The main driver for the growing areas burnt by fire is Australia’s increasingly severe fire weather, accounting for 75% of the variation observed in the total annual area of forest fires. This is consistent with predictions from climate change scenarios that severe fire weather conditions will intensify due to increasing greenhouse gas emissions.[1]
Is it possible for an insurer to bring a subrogated recovery action, where it steps in to recover the losses faced by the person insured from a climate event against a third party, for failing to take proper steps to mitigate against climate change? Could an emitter be sued for emitting unreasonable amounts of greenhouse gases, or could an emitter be sued for failing to take appropriate measures to adapt to climate change? New developments in climate attribution science may help support insurers recover costs in actions against emitters for damages resulting from severe bushfires and other extreme climate related weather events.
There is little doubt that humans are contributing to climate change, with the biggest contributor being the combustion of fossil fuels. Fossil fuelled climate change has caused increases in the intensity and frequency of many extreme weather events, including bushfires.[2] The CSIRO confirmed the trend of worsening climate-linked weather resulting in bushfires in its recent study which found that over the last three decades, the annual area burned by fire across Australia’s forest has been increasing by around 48,000 hectares per year.[3] The study also found that the fire season is growing, extending from spring and summer into autumn and winter.[4] These trends are consistent with predicted human-induced climate change.[5]
The summer of 2019-20 saw the Black Summer fires which, in NSW alone, resulted in the tragic loss of 26 lives, the destruction of 2,440 homes, and the burning of 5.5 million hectares of land.[6] Following multiple bushfires across eastern and south-eastern Australia, on 8 November 2019, the Insurance Council of Australia (ICA) declared the fires a catastrophe. This enabled related insurance claims from the bushfires across NSW, Queensland, Victoria and South Australia to be made by those impacted. Claims numbered 38,181 with the ICA’s estimated insurance loss for the 2019–20 Australian bushfire season of AU$2.32 billion as of 28 May 2020.[7] On 6 January 2020, the Australian Government committed AU$2 billion to the National Bushfire Recovery Fund to provide further assistance to individuals and communities impacted.[8] The Royal Commission into National Natural Disaster Arrangements (the Royal Commission) estimates the national financial impacts, including business loss, health impacts and property damage from the 2019-20 bushfires are over $10 billion.[9]
Given the significant economic and social costs of bushfires and the worsening climate related fire weather, could an insurer take subrogated action to recover some of these costs from an emitter for causing unreasonable amounts of greenhouse gases, or for failing to take appropriate measures to adapt to climate change?
What is a subrogated action?
Subrogation is a statutory entitlement of insurers that allows them to seek recovery against parties who cause or contribute to a loss indemnifiable by the insurer, under a contract of General Insurance.[10] In a subrogated action the insurer steps into the shoes of the insured and tries to recover the costs from the third party responsible for injury or property damage suffered by the insured. Many standard insurance policies contain a standard clause which grants a contractual right to the insurer to bring a subrogated action in the name of the insured against any person or entity against whom the insured property owner has a cause of action.
Anthropogenic climate change in case law
The role of carbon dioxide in anthropogenic climate change has been acknowledged by the courts.[11] The Australian Government has accepted that the global average surface temperature is increasing because of increased greenhouse gas emissions, primarily due to human activity.[12] The Australian Government also accepted that increases in temperature affect the environment and the effects of increased temperatures are likely to be compounded by climate change induced events such as severe storms, heatwaves, more extreme droughts and floods and sea level rise.[13]
A recent case filed in the United States builds on more than twenty cases filed in the United States seeking damages from fossil fuel companies for climate harm.[14] Here, sixteen Puerto Rican municipalities are suing some of the biggest fossil fuel companies in the world, claiming that they are liable for thousands of deaths and more than US$100 billion worth of damages caused by Hurricane Maria in 2017.[15] The claim contends that the fossil fuel companies knowingly produced and marketed products that have caused climate change harms, while concealing and misrepresenting the dangers.[16] The case relies on attribution modelling in support of its claim.
What is climate attribution science?
Climate attribution science is the use of statistical methods and computer modelling to compare and observe climate data with global climate simulations that include and exclude human influence.[17] Scientists can compare the two data sets to establish the probability that human activities are responsible for observed changes in temperature, precipitation patterns, sea level rise and other climate change indicators. They can also look at known carbon emission sources and model the world with and without them.[18] Classical attribution science is generally based on global-scale emissions rather than assigning climate change responsibility to major emitters.[19] To better quantify the contributions of individual countries to human induced climate change, there is a need to assign climate change responsibility to major emitters.[20]
In a step further, climate researcher Richard Heede released a paper in 2013, in which he was able to attribute a proportion of the global emissions to specific emitters of greenhouse gases.[21] In a 2014 report, Heede concluded that 63% of the carbon dioxide and methane emitted between 1854 and 2010 could be attributed to just 90 entities.[22] The 2014 report assessed the cumulative greenhouse gas emissions of the largest multinational and state-owned producers of crude oil, natural gas, coal and cement, quantifying and tracing the contributions to determine where the carbon came from and who provides the fuels to the global market.[23] That is, to attribute responsibility for human induced climate change. These entities are referred to as the Carbon Majors and have become the subject of a database which is used to store and evaluate their greenhouse gas emissions.[24]
Similar research on emitter contributions has been undertaken in Australia however it does not attribute specific proportions of global emissions as a percentage.[25] Rather, contributions made by Australian emitters have been analysed as a percentage of Australia’s total emissions. In 2018, BHP Group Limited was found to be responsible for 33% of Australia’s total emissions, followed by Yancoal Australia Limited (12%), and Whitehaven Coal Limited and Woodside Energy Group Limited (each at 6%).[26]
Since the release of the 2013 Carbon Majors Report, climate litigation targeting the Carbon Majors for their contribution to the climate crisis has increased, including for non-disclosure of known harm or misleading disclosure of harm.[27] The use of climate attribution science is growing in its use as expert evidence to support these claims.[28]
How could insurers use climate attribution science?
Claims against emitters responsible for large-scale greenhouse gas emissions
Consider the hypothetical scenario where a property owner’s house burnt down in the Black Summer fires. The property owner made a claim on their insurance policy which was accepted by the insurer. The insurer then decides to sue the emitters in the area.[29]
Nuisance
For an insurer to pursue a subrogated action in nuisance, the insurer would need to establish that:
- The emitter or emitters being sued have interfered with the insured property owner’s use and enjoyment of their land; and
- That interference has been both substantial and unreasonable.[30]
Establishing interference is straightforward. The owner of property whose house was damaged by the bushfire will have suffered an interference with the use and enjoyment of their land that is substantial an unreasonable, arguably though the fault of the emitter. [31]
Finally, causation of loss must be shown. Here, a portion of emissions over a specified period would need to be identified as having caused the particular weather event that damaged the particular property. Expert evidence from an attribution expert could show the necessary causation of loss.
Negligence
For an insurer to pursue a subrogated action in negligence, the insurer would need to establish that:
- The emitter or emitters being sued, emitted greenhouse gas emissions which materially contributed to climate change; or
- The emitter failed to take steps to reduce the risk of greenhouse gas emissions contributing to climate change; and
- That climate change materially increased the risk of occurrence and/or severity of bushfires; and
- The material contribution or failure was a cause of the Black Summer bushfires; and
- The bushfire caused the property damage.
Establishing damage is straightforward. The owner of property whose house was damaged by the bushfire will have suffered damage. The question of failure to act has yet to be decided by the courts. Attribution science could be used to show the contribution of the emitter increased the risk to support the claim.
Finally, causation of loss must be shown. Expert evidence from an attribution expert may be able to link the weather event with the emissions and show causation of loss.
Watch this space…
Climate contribution science can potentially be used to quantify the cumulative contribution of greenhouse gas emissions from each emitter. By identifying the individual emitter’s contribution and using modelling to compare and observe climate data with global climate simulations that include and exclude its influence, causation of severe weather events may be established. This could lead to findings in favour of the insurer when stepping into the shoes of the insured to recover costs for property damage caused by climate related fire weather events resulting from greenhouse gas emissions of major emitters.
[1] Cook, G., Dowdy, A., Knauer, J., Meyer, M., Canadell, P., and Briggs, P. (2021) Australia’s Black Summer of fire was not normal – and we can prove it. Retrieved from https://www.csiro.au/en/news/all/articles/2021/november/bushfires-linked-climate-change
[2] See: IPCC Assessment Reports, UN Framework Convention on Climate Change, Council of Australian Governments (2012) Roles and Responsibilities for Climate Change Adaptation in Australia.
[3] Cook, G., Dowdy, A., Knauer, J., Meyer, M., Canadell, P., and Briggs, P. (2021) Australia’s Black Summer of fire was not normal – and we can prove it. Retrieved from https://www.csiro.au/en/news/all/articles/2021/november/bushfires-linked-climate-change
[4] Ibid.
[5] Ibid.
[6] Australian Disaster Resilience Knowledge Hub New South Wales July 2019 – March 2020 Bushfires Black Summer. Retrieved from https://knowledge.aidr.org.au/resources/black-summer-bushfires-nsw-2019-20/
[7] Ibid.
[8] Ibid.
[9] Royal Commission into National Natural Disaster Arrangements Foreword. Retrieved from https://naturaldisaster.royalcommission.gov.au/publications/html-report/foreword
[10] Insurance Contracts Act 1984 (Cth) section 64
[11] Sharma by her litigation representative Sister Marie Brigid Arthur v Minister for the Environment [2021] FCA 560; 391 ALR 1 at [198].
[12] Ibid
[13] Ibid. See also Bushfire Survivors for Climate Action Incorporated v Environmental Protection Authority [2021] NSWLEC 92. These issues are discussed in the latest Inter-governmental Panel on Climate Change assessment report (IPCC AR6).
[14] Municipalities of Puerto Rico v Exxon and ors. See https://climateintegrity.org/uploads/media/PR_complaint.pdf
[15] Gelles, D., (2023) She’s on a mission from God: Suing Big Oil for Climate Damages. Retrieved from https://www.nytimes.com/2023/07/19/climate/climate-lawsuit-puerto-rico.html?searchResultPosition=1
[16] Silverman-Roati, K., and Antonia Tigre, M. (2022) Municipalities of Puerto Rico v Exxon: a unique class action against fossil fuel companies presses for climate accountability in the United States. Retrieved from https://blogs.law.columbia.edu/climatechange/2022/12/02/municipalities-of-puerto-rico-v-exxon-a-unique-class-action-against-fossil-fuel-companies-presses-for-climate-accountability-in-the-united-states/#:~:text=In%20Municipalities%20of%20Puerto%20Rico,and%20misrepresenting%20the%20associated%20dangers.
[17] Union of Concerned Scientists (2023) From Research to Action: the Growing Impact of Attribution Science. Retrieved from https://blog.ucsusa.org/delta-merner/from-research-to-action-the-growing-impact-of-attribution-science/#:~:text=Climate%20attribution%20science%20uses%20statistical,include%20and%20exclude%20human%20influence.
[18] Ibid.
[19] Beusch, L., Nauels, A., Gudmundsson, L., Gutschow, J., Schleussner, C-F., and Seneviratne, S. (2022) Responsibility of major emitters for country-level warming and extreme hot years. Communications Earth & Environment 3, 7. Retrieved from https://www.nature.com/articles/s43247-021-00320-6
[20] Ibid.
[21] Heede, R. (2014) Tracing anthropogenic carbon dioxide and methane emissions to fossil fuel and cement producers, 1854-2010. Climatic Change 122(1-2). Retrieved from https://www.researchgate.net/publication/259634408_Tracing_anthropogenic_carbon_dioxide_and_methane_emissions_to_fossil_fuel_and_cement_producers_1854-2010
[22] Heede, R. (2014) Carbon Majors: Accounting for carbon and methane emissions 1854-2010 Methods and Results Report. Retrieved from https://climateaccountability.org/pdf/MRR%209.1%20Apr14R.pdf
[23] Ibid. at page 8.
[24] CDP (2017) The Carbon Majors Database CDP Carbon Majors Report 2017. Retrieved from https://cdn.cdp.net/cdp-production/cms/reports/documents/000/002/327/original/Carbon-Majors-Report-2017.pdf?1501833772
[25] Moss, J and Fraser P, (2019) Australia’s Carbon Majors, Practical Justice Initiative UNSW. Retrieved from https://climatejustice.co/wp-content/uploads/2019/10/Australias-Carbon-Majors-Report-2019-1.pdf ; Climate Analytics (2019) Evaluating the significance of Australia’s global fossil fuel carbon footprint. Retrieved from https://climateanalytics.org/media/australia_carbon_footprint_report_july2019.pdf
[26] Moss and Fraser (2019) Ibid.
[27] See for example Greenpeace France and Others v TotalEnergies SE and TotalEnergies Electricite et Gaz France http://climatecasechart.com/non-us-case/greenpeace-france-and-others-v-totalenergies-se-and-totalenergies-electricite-et-gaz-france/; Australasian Centre for Corporate Responsibility v Santos http://climatecasechart.com/non-us-case/australasian-centre-for-corporate-responsibility-v-santos/; Milieudefensie et al. v Royal Dutch Shell http://climatecasechart.com/non-us-case/milieudefensie-et-al-v-royal-dutch-shell-plc/; FossielVrij NL v KLM http://climatecasechart.com/non-us-case/fossielvrij-nl-v-klm/
[28] Climate Justice Programme (2021) Who are the Carbon Majors? Retrieved from https://climatejustice.org.au/carbon-majors-1. See also Keelings, D. (2019) Climate change to blame for Hurricane Maria‘s extreme rainfall. Retrieved from https://news.agu.org/press-release/climate-change-to-blame-for-hurricane-marias-extreme-rainfall/
[29] The defendant does not need to be physically next door, just in the same locality or vicinity. See Field v SA Soccer Association [1953] SASR 224; Kidman v Page [1959] Qd 53; Fraser v Booth (1940) 50 SR (NSW) 113
[30] Gales Holdings Pty Ltd v Tweed Shire Council (2013) 85 NSWLR 514 at [131]-[132]
[31] The test of unreasonableness is set out in Ammon v Colonial Leisure Group Pty Ltd [2019] WASCA 158; 55 WAR 366 at [120]-[121]. It is objective and involves a balancing exercise between the defendant’s right to use its land freely, and the right of the plaintiff to enjoy its land without interference. The mere fact that the act of using the land by the defendant was lawful does not necessarily preclude the interference from being unreasonable for the purposes of the tort of nuisance. Factors taken into consideration to determine reasonableness include: the nature and extent of the harm or interference; the social or public interest value in the defendant’s activity; whether all reasonable precautions were taken to minimise any interference; and the type of damage suffered.
