivalina v ExxonMobil, the native Alaskan village of Kivalina sued ExxonMobil and twenty three other defendant energy producers in the US courts for harm caused by their past emissions of greenhouse gases. The coastal village had previously been protected from storms by sea ice; however, as a result of climate change, this ice had begun to melt and break up, resulting in serious erosion of the village and a threat to its future. In dismissing the claim, one of the judges stated:

“Kivalina has not met the burden of alleging facts showing Kivalina plausibly can trace their injuries to Appellees. By Kivalina’s own factual allegations, global warming has been occurring for hundreds of years and is the result of a vast multitude of emitters worldwide whose emissions mix quickly, stay in the atmosphere for centuries, and, as a result, are undifferentiated in the global atmosphere.

Further, Kivalina’s allegations of their injury and traceability to Appellees’ activities is not bounded in time. Kivalina does not identify when their injury occurred nor tie it to Appellees’ activities within this vast time frame. Kivalina nevertheless seeks to hold these particular Appellees, out of all the greenhouse gas emitters who ever have emitted greenhouse gases over hundreds of years, liable for their injuries. It is one thing to hold that a State has standing … to challenge the EPA’s failure to regulate greenhouse gas emissions … It is quite another to hold that a private party has standing to pick and choose amongst all the greenhouse gas emitters throughout history to hold liable for millions of dollars in damages.”

One must be wary of reading across from US to German law, but the Peruvian farmer is quite likely to face similar issues. In his favour, unlike Kivalina, the loss is clearly defined, and it is also attributed in a proportionate, evidence-based way, to a single emitter (rather than a medley of 24). However, the burden of establishing a precise causal link between RWE’s historical emissions and the melting of glaciers in Peru is, to say the least, unlikely to be straightforward; nor is establishing the fairness and proportionality of singling out one private emitter from many millions who have been responsible for climate change. On top of that, the claim appears to be for the risk of harm (from future flooding) rather than for existing harm and in many national jurisdictions, it is difficult to sue for this.

Rather than sue in the German courts, one might have expected the Peruvian farmer to have petitioned the Inter-American Commission on Human Rights. In 2005, Sheila Watt-Cloutier, Chair of the Inuit Circumpolar Conference famously submitted a petition to the Commission for violations of Inuit human rights resulting from global warming caused by US greenhouse gas emissions. That petition was subsequently rejected. However, the farmer here might well have a stronger case on the basis that the Peruvian government itself should be taking precautionary action against the risks of flooding, including, at a minimum, the creation of effective early warning systems, and that a failure to do so breaches his human rights. That the farmer and his lawyers decided to sue in Germany instead is no doubt due to concerns around climate justice: climate change litigation against countries from the Global South like Peru which have not been responsible for historical climate emissions has much less purchase in justice terms than taking action against a multinational corporation from the North.

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