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Copyright © International Chamber of Commerce (ICC). All rights reserved.
( Source of the document: ICC Digital Library )
by Professor Michael GerrardAndrew Sabin Professor of Professional Practice, Director, Sabin Center for Climate Change Law, Columbia law School
This paper discusses the array of different disputes that are likely to arise in the future as a result of climate change regulation, as a result of efforts to deal with the climate change problem, and as a result of climate change itself. One will see that there is an astonishing array of different kinds of disputes that are likely to arise. Some of them have been dealt with for a long time whereas others are entirely novel. These disputes can be discussed under five broad categories: (1) Mitigation — disputes relating to efforts to reduce greenhouse gas emissions; (2) Energy transition — disputes arising from the necessity of changing the world’s energy system from a fossil fuels based energy system; (3) Adaptation — disputes arising directly from the impact of climate change itself; (4) Liability and Compensation — suits to determine the financial responsibility of parties; and finally (5) Geoengineering — a novel means of tackling climate change which itself raises interesting legal issues.
As we are aware, there have been numerous multilateral agreements where countries have pledged commitments to emissions reductions. But in many cases, the voluntary pledges that a country makes for its own emission reductions, by the terms of the relevant agreement, may not be enforceable. They can be reported, but they are not strictly enforceable. There will be an effort in the next five years to do better in this respect. But in many countries there will be domestic disputes under domestic law about carrying out these commitments. In the United States, there are already about 25 lawsuits challenging a proposal by the Obama administration to control pollution from coal-fired power plants. This is quite characteristic of what has happened in the US whenever the government tries to take action.
In relation to mitigation, carbon markets have emerged in different parts of the world. Perhaps one of the most significant events is the adoption of carbon markets in China, so far in seven different states and provinces. China has said that this is going to expand nationwide. Attempts will probably be made to link that with carbon markets elsewhere in the world. In the US, there is a carbon market in California that is linking with markets in two provinces in Canada, and it may also link in some fashion with the Regional Greenhouse Gas Initiative market in the northeastern states. The growth of the carbon market and such links will inevitably lead to commercial and regulatory disputes. So will any efforts by some countries to impose border taxes against other countries that are not undertaking comparable measures.
The efforts to control forest degradation are leading to the emergence of their own system of regulation, which will lead to many questions about who owns title to what land, and how one is supposed to monitor what is happening to the forests. Resolving these disputes will raise many scientific difficulties.
Some countries have seen litigation concerning emissions reductions obligations beyond the UNFCCC. A trial level court in the Netherlands issued a very important decision in June 2015, in the Urgenda case. It required the Dutch government to reduce its greenhouse gas emissions to a considerably greater extent than the government itself had pledged to the European Union and the United Nations. That case is under appeal, but if it goes forward that will lead to its own disputes. Similarly, there is litigation in the United States by a group called Our Children’s Trust, which is trying to establish under the old public trust doctrine, an obligation on the United States and individual to do more to reduce greenhouse gas emissions.
The UN framework convention was calling for a great deal of technology development, and transfer from the more to the less affluent countries. This will invariably lead to some disputes. In [Page100:] terms of the magnitude of the challenge, the numbers are astonishing. One of the elements will be the construction of thousands or possibly tens of thousands of large wind farms, solar farms, hydroelectric facilities, geothermal facilities and all kinds of other new facilities for the generation of low-carbon or zero-carbon energy.
In the course of that, locations are going to have to be found for every one of them. Sometimes the neighbours or others will be unhappy, leading to disputes about regulatory approvals. Impact assessment will have to be done, and these projects will impact some species. There will also be a large number of contractual issues with the equipment, the financing, the real estate, the agreements for the purchase of the electricity and so forth. There will probably be a continuation of some of the trade disputes that we have seen emerge in the last several years where one country is subsidising its own renewable industry and another country alleges that that is a violation of the WTO.
Many existing facilities will need to be closed. Under most of the projections, the world is going to have to stop burning fossil fuels before the end of the century. Those who now are in the businesses of extracting, producing, transporting or utilizing fossil fuels will be affected. Many companies have very substantial investments in equipment and reserves, which will be greatly devalued, and they will not necessarily accept the phase out of their product willingly. This may lead to another round of litigation.
Another important measure will be the increasing of energy efficiency of buildings, of industrial equipment, and of motor vehicles. Ultimately motor vehicles will need to be transitioned away from fossil fuels and toward electric power from clean energy sources. More attention will need to be paid to the emissions from the aviation and shipping sectors, which have so far been outside of the UN Framework Convention but are among the fastest-growing sources of greenhouse gas emissions.
Restrictions are being imposed on the construction of new fossil fuel facilities. There are numerous calls that many of the existing proven reserves of fossil fuel companies can no longer be used because using them would exceed the carbon budget and would cause a great exceedance of the two degree target that we have heard so much about. Some countries are endeavouring to restrict the ability of international financing to help pay for fossil fuel restrictions. There is also a major movement to eliminate fossil fuel subsidies, which are a significant part of the economic structure of many countries, but also perversely encourage the use of fossil fuels. This change in the energy economy will also require significant changes in who is engaged in what kind of activity. It will also lead to a good deal of labour migration, which brings with it its own problems.
Adaptation is the next area which will lead to possible disputes. The Copenhagen Conference in 2009 led to a collective commitment by the developed countries to come up with US$100 billion per year beginning in 2020 to assist the mitigation and adaptation actions of the developing countries. It is not clear where that money will come from, but pledges are far below that. Once the money starts flowing there will inevitably be disputes about the allocation and utilization of the funds.
Litigation has begun over the failure of states to adapt. A trial court in Pakistan in September 2015 issued a very interesting ruling, in Leghari v Federation of Pakistan, finding that the national government was failing to carry out the national policy to prepare for climate change. This court created a commission to come up with a new plan and named the members of this commission. The world is likely to experience more and more litigation (as seen to an extent in the United States) over whether the state is liable for having failed to prepare adequately for climate-related events that have caused great damage. This will be the case even if the global increases stay below two degrees, but more so if the world goes beyond two degrees.
Claims may also be brought seeking damages from architects, engineers and builders who have created buildings and structures that do not withstand foreseen extreme weather events. There will clearly be many commercial disputes, business interruption claims, and disputes over supply chain disruption.
Disasters will create manifold disputes. When a disaster happens, as in the case of Hurricane Sandy in New York City, there will be a very large volume of insurance litigation over which policies cover what losses. As the world gets warmer and warmer, some places will become dangerously hot, and it may be necessary to construct “cool rooms” or other ways for the people to survive these dangerously hot conditions that are expected in the second half of this century, if not before. There may also be liability claims against first responders and volunteers under some circumstances.
For many years, of course, we have seen constant disputes about water supply and water pollution. There is nothing new about that, but what will be new is that climate change in general [Page101:] makes the wet places wetter and the dry places dryer on the planet, leading inevitably to many disputes over water supply. For instance, where upstream users utilise the water, less gets downstream, causing significant damage.
Likewise, there will be significant disruptions to agricultural activities, and to crops and livestock, because the current patterns of agriculture around the world were based on the climate that the Earth has experienced over the last several centuries. As the climate changes, many of the crops that have long been able to grow in particular areas can no longer survive there, and they will have to be cultivated someplace else. That will lead to very significant disputes. Fisheries are being disrupted not only by overfishing and pollution, but also by ocean acidification and by the related degradation of coral reefs.
With the melting of the Arctic ice caps the world will see much more commerce in the North. There will be much more shipping and mineral exploitation, inevitably leading to disputes after spills or boundary disputes.
One of the gravest predictions concerns population displacement. Some of the small island nations are going to go under water. There is great uncertainty about when that will happen, but it clearly will happen. And much more heavily populated regions of the Earth will experience massive amounts of population relocation. Bangladesh is the prime example. The crises that have been occurring over the last several months with displaced people crossing the Mediterranean into Europe involve only a fraction of the magnitude that is likely to be experienced in the second half of this century as a result of climate change. This phenomenon raises extremely difficult issues about where the displaced people go, who will decide, what will become of them when they arrive, who will pay the costs.
In addition, as many coastal areas become less habitable, people will have to move inland. So that raises several questions: How do you get them to leave? Who bears the costs? How does a state decide that a coast is no longer suitable? How does one identify where to go? How does a state make that land available, even though that land may traditionally have been used for other purposes? This is going to happen in the decades to come, on a massive scale.
The issue of shrinking and drowning islands is relevant to liability and compensation. So far, courts have not granted compensation. The question is who pays, who receives, and the accountability of such funds?
There have been and continue to be lawsuits that go after greenhouse gas emitters in an effort to hold them financially liable. These include Kivalina v ExxonMobil, Comer v Murphy Oil — both of which were dismissed. Pending cases include Saúl Luciano Lliuya v RWE, where a Peruvian farmer is suing RWE, the German energy firm, in a German court for its proportional contribution to glacial melt in Peru; and a petition filed by Greenpeace with the Commission of Human Rights in the Philippines seeking a finding on the responsibility of carbon majors. It will be interesting to see how these proceedings play out.
There have also been investor disclosure suits in the United States. The New York Attorney General has commenced investigations of ExxonMobil to determine whether it lied to the public about the risks of climate change. Likewise, a similar investigation was brought against the coal company Peabody Energy in respect of its disclosures of the risks posed by climate change. Such cases may increase in the near future.
As it becomes clear that the efforts being made to reduce greenhouse gases are not enough, there are two methods that have been proposed to deal with it. One is legally fairly easy, but very difficult technologically. The other is relatively easy technologically, but horribly difficult legally.
The first, the one that few object to but is hard technologically to develop at scale, is air capture. This involves capturing the carbon dioxide from the atmosphere and storing it or utilizing it. Nobody objects to that but it has been difficult to devise ways to do this at scale. Some of the techniques that might work at scale involve using a tremendous amount of land, which could pose major legal problems.
On the other hand, there are now serious proposals to try to alter the climate by replicating the effect of a volcano and spraying sulphates or other materials into the atmosphere to shade out enough of the sunlight to lower the global temperature two or three degrees and counteract global warming. The most prominent proposals involve launching fleets of aircraft to be spraying continuously. The environmental impact review for that would be frightful, and one of the real difficulties is that we cannot predict where it will cause terrible weather problems. If one country were to undertake this and within a year there is a terrible weather event someplace else — which [Page102:] occurs all the time — it may be blamed on the country that undertook the geoengineering experiment. One can imagine a very serious dispute arising as a result of that.
The global community will continue to hear more about geoengineering, and it will be very important to begin the process of developing what does not now exist — an international framework to make decisions about whether to undertake that and to decide on liability and compensation in case something goes wrong.