1. The Science Behind Climate Change

Climate change refers to "long-term shifts in temperatures and weather patterns".¹³ These alterations can be caused by natural reasons,¹⁴ but since the beginning of the 19th century, human activity has been their main driver, especially due to the emission of greenhouse gases from the combustion of fossil fuels.¹⁵ Those gases trap the heat of the sun -more precisely the terrestrial radiation flowing from the earth's surface- producing a raise in temperatures: the famous greenhouse effect.¹⁶

The current concentration of greenhouse gas emissions is the highest in the last two million years.¹⁷ Among the main gases that produce the greenhouse effect are carbon dioxide (CO₂), nitrous oxide and methane.¹⁸ CO₂ has traditionally been the target of measures aiming to mitigate climate change because, once added to the atmosphere, it can stay around for a long period of time: between 300 and 1000 years.¹⁹ Thus, the changes in the atmosphere produced by CO₂ emissions will remain there for generations.²⁰ Also, this gas has been an issue of concern due to the increase of its concentration during the last centuries, and because it is the main greenhouse gas emitted by human activities.²¹ Other reasons also explain the worries about this element.²²

Greenhouse emissions have an impact on the climate regardless of the jurisdiction where they are produced. In other words, the causes and effects of climate change are global.²³ That is why measures to mitigate the climate crisis require a world-wide policy.²⁴ In this regard, Smil has stated that "[s]ubstantial decline of carbon emissions, even an instant decarbonization of energy supply in a major advanced economy, makes little difference as long as the greenhouse gas emissions from other sources and from other countries keep on rising".²⁵

In 2017, the warming induced by human activity reached approximately 1 degree Celsius (°C) above the preindustrial level,²⁶ and it is likely to reach 1.5°C between 2030 and 2052 at the current increase rate.²⁷ In the meantime, relevant changes have been observed: the atmosphere and oceans are warmer, the sea level has risen, and lower amounts of ice and snow are present.²⁸ The year 2019 was the second hottest of all time, and the decade that started in 2010 was the hottest ever recorded.²⁹

Climate change is a global problem that has the potential to affect nearly all systems of our planet,³⁰ both human and natural.³¹ Indeed, besides involving changes to weather systems and temperatures, the climate crisis includes risks to health, livelihoods, food security, water supply, human security, economic growth, biodiversity, and ecosystems,³² among other hazards.³³ So far, human-induced climate change has caused extensive negative impacts, losses and damages to nature and humans.³⁴ In this regard, Gardiner states that "[h]umanity stands on a precipice. Mainstream science tells us that climate change is real, accelerating, and might credibly result in global catastrophe".³⁵

The higher the temperature increases, the greater the problems and challenges arising from climate change become.³⁶ That is why common efforts to tackle the problem have emphasized the need to restrain the increase of temperature. As explained by the Intergovernmental Panel on Climate Change (IPCC), perhaps the most relevant scientific body in charge of studying and explaining the climate crisis,³⁷ there is high confidence in that the risks derived from climate change are higher for global warming of 1.5°C than at present, but lower than if the increase of temperatures reaches 2°C.³⁸

There is little contention on the scientific basis of the climate crisis.³⁹ This can be attributed substantially to the IPCC, the United Nations body in charge of assessing the science related to climate change.⁴⁰ The organization, formed by diverse and prominent members, produces reports related to the scientific grounds of climate change, its impacts, and the possible roads to handle it.⁴¹ These reports have shaped the key milestones of the climate regime by articulating the scientific concerns regarding the climate crisis.⁴² The science of climate change shows that the world is facing a severe problem, perhaps "the defining issue of our time".⁴³

In sum, the science behind climate change illustrates the wide scope of the climate crisis. The phenomenon is an extensive problem because it has the potential to affect nearly all systems of our planet. Also, its wideness comes from the solutions that must be adopted to tackle it, as addressing the problem requires global and coordinated efforts.

2. Global Efforts to Build a Legal Framework to the Crisis

Several multinational forums address the climate crisis.⁴⁴ The United Nations Framework Convention on Climate Change (UNFCCC) is perhaps the most relevant.⁴⁵ It provides a governance structure for international laws on climate change and a platform to negotiate multilateral solutions to the problem.⁴⁶ The goal of the UNFCCC is to stabilize "greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system".⁴⁷

Since 1994 the UNFCCC has led several global initiatives, among which the Kyoto Protocol (199 7),⁴⁸ the Copenhagen Accord (2009) and the Paris Agreement (2015)⁴⁹ are perhaps the most notable because they symbolize the evolution of international climate change law.⁵⁰ Indeed, the Kyoto Protocol has been considered "the thesis, the Copenhagen Accord the antithesis, and the Paris Agreement the syntheses".⁵¹ They outline the three main models of global climate governance that have been applied.⁵²

The Kyoto Protocol followed the traditional approach at the time: a mandatory top-down architecture, establishing an overall greenhouse gas reduction of 5% below 1990 during a first commitment period (2008-2012), for which targets, a timetable, and compliances rules were agreed upon. It followed a regulatory approach, according to which negotiated individual targets were mandatory.⁵³ However, it was criticized, among other reasons, for being ecologically ineffective and for including reduction targets that were not based on science.⁵⁴

The Copenhagen Accord shifted global governance on climate change to a more voluntary approach, according to which each State would commit freely to adopt particular actions. Even though the accord was criticized for its lack of enforceability, it set a long-term target in order to limit the increase in global temperatures to 2°C above pre-industrial levels with a more scientific background than the Kyoto Protocol.⁵⁵ Also, it made all major emitters of greenhouse gases to engage in negotiations related to climate change.⁵⁶ The Copenhagen Accord has been described as the complete opposite of the Kyoto Protocol, "a political agreement built around bottom-up pledges giving states tremendous flexibility".⁵⁷

The Paris Agreement, which is an international treaty,⁵⁸ ratified the 2°C target established in the Copenhagen Accord, adding an aspirational goal of a 1.5°C limit in the rise of global temperatures.⁵⁹ This international treaty mixes voluntary and regulatory elements: States inform their nationally determined contributions (NDC),⁶⁰ which despite being voluntary targets regarding emission reductions come with procedural obligations, like updating them and publishing reports tracking emissions.⁶¹ The Paris Agreement is a hybrid between the Kyoto Protocol and the Copenhagen Accord, "a legally binding instrument with some non-binding elements, and combines bottom-up, nationally determined contributions (NDCs) with internationally negotiated rules to promote ambition and accountability".⁶²

It must be noted that the Paris Agreement highlights the importance of non-state and sub-state actors in the fight against climate change.⁶³ As explained by Streck, such a treaty encourages "sub-national governments, corporations and civil society to contribute to reaching ambitious climate goals".⁶⁴ This constitutes a transition from the design of the Kyoto Protocol,⁶⁵ in which private actors have gone from opponents to partners.⁶⁶ In other words, the evolution of global climate governance shows that private actors are expected to play a crucial role in dealing with the climate emergency.⁶⁷ Therefore, it is logical that the law of contracts has a role to play in such task, as agreements have been commonly used by private parties to regulate their conducts on certain matters.

That said, the following section of this work reflects on the relevance of climate change to the field of contract law, developing three reasons that allow to sustain, at the same time, that the climate crisis is an important issue for the law in general and specifically for the law of contracts.

1. The Solution Requires Legal Efforts

A solution to the climate crisis requires global efforts,⁷² but coordinating different states towards a same goal is not an easy task.⁷³ Moreover, addressing climate change faces additional complications, like divergent political agendas,⁷⁴ economic concerns,⁷⁵ or the temptation to leave the solution to others.⁷⁶ In this context, a solution demands a system to organize, bind, and enforce different responsibilities in a cooperative manner on a global scale.⁷⁷ This must be done, and has been done, using legal instruments.

In this regard, it has been stated that the problem of climate change "dictate[s] robust international cooperation within a structured framework",⁷⁸ and that international law delivers "a framework for structured cooperation among states on key global challenges".⁷⁹ Accordingly, climate change has been traditionally the subject of international public law and international environmental law.⁸⁰ This is logical considering that the solution requires global cooperation by different countries under a suitable framework,⁸¹ and also, that the evolution of climate change law "stem[s] from the basic tenets of international environmental law".⁸²

Examples of the legal field trying to address the issue of climate change by coordinating global efforts are varied. Perhaps the most paradigmatic are those briefly described before in this work, namely: the Kyoto Protocol, the Copenhagen Accord, and the Paris Agreement. They indeed portray how participants of a global community can intend, by the use of legal instruments, to coordinate the efforts to tackle the climate crisis on a global scale.⁸³

However, climate change is not merely a challenge of international law, as it involves different aspects of domestic policies.⁸⁴ Even the implementation of norms agreed under international frameworks "remains a constant point of consternation for States, because the drivers of implementation operate firmly in the realm of national interests and realpolitik".⁸⁵ Globalized events usually operate on a sub-global level, expressing themselves locally despite their wide scope.⁸⁶ Thus, unsurprisingly, diverse areas of the law -besides international law- have a role to play in addressing the climate crisis. In this task, all hands are needed,⁸⁷ including the assistance from the law of contracts.

In this regard, some associations promote the fight against climate change using contractual instruments. This is the case of The Chancery Lane Project, which has developed climate-friendly clauses to be incorporated into contracts in a way that can help to reach net-zero goals.⁸⁸ By way of example, some clauses promote the cooperation between landlords and tenants regarding the environmental performance of buildings,⁸⁹ while others allow the incorporation of circular economy and sustainability principles into certain contractual relations,⁹⁰ or aim to enhance the possibility of transporting goods in the greenest possible way.⁹¹

More generally, it is possible to argue, following Howarth in examining the relationship between environmental and private law,⁹² that contract law can act as climate change law in two different ways: developing contracts or clauses in pursue of climate goals -as the examples given before-, and refusing to facilitate contracts that aggravate climate change.⁹³

Regarding the foregoing, it is worth stating that the possibility of private actors driving climate action should not be surprising because civil society has been playing a key role in different aspects of that quest, shaping debates and strategies on the matter.⁹⁴ This was recognized in the Paris Agreement, which enhanced the role of non-state actors in solving climate challenges, like civil society groups, multinational corporations, cities, and others.⁹⁵ Furthermore, authors have reflected on the relationship between climate change and private law,⁹⁶ highlighting the role that corporations⁹⁷ and private litigation can play in the solution to the problem.⁹⁸ In fact, it seems that more research should be devoted to the relationship between climate change and private law, because the potential contributions of the field to solve the climate crisis have been overlooked.⁹⁹

Finally, in relation to the role of the law in the solution to climate change, it must be noted that some suggest that the current legal structure is one of the causes of the climate crisis, therefore a solution to the problem will not result from reproducing the traditional legal doctrines.¹⁰⁰ However, even in that scenario, the law needs to be part of the solution to climate change because legal frameworks would still be essential to coordinate and enforce the global and domestic efforts required to tackle the issue. In other words, an eventual necessity to modify the legal landscape does not mean that a legal framework is not required to address the climate problem. Perhaps that explains why some scholars suggest that, when it comes to climate change and private law, it is important to "rethink and reassess private law concepts like private property, not to abolish them but to find new ways to conceive, think about, and invoke them".¹⁰¹

In sum, one reason to consider climate change as an issue of legal significance for the law in general and specifically for the field of contract law is that reaching a solution to the problem requires and is assisted by the use of legal tools.

2. Source of Legal Challenges

Climate change is an abundant source of challenges in the most varied legal fields.¹⁰² The crisis has forced societies to deal with complex questions of justice, especially in relation to intergenerational responsibility and social inequality, since the biggest costs of the problem are expected to fall on the poorest people of future generations.¹⁰³ In fact, even the chance of implementing new technologies to address the climate crisis -climate engineering- comes with legal questions, particularly about the responsibility and liability of those behind such solutions in case they turn out to be disastrous.¹⁰⁴

Other legal challenges derived from climate change flow from the need to provide a legal framework to address the problem. This entails several practical concerns, such as deciding on the regulatory approach that is most suitable to attract the global commitments that are required to tackle the climate crisis,¹⁰⁵ establishing how climate laws should relate with norms of other legal fields,¹⁰⁶ or discussing whether climate change law should be even considered as a legal field by itself.¹⁰⁷

Questions related to justice resurface at the time of crafting a legal framework to deal with the climate crisis, especially when it comes to the distribution between several countries of the burden of the measures that must be adopted.¹⁰⁸ As noted by Carlarne, "[a] particular point of normative controversy concerns the implementation of the principle of common but differentiated responsibilities",¹⁰⁹ since the UNFCCC provides that the parties to the treaty are expected to protect the climate system for current and future generations "in accordance with their common but differentiated responsibilities and respective capabilities".¹¹⁰

Moreover, climate change is a source of legal challenges due to the physical and transitional risks that derive from the phenomenon.¹¹¹ Indeed, rains, draughts, floods, technological breakthroughs, policies, and other events related to the climate crisis will generate problems requiring responses from different legal fields.¹¹²

Regarding the foregoing, it must be stated that several cases submitted to the courts portray the climate crisis as a disruptive situation for the legal field and a constant source of legal dilemmas.¹¹³ Indeed, courts have been forced to consider whether law can acknowledge the climate crisis as a legal problem and to develop responses accordingly. In this task, they have identified innumerable problems, including issues of procedure, state responsibility, statutory interpretation, or liability, among other matters.¹¹⁴

The law of contracts also faces challenges brought about by the climate crisis.¹¹⁵ For instance, on some occasions, the risks derived from climate change will affect contractual relations and result in unexpected costs for one or more of the parties of an agreement. In those situations, the pertinent rules of contract law will have to determine how to allocate such risks between the parties. In fact, even if the parties decide to allocate those risks by an explicit reference in the agreement -for instance, by drafting a force majeure clause- that decision will present its own particular challenges, like how to define the climate crisis, or when it can be assumed that a certain event is a consequence of such phenomenon. Thus, one type of challenge that the climate emergency presents to the law of contracts is the need to understand how such a phenomenon interplays with the current legal rules.

Also, challenges to contract law arise from the need to answer questions like whether to facilitate or refuse contracts that aggravate the climate crisis.¹¹⁶ In those situations, the answers required seem to be related to the problem of how far contract law can go in dealing with climate concerns.

One last type of challenge in the context of contract law relates to the outcomes derived from the traditional understanding of how the pertinent doctrines should be applied. In this regard, it must be taken into account that normally those doctrines were not crafted with climate concerns in mind, so their traditional application can result in negative impacts on efforts to tackle the climate crisis.¹¹⁷ For instance, it is possible to mention a situation that took place at the beginning of the century in the Chilean electricity system.¹¹⁸ On that occasion, a generator of electricity was forced, according to the application of the pertinent contract law rules, to comply with a set of power purchase agreements that it had subscribed. This occurred even though the circumstances of the electricity market had changed dramatically, making the fulfillment of those agreements more expensive than expected and thus resulting in enormous losses for the mentioned firm. What is relevant to this article is that, in order to comply with the mentioned contracts, the energy producer had to resort to less green means for the generation of electricity. Particularly, it had to switch from natural gas, which was the original fuel, to diesel, a resource that has a bigger footprint than the gas. As it can be noted, the situation described was the result of the traditional application of contract law rules and had negative impacts on the efforts to tackle climate change.

In sum, the examples given illustrate that the phenomenon of climate change is an issue of legal relevance, among other reasons, because it is a source of varied legal challenges.

3. Changing the Legal Landscape

The climate change has modified the legal landscape in two different ways. Firstly, new laws have been enacted to deal with the climate crisis. Secondly, traditional legal fields have been affected by external factors related to the phenomenon (different from new legislation), like the needs imposed by the climate emergency or a better understanding of its consequences, among other situations.

The climate crisis has implied the crafting of novel norms that have evolved swiftly, being now possible to speak of climate change law as a particular legal field with its own principles.¹¹⁹ Moreover, new regulations are expected to appear in the future, because the current regime has not yet produced the changes required to "effectively address the contemporary challenges of climate change".¹²⁰ Indeed, the success of current laws to deal with the crisis has been described as "modest".¹²¹ However, despite the humble results, the effects caused by the regulations created to address climate change have been categorized as legal disruptions.¹²²

There are many examples of legal fields that have seen additions, restrictions, or modifications due to climate concerns. This is more evident in the international law arena, where well-known global treaties like the Kyoto Protocol or the Paris Agreement have been forged to address the issue of climate change.¹²³ At the domestic level, different laws in several countries have been enacted to deal with the climate crisis, like regimes promoting cleaner electricity or regulations seeking energy efficiency,¹²⁴ which is understandable considering that the problem involves almost every aspect of domestic policies.¹²⁵ According to the Grantham Research Institute on Climate Change and the Environment, it is possible to register 2 637 "Climate laws and policies".¹²⁶

The field of contract law has also been impacted by climate change. For instance, it is possible to observe some restrictions, impositions and measures that affect the freedom of contract, a traditional principle of the mentioned field.¹²⁷ By way of example, in the Chilean electricity market a recently enacted legal mandate prescribes that a percentage of the electricity obtained from the grid by some energy traders must belong to non-conventional renewable energy sources.¹²⁸ It can force traders to contract with specific producers to achieve the required minimums, instead of contracting with who they want, and to the extent that they want.

Regarding the foregoing, it must be noted that new constraints on the freedom of contract will probably appear in the future, due to the serious consequences of climate change, on the one side, and the modest success that current laws have shown in dealing with that challenge, on the other side.

Modifications to the landscape of contract law can also flow from external factors related to climate change, they do not result from the enactment of new legislation. For example, it is possible to imagine a situation in which a specific consequence of the climate emergency appears as extremely profound, undisputed, worrying, evident, and well-known. A scenario like that could change the ways in which the parties are allowed to allocate the risks flowing from the mentioned situation, by impeding, for instance, a contractual clause to exclude such type of events from frustrating a contract due to considerations of public policy. In other words, matters that are subject to the possibility of being regulated in a contract by the parties could completely or partially lose that feature. That would amount to a modification in the current landscape of the field of contract law.¹²⁹

Thus, in addition to the reasons given in the previous sections, it is possible to sustain that climate change is an issue of legal significance, for the law in general and specifically to the field of contract law, because it has modified the legal landscape and will continue to do so.¹³⁰