End to UK free-ride on fossil fuel subsidies – legal expert

Image copyright AFP/Getty Images Image caption If we cut carbon emissions fast, fossil fuel prices could fall by hundreds of pounds per tonne

The UK could be sued for the billions it is pumping into fossil fuel companies, an environmental law professor has warned.

Professor Jonathan Baker, from the University of Edinburgh, said the courts could “put an end” to countries’ “free ride” on the back of the rest of the world.

Several NGOs have threatened to take action, saying the UK’s efforts to slow climate change are “undermined” by fossil fuel subsidies.

But a government spokesman said the subsidy reform “meets our international obligations”.

“[They are] part of a number of policies and commitments made by the UK and other G20 nations to ensure that fossil fuel firms, in the same way as many other businesses, will be paid fairly for the pollution they emit when extracting, burning and transporting fossil fuels,” he said.

‘Triple whammy’

But the possibility of legal action, in the UK and elsewhere, has been the subject of wider discussion.

Some experts warned it would be hard to predict what the reaction would be from the courts, given that regulators were not immune from the “triple whammy” of higher pollution costs, and more specifically the “energy costs that fossil fuel extraction creates”.

But Prof Baker agreed.

Image copyright Getty Images Image caption Governments such as China could be threatened by potential fines

“The danger with this is that some people see it as the UK versus everybody else, but it could be hugely disruptive for a lot of nations”, he said.

“If we find it necessary to transfer pollution control responsibility and enforcement functions from state to state, that could hit those nations where it hurts.”

One potential factor is that governments could find themselves facing the financial strain of future fines, Prof Baker said.

He said those countries would be financially damaged if their citizens, who also faced the pollution problems they had helped create, successfully challenged the subsidy regime.

Katharina Pfister, from oil and gas company firm Total in the UK, said she was not particularly worried about the prospect of legal action.

“I think this is a very difficult path to go down,” she said.

“We know from experience now that politicians and organisations throughout the world can’t be trusted to make decisions based on the common good and common interests.”

‘Better decisions’

Prof Pfister also pointed out that fossil fuel subsidies were already controlled by the market, and no long-term agreement between governments was needed to cut them.

“People are only paying a relatively small amount of money on refineries, refining and chemical infrastructure, which is where those costs come from,” she said.

“It’s very difficult to say that a big organisation like Total would invest in exploration and development if there were a guarantee that the UK wouldn’t step in and take control and impose regulations and taxation on us.

“It would mean putting out profit and loss statements year after year. We could actually make better decisions about energy costs and take steps towards more efficient utilisation of our assets.”

Image copyright Getty Images Image caption Prof Baker says action by the courts could “put an end” to countries’ “free ride” on the back of the rest of the world

She said by tackling the problem, countries had “ensured that investment doesn’t follow the volume or trend of the day”.

Several civil society groups, including the Ellen MacArthur Foundation, WWF International and Unseen Campaign have called for the UK to hand responsibility for subsidies to both state and independent regulators.

“If that doesn’t happen, then they [the NGOs] could bring legal action against the UK,” Prof Baker said.

“There has been legal precedent with the Environment Agency [to] cut subsidised wheat.”

The Ellen MacArthur Foundation wants to put environmental issues on the same footing as legal and social problems, Professor Baker added.

But this has “created a nice situation for the government to say, ‘well you don’t have to follow those rules and regulations [for investment]’.”

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