How does PAL scientifically place a dollar cash valuation of over $6billion on New York City’s claim against the five Big Oil?

Posted on Posted in Chairman’s Blog

PAL’s methodology is a classic research narrative that reveals the tip of a $1.8 trillion iceberg of potential claims from cities across the globe.

In brief, PAL’s step-by-step research narrative goes like this: historically GDP has driven emissions, emissions drive temperature increases, increased temperatures drive more extreme weather, which in turn increases insured and uninsured loss and damage.

The book, Predicting the Price of Carbon, by PAL’s Director of Research, Richard Clarke, explains and defines these inter-relationships along with a carbon price based on losses arising from a specific 3% GDP global growth scenario. This carbon price we call ‘PAL-One-Year’ or PAL- 1Y, for short, and it is fully explained in Predicting the Price of Carbon Supplement 1 (Hinkley Point C Nuclear Power Station Enhanced Carbon Audit LCA Study). This is a pricing method that depends only on carbon data. Our proprietary catastrophe loss modelling tool, PALgamma, that derives from our original work on what drives disasters and their costs, underpins the PAL-1Y methodology.

We use PAL-1Y for carbon auditing, carbon liability assessment, and Value at Risk (VaR) determination. The methodology of PAL’s algorithm-based carbon-pricing system compares well with a recent, major, evidence-based study in the US.

PAL’s carbon price is based on the dollar cash cost of the loss and damage attributable to manmade climate change triggered by burning fossil fuels. This is expressed in dollars per tonne of CO2, not simply tonnes of CO2.

Our climate attribution algorithm (PALca) tells us roughly one fifth of global insured and uninsured losses are attributable to manmade Climate Change. PALgamma, then tells us the proportion of global Climate Change losses for each location, city, and region.

Applying oil companies’ percentage contribution to global emissions from their gas and oil products, roughly one eighth of Climate Change losses are attributable to emissions specifically from the gas and oil products of the five Big Oil companies BP, Chevron, ConocoPhillips, ExxonMobil and Shell, currently being sued by New York City. Our preliminary calculations indicate that New York City could claim from between $1.4billion and $6.2billion, depending crucially when their climate-related losses are deemed to have started, plus an ongoing $65million per year from 2018.

If the many other cities we have defined as being at climate risk, and thus having claims potential, all followed the example of New York City, then the five Big Oil above could be facing claims totalling over $1.8trillion – roughly twice their market capitalization.



Bruce Menzies, Chairman, Predict Ability Ltd (PAL)

© Copyright Predict Ability Ltd 2018. All rights reserved.


Image: Charlie Atterbury, Seattle

Bruce Menzies

Author: Bruce Menzies

Bruce Menzies is Chairman and co-founder of PAL. He founded Global Digital Systems Ltd that won the Queen’s Award For Enterprise 2011. Bruce is co-author of six books on geotechnics and geology, one of which won the British Geotechnical Association Prize 2002. He holds doctorates from the Universities of London and Auckland, and is a Fellow of the Institution of Civil Engineers.

How does PAL scientifically place a dollar cash valuation of over $6billion on New York City’s claim against the five Big Oil? was last modified: January 2nd, 2019 by Bruce Menzies

Leave a Reply