Who Pays for Climate Change? (You May Not Like The Answer)

It’s an Important Question: Who Pays for Climate Change / Global Warming?


Natural disasters have been much in the media recently. Storms that have been made more extreme by climate change have been happening globally for a while now – the Philippines had 4 natural disasters in 4 years, for example. But the issue got considerably more global media attention when parts of the US were affected by catastrophic hurricanes.

Of course, hurricanes happen, but they were proved to be made more dangerous by the effects of climate change (warmer water, higher sea levels and heavier rain).

climate change report

What Are The Costs of Extreme Weather?

We know that the costs of the recent hurricanes as well as other extreme weather around the world are enormous.

For example, hurricanes Harvey and Irma are estimated to cost about $300 billion (can you imagine that amount?).

And it’s not just the storm damage that needs to be paid for. New York City estimates that it will spend almost $20 billion to prepare for climate change impacts through 2030.

And researchers say developing countries most vulnerable to rising seas and increasing extreme weather will need between $140bn and $300bn annually by 2030 to help them cope.

who pays for climate change rising costs?Since the 1980s the number of billion-dollar natural disasters each year in the United States has tripled from two to six. Asia, Africa and Australia are also seeing dramatic rises in the frequency of extreme weather.

So, who pays for climate change? It has become an increasingly pressing question for humankind. The frequency and cost of natural disasters is rapidly increasing.

In the US, insurance companies, businesses and communities, as well as individual homeowners all have to pay. There is some federal relief – but it’s not nearly enough, and it’s often slow to arrive. There have been attempts over several years to create a national catastrophe fund – but some states didn’t want to pay for the supposedly higher-risk states in southern and south-eastern US (and then Sandy hit!).

Who SHOULD Pay for Climate Change?

Somebody has to pay these vast amounts of money.

Is it right that taxpayers (you and me) fund national or federal relief funds, and affected homeowners and communities and businesses pay the rest?

Some US communities think not – and they are taking their arguments to the courts.

Lawsuits filed by three coastal California communities against ExxonMobil, Chevron, BP and other large fossil fuel companies argue that those companies, not taxpayers or residents, should bear the cost of damages from rising seas.

exxon mobil who pays for climate changeThere is extensive evidence that Big Oil not only knew their products contributed substantially to climate change, but they also actively and publicly deceived us by disparaging climate science.

And so now we face the devastating human and economic costs of climate change. We now know that:

  • Nearly 30% of recent global sea level rise is caused by emissions traced to the 90 largest carbon producers.
  • More than 6% of global sea level rise resulted from emissions traced to ExxonMobil, Chevron and BP, the three largest contributors.

And even now, fossil fuel companies maintain business plans and models that continue to extract oil – “business as usual”. Even though that would mean unchecked global warming.

Why should companies be allowed to continue selling products they know they are harmful? After all, there are alternatives.

Upon learning of the risks of their products (50 years ago!), companies could have used their huge technical and financial resources to greatly speed up carbon storage and clean energy technologies.

Instead, they continue using the atmosphere and water as a cheap waste dump.  They leave impacted communities, taxpayers and future generations to deal with the consequences. Our governments allow them to do this.

As we learnt in the 2008 financial crisis, allowing companies to make private profits while society at large underwrites the risk, ends badly for everyone.

Is Big Oil Paying Its Fair Share?

who should pay for climate change big oilIt will take not just billions but hundreds of billions of dollars to support disaster relief and recovery among Gulf coast communities affected by Hurricanes Harvey and Irma.

ExxonMobil, Chevron and BP collectively pledged just $2.75m.

Do you think that’s fair?

I don’t.

(Companies routinely say they’ll have to pass on extra costs to consumers. Presumably they hope that will be enough to stop the costs being charged to them. But consumers are already paying – with pollution, health issues and of course, climate change. And anyway, why should oil companies be allowed to “pass on” their costs to the consumer? Apart from anything else, they are subsidized).

Who Pays for Climate Change – Only Big Oil?

It’s easy to see why Big Oil needs to pay for the damage it has caused.

But are they the only ones?

I think not.

Our insatiable demand for cars, vacation flights, air conditioning, phones, fast food, gadgets and single-use disposables (e.g. drinks bottles and coffee cups) has made sure that demand for oil (which produces cheap plastic) continues.

We’re able to afford these luxuries. Many are not.

Yet the sad truth is that the poorest countries on the planet will be hit hardest by climate change – and they don’t consume like we do. They didn’t cause climate change.

Hurricane Sandy who pays for climate change

Photo credit Lucas Jackson / Reuters

Hurricane Sandy hit the richest section of the richest country on earth. (Connecticut is the richest state, with New Jersey and New York not far behind).

A month later, typhoon Bopha struck the Philippines. It was their fourth major natural disaster in as many years. It devastated the economy and left as many as 2000 dead.

Connecticut has a per capita income of $71,033. The Philippines has a per capita income of $2,000.

Should Countries Pay Also?

Should we include countries when we ask who pays for climate change? If we accept that developed nations have contributed by far the most to global warming, it seems fair that richer nations should help developing countries deal with climate change that we caused.

And that’s one of the things that the Paris Climate Agreement was designed to do. Countries pledged to reduce their greenhouse gas emissions. and give money to help developing countries invest in green energy and renewable technology.

The US pledged the largest amount, $3 billion – as befits the largest historical contributor to greenhouse gases. $1 billion has been paid, but the rest is not forthcoming due to President Trump reneging.

Many other developed countries have so far paid about half of their pledges. This is how much they pledged:

  • US – $3bn (payment halted after 1 bn)
  • Japan – $1.5bn
  • UK – $1.2bn
  • France – $1bn
  • Germany – $1bn

However, the picture changes dramatically when you take the population size of the countries into account. This is the result when you take the pledged amount and divide it by the number of people in the country:

  • US – about $9 per person (rounded up for ease)
  • Sweden – about $60 per person (the highest of any country)
  • UK – about $20 per person.

And China has made available significant funds for a different fund to help developing countries combat climate change.

For the first time, richer countries seem to have accepted their moral obligation to offer aid, given their outsized contribution to the problem.

Yet, are we helping?

Surprisingly, the United States ranks near the bottom in terms of countries that give foreign aid, as a percentage of GDP (2015 figures):

  • US:  0.17 percent
  • Scandinavia: 1 percent on average (ranging from 0.76 to 1.4 percent in Sweden, Denmark, the Netherlands and Norway).
  • UK: 0.71 percent
  • Most other European donors give between 0.30 and 0.56 percent.

A USA TODAY/Gallup poll found that 59 percent of Americans favor cutting foreign aid even further. In addition, the vast majority of US foreign assistance is given for geopolitical and military considerations, not for humanitarian aid. 2

How Could Payment Happen?

When considering who pays for climate change, we have to ask how could we raise the huge amounts of money needed, without putting an unfair burden on the wrong parties?

It’s a tricky question with all sorts of problems. There is no easy solution. However, one relatively simple option is a tax on greenhouse gas emissions 3.


Companies should no longer be allowed to pollute the air almost for free. And if we as consumers want the trappings of a consumer society, it should cost more so that we think twice before buying.

who pays for climate change we all shouldWhen things are cheap, we don’t value them. We can’t continue to live a throw-away lifestyle. (When it costs the same to provide single-use disposables in restaurants as it does to supply reuseables, we know there are hidden costs and damage at all stages of the product lifecycle).

The costs of products should cover the damages caused – at the moment, they don’t. We live on a finite, circular planet. There is no “away”.

Will such a tax be popular? No. The conversation will be hard and loud. But devastation from extreme weather has brought up again the question of who pays for climate change.

And it’s a question we can no longer afford to ignore.

Fighting climate change by cutting carbon pollution and expanding clean energy is the best way to build a better future for our children.



 1 Sea level along the US East Coast has risen by about 8 inches since 1900, as oceans have warmed and expanded in response to rising concentrations of carbon dioxide and other heat-trapping gases in the atmosphere, with subsiding land adding insult to injury. Sea level rise  increased Hurricane Sandy’s flood damages to property in New York City alone by $2bn – more than $230 per New Yorker.

2 Representative Ileana Ros-Lehtinen (R-FL), Chairman of the House Foreign Affairs Committee questioned the priorities on US foreign assistance to the Western Hemisphere. She wanted funds directed more towards counter narco-trafficking efforts and security assistance and not to offset climate change impacts insisting, “With limited resources, we must ask if this best meets our US national security interests.”

3 In the United States, a $10 per ton of CO2 tax would raise about $60 billion annually, sufficient funds to pay for adaptation, mitigation and assistance for at least for the foreseeable future. An additional $10 per ton paid by the richer nations alone would provide sufficient funds on an international scale to pay for adaptation and compensation, although all nations should be required to pay something in catastrophic insurance premiums.

climate change report cover


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What do you think SHOULD pay for climate change? Let me know in the comments below.

Warm regards,

signature Clare




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