The UK government could be hit with legal claims to cover billions of pounds in payments to investors who buy the fossil fuel projects that fuel the economy, the Financial Times reports. British firm Fielden Clegg Ormond won a high court ruling last week, accusing the government of breaching its duties to force major fossil fuel companies to reveal what they really know about climate change. Fielden Clegg argued that legislation the government passed in 2009 to shore up the carbon market did not take account of the costs associated with climate change. One proposal, the reform of the Petroleum Revenue Tax (PERF), would raise the tax for oil companies by 40 percent a year until 2020, the FT said. This translates to nearly £4.5 billion (roughly $6.9 billion) in carbon taxes for fossil fuel companies over the course of the next seven years. Fielden Clegg told the Financial Times it was only by overturning the tax that the government could address climate change.
Fielden Clegg argued that the legislation the government passed to shore up the carbon market did not take account of the costs associated with climate change.
But its claims may be hard to sustain. Government statistics, reported by the FT, suggest that taxpayers are nearly $1.3 billion richer per year as a result of the reform, or roughly the cost of the tax in just three years.
Cordis, the group that funds the Pierce Leys investments fund, was not taken along with the suit, but did tell the FT that compensation should be paid for the impact of climate change, but it’s unclear how such a legal challenge could be pursued. In the case of “carbon leakage,” in which coal and oil industries shift jobs and investment to countries with less stringent air pollution standards, it may be too hard to prove that companies have acted in bad faith.
Another challenge is more abstract. As such energy continues to be an important source of revenue for the British economy, the prospect of putting a price on carbon could have an effect on it as well, though this too is hard to prove.
Meanwhile, one of the polluters taken to court is no longer in business. Friends of the Earth told the FT that, as a result of a ruling by the European Court of Justice, the billionaire banker Nathaniel Rothschild had been forced to stop trading carbon emissions permits in a case that played out over three years. The Order of Liquidation will essentially return $4.4 billion (£3.9 billion) of market losses to the Government of the United Kingdom and will most likely wind up with the Department of Climate Change.