I clearly understand where your doubt stems from.
You are trying to compare “human beings’ burning” with a general and more common usage such as “John’s house”.
“John’s house” is same as “house of John”.
That’s an interesting observation you have there. Anyway let me try to address your query.
Before that, I want you to observe the difference in the following sentences.
A. Obama’s pictures
are frequently used all over the internet. (pictures of Obama)
B. Da Vinci’s painting
of the Monalisa is world famous. (painting by Da Vinci)
Do you think it is “painting of” in both the cases?
From the context, you need to observe if the possessive case (’s) is used to denote the “possession of an object” or if it hints at a “doing of an action or an action already done” (Da Vinci painted… in this case)
Coming back to the question, let me write the entire sentence with Option C.
The World Wild Life Fund has declared that global warming, a phenomenon that most scientists agree is caused by human beings' burning of fossil fuels,
will create havoc among migratory birds by altering the environment in ways harmful to their habitats.
Observe that the usage in this sentence is similar to the usage in example (B) shown above. It is the burning of fossil fuels which is done by human beings
As a final note, you need to understand from the context what a possessive case denotes in the sentence.
Hope this helps!