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Who pays for climate change? Peruvian sues German utility company

For several days in late May, an unusual collection of scientists, lawyers and judges from Europe could be found in the Peruvian Andes almost 5,000 meters above sea level, watching a drone fly to a huge but shrinking glacier.

The setting was impressive: the bright blue Lake Palkacocha glistened in the sun in front of a huge wall of rock and ice hundreds of meters high, the facade of a glacier stretching back over the snow-capped peaks. The beauty of the scene belied its instability; if an avalanche falls into the lake, experts warn that floods could rush to the city of Huaraz below.

The unlikely group was deep in the mountains to gather evidence in a high-stakes lawsuit brought by a Peruvian farmer, Saúl Luciano Lliuya, against RWE, Germany’s largest utility company.

Because emissions produced by RWE worldwide over its 124-year history have contributed to the warming that is shrinking the glacier, the farmer argued that the company should help pay for the defense to protect Huaraz, his hometown.

RWE has never had operations in Peru. But it is one of Europe’s top 10 polluters, according to an influential 2014 study, accounting for 0.47 percent of cumulative global industrial emissions of carbon and methane between 1751 and 2010 — the effects of which they do not respect national borders.

Accordingly, in a lawsuit filed in Germany in 2015, Luciano Liuya said the company should pay 0.47 percent of Huaraz’s defense costs – about 20,000 euros. RWE says the claim has no basis in German law and that it is impossible from the court’s point of view to attribute specific local effects of climate change to an individual company.

Luciano Lliuya’s action, which is funded entirely by donations, is much more than compensation. The dispute, now nearing its final stages, is a landmark case — seen by many academics, activists and litigators around the world as a potential watershed moment that could lead to a wave of compensation claims for climate-related destruction.

“If this case is successful, I have no doubt that there will be a number, probably a large number, of additional lawsuits,” said Christoph Balls, political director of the nonprofit Germanwatch, which supports Luciano Liuya.

This is just one of a growing number of climate-related lawsuits that have been filed in the six years since the Paris Agreement was signed. The accord – in which more than 190 countries agreed to limit global warming to well below 2C – provided new legal tools for activists and environmentalists as national courts are asked to interpret what the treaty obliges individual countries to do.

Lawyer Rhoda Verheijen, her client Saul Luciano Liuya and climate litigation consultant Noah Walker-Crawford walk around Huaraz during an evidence-gathering trip in May © Walter Hupiu Tapia/Germanwatch eV

Recent victories – such as a 2021 French court ruling that the government must do more to cut emissions – have emboldened campaigners, and funding for climate cases is increasingly available. There is also a growing acceptance in many jurisdictions of the need to limit warming: in a 2021 ruling, a court in the Netherlands ruled that oil company Royal Dutch Shell has a duty of care to Dutch citizens and must make a sharper cut of emissions.

While the amount Luciano Liuya is seeking amounts to little more than a rounding error for a company like RWE, which had a turnover of 24.5 billion euros in 2021, a precedent-setting victory would put other polluters at risk of similar claims from all over the world, potentially for much larger sums.

The justices’ decision will “influence the thinking” of judges elsewhere who “see climate cases coming into their courtrooms and[are]is looking for guidance,” says Michael Berger, executive director of the Sabin Center for Climate Change Law at Columbia University in New York.

Even if Luciano Liuya’s challenge fails, the architecture of the case will exist for others to learn from at a time when poor nations’ demands for climate-related financial support are growing louder. The RWE case is the first transnational litigation of its kind to go this far, and is believed to be the first time a resident of one country has sought compensation from a polluter based elsewhere.

“Ultimately, there will be a brave court that will order compensation,” says Sophie Marjanak, a lawyer at environmental law charity ClientEarth. It may be “impossible to estimate or place a limit on this liability. . . that’s why [companies are] resisting him incredibly hard.’

The struggle reflects a stark reality: Those most affected by climate change have often done little to cause it and feel left out by big polluters who they say are not doing enough to help them cope with its consequences.

“When we took on this case in 2015, everyone said we were crazy,” says Luciano Liuya’s German lawyer, Rhoda Verheyen. “Science only works in our favor. . . I don’t think I’ve ever been so optimistic.” Even if the farmer loses, she adds, the question of who is responsible for the damage caused by climate change will not “go away.”

The case for the plaintiff

To have any chance of winning, Luciano Lliuya’s legal team must first show that the threat to his property is significant and imminent. That’s what scientific experts appointed by the regional court of Hamm, Germany, gathered evidence for during a week-long visit in May overseen by the German judges who will rule on the case.

The scientists took soil samples and recorded the measurements. A drone flew to the ice wall – which was theoretically accessible by boat but “too dangerous” to approach because of the risk of falling ice, said Martin Mergili, a geomorphology expert who supported Luciano Liuya’s team.

The lawsuit claims that the glaciers around Lake Palcacocha have become unstable, increasing the risk of dangerous floods in Huaraz © Walter Hupiu Tapia/Germanwatch eV

They worked to the sound of an occasional pop. “It’s not a constant noise, but every now and then. . . little ice avalanches fall,” says Mergili. Sometimes the sound is “shocking”.

According to people familiar with the matter, RWE has cast doubt on and tried to discredit the climate science presented to the German court by Luciano Liuya’s team during the course of the case, much of which has been conducted behind closed doors.

In a statement to the FT, the company said it “should be allowed to argue about studies and whether they are relevant to the case. . . We do not deny climate change and that man has been and still is influential on it.

In addition to proving the threat to his home, the farmer’s team must show that RWE is partly to blame for the risk due to its historical emissions. This is more of a challenge and something that would be difficult to prove until recently.

Enter the “science of attribution,” a fast-growing field of research into the extent to which climate change has made a natural disaster more likely or severe, and who singled out the pollution that caused warming.

RWE’s historic emissions in Europe are blamed for contributing to the warming that is shrinking Peru’s glaciers © Alex Krauss/Bloomberg

Once a specialized niche, this field of study has advanced rapidly in its 20 years of existence, and scientists are getting better at drawing cause-and-effect relationships. Without these advances, proving liability for climate-related destruction would be much more difficult, says Delta Merner, who directs the Science Center for Climate Litigation at the US nonprofit Union of Concerned Scientists. The RWE case “wouldn’t have been possible 10-15 years ago,” she adds.

For Luciano Liuya and his supporters, victory is about “climate justice” – or redressing the balance between big polluters and communities that have done little to contribute to climate change but will be hit hardest by its effects.

A wave of legislation

Vulnerable countries are also seeking climate justice, which some of their leaders say should include compensation for the effects of warming, something rich nations have long opposed. Damages cases are “the holy grail of climate change litigation,” Marjanak says. “There is no way the rich countries of this world will voluntarily agree to pay reparations to the global south.”

The issue proved a sticking point at last year’s COP26 UN climate summit, where rich countries refused to back a proposal by poorer ones for a new “loss and damage” financial mechanism, or money to help those most at risk cope with the devastation caused by rising sea levels, hurricanes and wildfires. Loss and damage is expected to be a major theme at this year’s COP27 meeting in Egypt.

Lee White, Gabon’s Minister of Water, Forests, the Sea and the Environment, says that if he were a country at high risk of climate hazards, “I would be very tempted to take [legal] action. . . although I know it would be extremely complicated and difficult to prove.

Some island nations are considering doing just that: Last year, Antigua and Barbuda and Tuvalu set up a panel to discuss the prospect of suing countries over the effects of their emissions, among other things. The Small Island States Commission on Climate Change and International Law plans to seek legal advice from international courts and tribunals on whether they can bring such cases.

Meanwhile, in the US, more than 20 lawsuits are making their way through state courts across the country seeking compensation for climate-related destruction. Unlike RWE, they are rooted in the idea of ​​fraud as a source of responsibility – that big polluters have misled people about the effects of their carbon-intensive products.

Island nations struggling with rising seas…