Introduction

The preceding chapter discussed the issues of how and on what basis allowances were allocated. This chapter addresses a second question: what is the effect of allocation when the affected installations receive a free allocation of allowances? The debate surrounding auctioning and free allocation suggests that it matters a great deal. The purpose of this chapter is to explain how, and in what ways, allocation does (and does not) matter.

Price effects and allocation effects

Two key distinctions must be made. The first concerns the effects of free allocation itself, distinct from what would be attributed to the price created by the cap-and-trade system. If full auctioning is the means chosen for distributing allowances to installations, there will be no allocation effects because there would be no free allocation. The only effects would be those associated with the price for CO2 emissions. Free allocation raises the question of whether the allocation itself has effects beyond or additional to those associated with the carbon price.

In the classic economic explanation advanced by Coase (1960), an up-front, fixed assignment of rights to emit will have no effect on the supply and demand for the good in question – in this case emissions. Under certain idealized conditions, such as complete information or the absence of significant transactions costs, trade would occur until marginal valuations and marginal costs are equalized.1

The distinction between allocation and price effects, and the assumed independence of these effects, also raise questions about behaviour.

INTRODUCTION

Everyone is talking about climate change. Climate change has been on the cover of almost every U.S. magazine in the past couple of years, including Vanity Fair, Time, Newsweek, the Economist, and even Sports Illustrated, on such television shows as Oprah and The Tonight Show, and in the movie theaters with Al Gore's An Inconvenient Truth and Who Killed the Electric Car? To be sure, this media attention is driven first by the increasingly clear scientific connection between greenhouse gas concentrations, climate change, and real impacts affecting real people. But the growing public awareness of climate change is also being driven by the actions of lawyers and other climate advocates who are increasingly litigating climate change in the world's courts, commissions, and congresses. Climate change even made an appearance before the U.S. Supreme Court. Win or lose (and some will surely win, as they did in the U.S. Supreme Court), these litigation strategies are significantly changing and enhancing the public dialogue around climate change.

This chapter discusses the awareness-building impacts of climate litigation as well as related impacts such strategies may have on the development of climate law and policy – even if many of the individual cases lose. The chapter does not discuss the significant implications if a tort action in the United States or the Inuit human rights claims, for example, were ultimately to prevail. Such precedents, which would obviously be far reaching, are discussed in the various chapters of this book addressing difficult litigation strategies.

INTRODUCTION

Justice Scalia: But I always thought an air pollutant was something different from a stratospheric pollutant, and your claim here is not that the pollution of what we normally call “air” is endangering health.…[Y]our assertion is that after the pollution leaves the air and goes up into the stratosphere it is contributing to global warming.

Mr. Milkey: Respectfully, Your Honor, it is not the stratosphere. It's the troposphere.

Justice Scalia: Troposphere, whatever. I told you before I'm not a scientist. (Laughter).

Justice Scalia: That's why I don't want to deal with global warming, to tell you the truth.

The above exchange occurred between Justice Scalia and James Milkey, Assistant Attorney General of Massachusetts, during the oral argument in Massachusetts v. EPA, the first case heard by the U.S. Supreme Court on governmental regulation of greenhouse gas emissions. It not only illustrates the complexities of judicial engagement with the science of global warming but also provides a window into one of the greatest obstacles to effective regulatory approaches to the problem of climate change, which the Obama administration must grapple with as it embarks upon its ambitious climate and energy initiatives. Namely, greenhouse gas emissions and their impacts are foundationally multiscalar; they range from the most individual to global levels.

Referencing climate change as a multiscalar problem, however, only serves as a starting point for further discussion. “Scale” is a complex and contested concept in both the geography and the ecology literatures.

INTRODUCTION

Discussions about how to address climate change usually focus on politics, policies, and programs. Until recently, the potential role of climate change litigation had been virtually ignored. But in the past few years, the idea of using litigation as a tool to address the causes and impacts of climate change has picked up steam, as illustrated in many chapters of this book. Perceiving a lack of meaningful political action – and given the increasing scientific evidence that “[m]ost of the observed increase in global average temperatures since the mid-20th century is very likely [greater than 90% likelihood] due to the observed increase in anthropogenic greenhouse gas concentrations” – lawyers around the world have begun exploring litigation strategies and, in some cases, initiating actions. This chapter evaluates the viability of one type of climate change litigation – what some see as the most novel or radical idea – namely, applying tort law to hold companies emitting substantial amounts of greenhouse gases liable for at least some of the harms caused by climate change.

There are those who argue that it is not useful to pursue such climate change claims in the courts. But harm caused by human activity is a central concern of tort law, and many of climate change's costs are harms produced at least partially as a result of human actions. Further, because of the uneven nature and distribution of the effects of climate change, some localized groups (e.g., those living in coastal areas or at high latitudes) are bearing, and will continue to bear, the brunt of climate change's harms and costs.

INTRODUCTION

Over the course of the last few years, climate change litigation has been transformed from a creative lawyering strategy to a major force in transnational regulatory governance of greenhouse gas emissions. This book traces that journey and looks ahead to the future by considering a range of lawsuits and petitions filed in state, national, and international tribunals, as well as some potential causes of action. These actions cover an immense legal terrain but have in common their concern with more effective regulation of greenhouse gas emissions.

This introductory chapter frames the contributions in this book. It first provides an overview of climate change science, including both the current and the projected global impacts of climate change; second, it assesses current institutional responses to climate change and why they have been and likely will continue to be wholly inadequate to confront the looming threat of climate change in this century and beyond; third, it examines current efforts to open a new front to address climate change and climate change litigation; and finally, it provides a synopsis of the chapters that follow.

INTRODUCTION

This chapter outlines the contours of potential “atmospheric trust litigation,” designed to provide a means by which courts can hold governments at the national and subnational level accountable for reducing carbon emissions. Such litigation rests on the premise that all governments hold natural resources in trust for their citizens and bear the fiduciary obligation to protect such resources for future generations. The trust is embedded in the law as an attribute of sovereignty itself. While most frequently applied to state governments, public trust theory applies with equal force to the federal government, and seemingly indeed, to any sovereign. Atmospheric trust litigation would characterize the atmosphere as one of the assets in the trust, shared as property among all nations of the world as co-tenants.

Protection of the trust through judicial oversight lies at the heart of the public trust jurisprudence in this country. As this chapter explains, the courts have the ability to enforce a fiduciary obligation to reduce carbon at all levels of government. Whether they will do so or not depends largely on individual judges' perception of the urgency of climate crisis, their belief as to whether the political system will address the issue, and their view of the role of the judiciary in confronting climate change. While atmospheric trust litigation bears the risk of any untested strategy, it is perhaps the only macro approach that can empower courts to effectuate the reductions in emissions within the limited time frame afforded to us before critical climate thresholds are exceeded.

INTRODUCTION

This chapter examines another potential international forum in which the threat of climate change might be addressed, the Agreement for the Implementation of the Provisions of the U.N. Convention on the Law of the Sea 10 Dec. 1982 Relating to the Conservation and Management of Straddling Fish Stocks and High Migratory Fish Stocks (“UNFSA”). Actions under UNFSA could be salutary for several reasons. First, as outlined hereafter, the commercial fisheries sector may be profoundly and adversely affected by climate change. This includes many fish stocks regulated under UNFSA: highly migratory species, which have wide geographic distribution and undertake significant migrations, and straddling stocks, which occur both within and beyond Exclusive Economic Zones (EEZs). Overall, “[m]igratory and straddling species account for roughly 20% of the total marine catch and include some of the most economically valuable fish populations.”

Second, the United States, one of the world's largest emitter of greenhouse gases and a State with an abject record in addressing climate change, was one of the first nations to ratify UNFSA and has played an active leadership role in its implementation. UNFSA thus presents an excellent forum in which to engage the United States, as well as other major greenhouse gas emitters, including the European Union and China, on climate issues. Finally, unlike the other international fora where climate change actions have been pursued to date, UNFSA provides a dispute resolution mechanism with teeth.

INTRODUCTION

In March 2003, I wrote an article for the Environmental Law Reporter surveying potential international judicial forums where victims of global warming could bring lawsuits. In the ensuing six years, numerous lawsuits have been brought in the United States and in other countries, and environmentalists can now celebrate their first significant victory. In April 2007, based upon its finding that greenhouse gases are pollutants under Section 202(a)(1) of the U.S. Clean Air Act, the Supreme Court in Massachusetts v. EPA held that the U.S. Environmental Protection Agency (EPA) has the authority to regulate greenhouse gases.

Though we are still in the early days of global warming litigation, these lawsuits are having a significant impact on the legal and political climate. In response to a good deal of popular and academic discussion suggesting that those most responsible for the global warming problem be held legally accountable, corporations in the carbon sector are becoming concerned about the extent of their potential legal liability. This concern is one reason they are coming to publicly accept the reality of anthropogenic-caused global warming, and the corresponding need for regulation of greenhouse gas emissions.

Despite the significance of this litigation, however, global warming actions thus far have almost all been brought in domestic rather than international forums. The only exceptions are a petition by the Inuit to the Inter-American Commission on Human Rights, and petitions by environmental groups and others to UNESCO's World Heritage Committee to include various natural sites as world heritage endangered by global warming.

INTRODUCTION

Between 2004 and 2006, nongovernmental organizations (NGOs) from several countries submitted four petitions and a report (collectively, the Petitions) to the World Heritage Committee to list certain World Heritage sites on the “List of World Heritage in Danger” (the “in danger” list) because of the deterioration these sites have endured as a result of climate change. These sites include Sagarmatha National Park in Nepal, Huascarán National Park in Peru, the Great Barrier Reef in Australia, Waterton-Glacier International Peace Park in the United States and Canada, and Belize's Barrier Reef Reserve System, which suffer from two of the most dramatic effects of climate change on natural areas – coral bleaching and glacial ice loss. The Petitions argue that pursuant to their obligations under the World Heritage Convention (WHC), State Parties must develop a mitigation strategy that prevents anthropogenic interference with the climate system sufficient to halt further deterioration of World Heritage sites threatened by climate change. At the heart of the Petitions, then, is a call for all State Parties to the WHC to make drastic cuts in their greenhouse gas emissions.

The World Heritage Committee first considered the Petitions, except the petition concerning Waterton-Glacier International Peace Park (Waterton-Glacier), at its regular meeting in Durban, South Africa, during July 2005. The Committee adopted a decision recognizing the threat climate change poses to the integrity of World Heritage sites.

INTRODUCTION

Since the early 1990s, pressure from environmental and human rights groups has pushed international financial institutions (IFIs) to address the sustainable development impacts of the projects they finance. As part of their response, IFIs have increasingly adopted environmental and social policies that require them, among other things, to take environmental and social concerns into account. Some of these policies specifically include impacts associated with climate change. IFIs that have adopted environmental and social policies to guide their lending include multilateral development banks (MDBs) such as the World Bank Group, the Asian Development Bank, and other regional development banks; export credit and insurance agencies, such as the U.S. Export-Import Bank and the United Kingdom's Export Credits Guarantee Department; and private commercial banks, such as Citibank, HSBC, and ABN Amro.

Concern over the implementation of these policies led the same environmental and human rights groups to advocate for the establishment of citizen-driven accountability mechanisms in the IFIs. Beginning with the creation of the World Bank Inspection Panel, nine accountability mechanisms have been established. Although they all differ in terms of their independence and effectiveness, each provides an opportunity for project-affected people to raise concerns about the compliance of IFI-financed projects. This chapter reviews these mechanisms' potential use in filing claims relating to climate impacts. Unlike the litigation approaches explored by most of the chapters in this book, a pure climate change–related claim has yet to be filed with any of the IFI accountability mechanisms.

INTRODUCTION

Is there a human right to security from climate change? A recent ruling by the Federal High Court of Nigeria suggests that there is. Royal Dutch/Shell Group (Shell) and the other companies that produce oil in Nigeria have engaged for decades in a practice called “gas flaring,” in which natural gas released during oil extraction is burned off, discharging large clouds of greenhouse gases and other pollutants into the atmosphere. Citing the climatic and other environmental impacts of gas flaring on their community, Nigerians living near the flares filed a lawsuit charging that the practice violates their fundamental rights to life and dignity guaranteed under the Nigerian constitution. In a ruling on November 14, 2005, the Federal High Court of Nigeria agreed and ordered Shell and the Nigerian National Petroleum Corporation “to take immediate steps to stop the further flaring of gas” in the plaintiffs' community. Although the court's ruling thus far has had little practical effect – the oil companies have yet to comply and are appealing the order – it opens up intriguing possibilities for crafting legal approaches to the problem of climate change.

Little analysis of the plaintiffs' climate change claim accompanied the Nigerian court's ruling, but the notion that actions that contribute substantially to climate change may violate fundamental constitutional or human rights is intuitively appealing.

INTRODUCTION

The rapid pace of climate change in the Arctic poses serious challenges for the Inuit peoples living there. A petition filed with the Inter-American Commission on Human Rights in December 2005 on behalf of Inuit in the United States and Canada claims that U.S. climate change policy violates their rights. Upon filing the petition, Sheila Watt-Cloutier, Chair of the Inuit Circumpolar Conference, made a statement at the 2005 Conference of Parties of the United Nations Framework Convention on Climate Change. She summarized the severity of the stakes involved as follows:

The Inter-American Commission provided a two-paragraph response to the petition on November 16, 2006, that “the information provided does not enable us to determine whether the alleged facts would tend to characterize a violation of the rights protected by the American Declaration.