Yves here. I’m having a hard time knowing where to start with this climate case decision and basic law. It may seem too bold to impose stricter pollution disclosure standards on companies. Here, the public allegedly got a win because the French court decided to extend the reach of the company’s emissions right to its customers.
Actually, this whole approach is about the worst way to fight climate change>. It is a breach of duty by the French government. They have kicked the problem to the courts, which will occasionally result in successful lawsuits and fines for climate violators. Instead, the legislature needs to create and pass serious laws that, depending on the nature of the damage to society, ban jobs altogether or impose taxes. The authority then strengthened. The only place for the courts in the proper procedure to combat weather damage is in suits that may arise due to failure to enforce or contested excesses.
And it’s no secret when a tax or prohibition is the most appropriate approach. We’ll also quote an excerpt from an old paper written by the then Managing Director of Financial Stability at the Bank of England, Andy Haldane, in his paper, The 100 Billion Question:
The question of taxation versus prohibition crops up again and again in public choice economics. For centuries it has been at the heart of the international trade debate over the use of quotas versus subsidies. Over the course of this century, it has become the focus of debate on appropriate policies to reduce carbon emissions.
In making these decisions, economists often use Martin Weitzman’s public goods framework from the early 1970s.
the private costs of this regulation. Without doubt about costs or benefits, the policy maker cannot be indifferent between taxes and restrictions when striking this cost/benefit balance.In the real world, there is great uncertainty about both costs and benefits. The Weitzman framework tells us how to choose between pollution control tools in this setting. If the stated public benefits of the negative option are large, compared to the private costs incurred, quantitative restrictions are correct. Why? Because adjusting prices for profit
pollution control, while allowing for variable rates, does not have large private costs. If the marginal social benefit curve is higher than the private cost curve, the restrictions dominate.The results change when the marginal cost/benefits trade-off is reversed. If the private costs of the wrong choice are high, compared to the public benefits mentioned earlier, correcting these costs through taxation is likely to produce a better social outcome. If the marginal social benefit curve is lower than the private cost curve, the tax dominates. So choosing a tax versus a ban on pollution control is ultimately a practical matter.
Therefore the type of data that French companies report can be used to develop an analysis to determine what type of laws or regulations should be implemented. But as I read it, the purpose is instead to provide information to facilitate private litigation. From the post:
Nevertheless, the decision expands the options for corporate accountability efforts against oil companies in France. And it could set a precedent for European Union rules requiring similar reports from companies in other countries, which will come into force in 2028.
So this is an exercise to simplify wet noodle strokes. Private parties and perhaps sometimes government agencies will file suits based on these disclosures. The legal battles will take years. Most polluters will not be prosecuted and any rewards will come well after the misconduct. Such a lame ban will not change behavior.
By Aminta Ossom, Lecturer in Law, Senior Clinical Lecturer, Harvard University; Harvard Kennedy School. Originally published on The Conversation
A recent French court ruling requires Europe’s largest oil and gas company to not only report on its climate-changing gas emissions to its contractors but also to its customers who burn the oil and fuel products the company sells.
The court ruling against TotalEnergies, under a French law passed in 2017, adds to the growing number of global legal battles against climate change. The organization is seeking court orders to hold companies accountable for their emissions and global warming.
The court ruling gives TotalEnergies six months to report carbon emissions to airlines, motorists and other customers who use the company’s energy products. Those releases represent a large portion of the company’s cash flow. The company must also assess the risks of those emissions to the environment, human rights and health, and report how it plans to reduce those risks.
TotalEnergies said it will comply with the decision, although it may choose to appeal the decision. Nevertheless, the decision expands the options for corporate accountability efforts against oil companies in France. And it could set a precedent for European Union rules requiring similar reports from companies in other countries, which will come into force in 2028.
Corporate Responsibility
The French law requiring this kind of reporting came in the wake of the garment factory collapse in Bangladesh in 2013 that killed more than 1,100 people. Among the debris were clothes from several French companies. The result of public complaints led to the passing of this law, demanding that French companies be held accountable not only for their business practices but also for those of their contractors and subsidiaries.
In the case of TotalEnergies, the company admitted that its operations lead to emissions that are harmful to the environment, but said that the emissions from its customers are outside the legal value. The court disagreed, ruling that TotalEnergies must report the releases to its customers worldwide, but that the company must also take steps to mitigate the worldwide damage of those releases.
The court found that TotalEnergies’ energy production was closely related to the harm from its customers’ use of those energy products. However, in favor of the company, the court refused to directly order TotalEnergies to reduce its overall emissions – including those of its customers – which would have effectively told the company to sell less fuel.
Through its operations, TotalEnergies reported approximately 34 million metric tons of carbon dioxide emissions per year – more than the emissions of Ireland, Finland or Denmark. The company estimates that its clients’ output was about 10 times that amount, putting it about even with Australia’s annual output.
Affecting US Companies
This decision will have consequences in the United States, because TotalEnergies’ US operations are large, including oil and gas production, refining and sales. It is the largest exporter of liquefied natural gas from the US, yet its US oil and gas business accounts for only 4% of the company’s global total.
In addition, a French court has ruled that product injuries cause human rights and environmental risks that must be included in companies’ reports. That could, in time, be interpreted as requiring US-based companies operating in Europe to collect and share the same data about emissions as those of their customers.
The prospect of this type of report is one of the reasons that US energy companies have already sought to shape the new European directive on company risk assessment, which requires all EU countries to develop national rules on risk reporting by 2028.
The French ruling also marks a rare ruling against a company in a climate damage case. Many climate law cases are brought by governments, which have joined treaties and made other international commitments to reduce greenhouse gas emissions. Corporations are not parties to such agreements, and courts are often wary of interfering with corporate governance decisions.
The French court’s definitive conclusion that companies have a legal duty to help combat damage from climate change may also add weight to similar claims in lawsuits against companies in Belgium, Italy and Switzerland.
