Climate damage liability – different legislative aspects are coming into play

Earlier this year, we warned that the possibility of liability for the injury and damage caused by severe weather is hard for companies responsible for greenhouse gas emissions and their insurers to ignore.

Cases such as the “Peruvian farmer” case and the “Pakistan farmers” case (both brought in Germany against large greenhouse gas emitters based there in relation to climate damage issues in Peru and Pakistan respectively) and the action brought against Shell in the courts of England and Wales by claimants in the Phillippines based on damage caused by Typhoon Odette are becoming more common across a number of jurisdictions.

There is still a very long way to go before liability is established, but claimants and their lawyers are learning all the time. If a credible link between traceable greenhouse gas emissions and adverse weather were ever demonstrated, and liability were ever established, the financial consequences for individual emitting companies could be extremely significant.

As these cases rumble on, it is clear that there are plenty of other factors in the climate liability landscape that will need to be taken into account by claimants, defendants and insurers alike.

The stance of individual Governments is a major factor at play here. In recent months, we have seen some very significant legislative moves that, if repeated across multiple jurisdictions, could have a far reaching impact on climate damage liability litigation.

In New Zealand, the Government has decided to amend the Climate Change Response Act 2002 to prevent the courts from making certain types of civil findings of liability for climate change damage caused by greenhouse gas emissions.

This is a response to the case of Smith v Fonterra and others, a tort claim against six greenhouse gas emitters which was due to be heard in April 2027.

The New Zealand Government’s view is that New Zealand’s response to climate change is best managed at the national level through its a legal framework to manage greenhouse gas emissions, rather than through private litigation against emitters. The Government has decided it is important to maintain the coherence of the regulatory system that has been agreed by it and Parliament and to deliver consistent obligations for greenhouse gas emitters.

The New Zealand approach seems to have brought an abrupt end to the possibility of climate liability litigation against emitters in that jurisdiction. The rationale of the Government there is understandable, and it will be interesting to see whether other countries follow suit.

Another move by Government relates to the introduction of liability regimes. Very commonly in the past, where common law does not respond quickly or decisively enough to emerging environmental harm, governments introduce liability regimes to channel liability to certain operators, often on a strict liability basis, in order to provide swifter and simpler redress. The Part 2A contaminated land regime is a good example of this in the UK, as is the Environmental Damage Regime, which is in place across EU states.

Liability regimes that impose a level of liability on greenhouse gas emitters for climate damage have been a discussion point for some years. In the USA, the idea of “climate superfund” has been gaining traction at individual State level. States are trying to introduce legislation that would collectively require large fossil fuel producers and refiners to pay for hundreds of billions of dollars of state-level climate adaptation infrastructure.

The legislation is modelled on the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), commonly known as “Superfund”, which imposes liability on multiple parties, including the generators of waste, for the cleanup of contaminated sites.

Obviously, the idea is very much opposed by some. Two federal district court decisions in 2026 blocked enforcement of New York state law enacted to collect money from fossil fuel companies for climate adaptation costs. The introduction of “climate superfund” is obviously not going to be straightforward.

It will be interesting over time to see which other jurisdictions investigate and/or go down a liability regime route.

Damage resulting from changing climate and adverse weather is apparent across the world. Serious questions are starting to be asked about the best way of managing with this and who, if anyone, to hold to account. Liability litigation is just one of a number of alternatives currently being pursued.