Carbon Dioxide: Harmless, Ubiquitous and Certainly Not a Pollutant Under a Liability Policy's Absolute Pollution Exclusion

Abstract:     
Recent litigation seeking damages for the environmental and economic effects of global warming is targeting alleged producers of anthropogenic, atmospheric carbon dioxide. These defendants will inevitably seek coverage for the costs of litigation and any resulting judgments under their commercial general liability (CGL) policies. Insurance companies, in turn, are likely to attempt to bar coverage under the policies' absolute pollution exclusion, which defines a pollutant for which coverage is excluded as an irritant or contaminant. Carbon dioxide is a ubiquitous and harmless chemical compound that forms an integral and essential component of the terrestrial carbon cycle. As such, it is neither an irritant nor a contaminant under the absolute pollution exclusion, and therefore the exclusion should not act to bar coverage under a CGL policy for climate-change related liabilities.

Keywords: global warming, carbon dioxide, climate change, insurance coverage, commercial general liability policy, carbon cycle

JEL Classifications: K12, K13, K32, L69, Q29

Accepted Paper Series