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Trade Group Floats ‘Model’ Bill To Shield Oil Industry from Climate Lawsuits

July 31, 2020 Filed Under: Access to Courts, Liability Waivers, State Legislation

By Karen Savage

A model bill written by the American Legislative Exchange Council (ALEC), ostensibly in response to the COVID-19 crisis, could have big implications for climate liability litigation.

The group, whose membership includes several oil majors as well as trade associations, lobbying groups and PR firms associated with the fossil fuel industry, produced the model legislation for state governments. It doesn’t specifically mention the ongoing pandemic, but it limits civil liability for corporations and their employees after a declared disaster or public emergency, provided the company “complied with or made a good faith effort” to comply with federal, state or local regulations. 

As currently written, the model Liability Protection for Employers in a Declared Disaster or Public Emergency Act would not apply retroactively, but if passed by state legislators, could prohibit the filing of future climate-related litigation in municipalities that declare climate emergencies.

At least 98 U.S. municipalities have declared climate emergencies, including several that have already filed climate liability lawsuits against fossil fuel companies attempting to hold them accountable for their role in climate change.

“It’s possible that was designed to use this crisis in order to thwart future lawsuits about the devastating climate changes that are underway or other liability in in the midst of other crises that may be caused by those very businesses and their decisions,” said Lisa Graves, founder and executive director of True North Research, a policy research group.

ALEC, which has been called a “corporate bill mill,” writes and shares model bills, or policy, with state legislators, who are encouraged to copy and paste wording into bills they sponsor. Once bills are introduced, ALEC representatives help state lawmakers with background research and work to strategize ways to get the proposed legislation passed into state law.

Oil majors Chevron, Marathon, and Koch Industries—which have all been named in climate-related litigation—are current ALEC members, as are several railroads, public relations firms, trade associations, lobbying groups and others associated with the fossil fuel industry.

[Read more…]

Filed Under: Access to Courts, Liability Waivers, State Legislation

House Committee Climate Plan: No Liability Waivers for Oil Industry

June 30, 2020 Filed Under: Access to Courts, Latest News, Liability Waivers

By Karen Savage

Fossil fuel companies should not be let off the hook for their role in climate change, according to a plan to address the growing climate crisis proposed by House Democrats.

The plan, released Tuesday by the House Select Committee on the Climate Crisis, is intended to “reduce carbon pollution as quickly and aggressively as possible, make communities more resilient to the impacts of climate change, and build a durable and equitable clean energy economy.”

Included is the recommendation that Congress put a price on carbon, but the committee did not specify what that price should be.

In recent weeks, some have worried that the plan would allow the fossil fuel companies to escape climate liability lawsuits in exchange for supporting carbon pricing.

The committee not only refused to do that, but included specific language clarifying that it does not support waiving liability: “Congress should not offer liability relief or nullify Clean Air Act authorities or other existing statutory duties to cut pollution in exchange for a carbon price.”

The plan is the latest in a series of Democratic announcements indicating support for climate change-related lawsuits. Sixty representatives opposed using the Covid-19 crisis to shield fossil fuel companies from climate change-related lawsuits in a letter sent to House leadership last month.  Presidential hopeful Joe Biden pledged earlier this month that his administration will “hold corporations and executives personally liable for pollution.”

Filed Under: Access to Courts, Latest News, Liability Waivers

Exxon Backs a Modest Carbon Tax, But Knows Only a Strong One Will Slow Climate Change

December 3, 2019 Filed Under: Access to Courts, Exxon Climate Investigation, Featured, Liability Waivers

Oil reserves in Canada will be much less valuable if a strong carbon tax is implemented

By Karen Savage

Newly discovered documents show that Exxon has known for decades that a carbon tax would have to be at least $75 per ton to be effective in combating climate change, a level far higher than the plan it is currently promoting through the Americans for Carbon Dividends. 

Exxon’s understanding of carbon taxes was revealed in a 1991 economic report commissioned by Canadian-based Imperial Oil Limited, an Exxon subsidiary. The company was trying to assess the impacts of potential emissions regulations being considered in Canada, which had just committed to stabilizing its emissions at 1990 levels by 2000 and launched a plan to curb climate change. 

The report was commissioned by Imperial and written by the economics consulting firm DRI/McGraw Hill. “Only the carbon tax of $200 per tonne of carbon or $55 per tonne of CO2 achieves approximate stabilization of Canada’s CO2 emissions,” Imperial summarized in a discussion paper written shortly after it received the report. That translates to a tax rate of $78 per ton in 2019, far higher than the tax Exxon currently supports.

The DRI/McGraw Hill report and the discussion paper were uncovered along with a larger trove of documents discovered in Glenbow’s Imperial Oil archive collection in Calgary by DeSmog, a website dedicated to reporting about global warming disinformation campaigns. Released Tuesday by the Climate Investigations Center, the documents give the most in-depth look at Imperial’s climate science and policy history to date. It adds context to previous reporting on Exxon’s history of studying and then sowing doubt about climate change as reported by InsideClimate News and the Los Angeles Times in 2015 and 2016.

The new documents include a 1993 internal summary on global warming and climate change that shows Imperial lobbied for a “cautious and flexible response” through discussion papers published in 1990 and 1991.  It also held “extensive discussions with government, thought leaders and the media.” 

Imperial’s strategy was to highlight uncertainties and continue to utilize its “well developed and broadly communicated position aimed at limiting non-market-driven response steps.” It planned to continue to coordinate its policy efforts with Exxon’s corporate planning and environmental and safety teams. 

Exxon has recently been arguing its support for a carbon tax shows that it is serious about dealing with the coming climate crisis. But the tax plan it has thrown its support behind, the Baker Schultz plan, calls for a tax starting at $40 per ton. Exxon is supporting the plan as a founding member of the Americans for Carbon Dividends (AFCD), the sister advocacy organization of the Climate Leadership Council (CLC), which has support from other major fossil fuel companies. 

“Even back then, in 1991, the oil industry—Imperial and Exxon—knew that it takes much, much more ambitious climate policy than the $40 per ton that Exxon supports today,” said Gernot Wagner, an energy economist at New York University. 

“They knew that it takes much, much more than they, of course, were proposing back then and—this is the kicker here—even more than what they’re proposing today. More than a quarter century later we’re still having the same debate,” Wagner said, adding that with billions of dollars in assets at stake, Exxon had every incentive to accurately predict the climate policy needed for the world to avoid dangerous levels of warming.

“In many ways, Exxon is known to be ‘the best’ at what they do—that means knowing about the climate science, and knowing about the climate economics, in this case,” Wagner said. “And as we now know, they’re not going to tell us what they know, apparently—or their shareholders.” 

The report’s authors also warned Exxon that its oil sand assets would be stranded if Canada implemented an effective carbon tax.

The report said under such a scenario, “the Canadian oil and gas industry, which is heavily concentrated in Alberta would be harshly penalized … production of coal would falter while heavy oil would virtually cease to be a usable resource.” 

That directly contrasts a 2014 disclosure by Exxon, which stated the company is “confident that none of our hydrocarbon reserves are now or will become ‘stranded.’”

Exxon and Imperial did not immediately respond to requests for comment.

The documents unearthed from Imperial’s archive show its climate research, which appears to have been launched after the Canadian public became alarmed over the company’s environmental record, began in the 1970s and continued into the early 1990s. 

A 1970 report, Pollution is Everybody’s Business, authored by Imperial engineer H.R. Holland, confirms that Imperial and Exxon were aware that humans were causing changes to the earth’s atmosphere.

Holland cited a 1969 study by Eugene K. Peterson linking the burning of fossil fuels to rising carbon emissions. The changes that had occurred over the last century were “barely discernible,” according to Peterson. As such, he said they had “attracted little attention.” 

“Perhaps changes in the atmosphere and world weather will be obvious to all by the year 2000,” Peterson wrote.

Holland suggested Imperial take notice.

“Since pollution means disaster to the affected species, the only satisfactory course of action is to prevent it—to maintain the addition of foreign matter at such levels that it can be diluted, assimilated or destroyed by natural processes—to protect man’s environment from man,” Holland wrote.

Companies Highlight Uncertainty

As Canada began dealing with the reality of global warming, in 1990 it adopted the “Green Plan for a Healthy Environment,” which outlined the country’s commitment to reducing emissions, taking steps to curb climate change and protect its natural resources. Following the lead of Exxon, its parent company, Imperial chose instead to highlight the uncertainty of its own climate science.

“The possibility of global warming is a complex and potentially serious issue for the world community; however, many scientific contradictions and uncertainties remain … high priority needs to be placed on improving the deficient areas of the science to better guide potential responses,” Imperial wrote in a 1990 discussion paper on potential global warming.

The company acknowledged that “the scientific basis for the so-called greenhouse effect was well established decades ago”, but also said there is “contradictory evidence and analytical forecasting is uncertain.”

“Scientists cannot agree on whether a human-induced warming effect has or has not begun, how much, if any, or at what rate the earth might warm, and how the warming will affect individual countries or regions over time,” Imperial wrote in the paper.

The company’s messaging repeatedly downplayed Canada’s contribution to the problem.

“Canada contributes only a relatively small 2 percent share of global carbon dioxide emissions from fossil fuel combustion, and this share is expected to remain unchanged in the future,” Imperial wrote, adding that Canada’s economy would be harmed by reducing emissions if other countries did not take the lead in lowering global emissions.  

A 1991 paper on global response options shows Imperial was keenly aware that its oil sands mining was increasing emissions.

“Bitumen is increasing Canada’s [greenhouse gas] emissions despite efficiency measures,” the Exxon subsidiary wrote, referring to the type of crude produced from the oil sands deposits.

“Imperial’s CO2 emissions have grown by 49 percent over the 1973 to 1989 period due to business expansion and increased energy intensity. Energy intensity will continue to increase in the future as crude bitumen contributes a growing share to Imperial’s crude oil production.”

The 1993 summary illuminates Imperial’s private fear that Canada’s commitment to stabilizing emissions—and the potential application of a tax on carbon—could “increase the relative supply costs of energy intensive/higher carbon content fossil fuels such as oil sands. The DRI tax applied to natural gas fuel would increase bitumen production costs by about $5 [per barrel].”

Oil Sands Face Climate Risk 

Whether Exxon hid risks posed to its Canadian oil sands assets by climate change is a key accusation in lawsuits filed against it by attorneys general in Massachusetts and New York.

Evidence presented during its New York trial, which concluded last month, shows Exxon deceived investors by disclosing in 2014 that it used one number to represent the projected cost of future climate regulations on its Canadian oil sand assets while instead using an undisclosed lower number, according to the New York attorney general’s office.

As a result, the assets appeared to be more valuable—and less at risk from potential climate change regulations—than they would have otherwise.

Exxon maintains its planners used the lower number, as is allowed by corporate guidelines, because it was more in line with regulations then in force in Canada.

Shortly after the investor disclosures, Jason Iwanika, an Imperial development planner, along with other Imperial employees sought guidance from Exxon headquarters on which number to use when valuing its oil sand assets.

Using the higher number would “result in enough additional [operating expenses] to shorten asset life and reduce gross reserves,” one email presented as evidence by the New York AG said.

Another said the higher number would “result in large write-downs” of Exxon’s Alberta assets. Yet another said proved reserves at its Cold Lake field were reduced by about 20 million barrels when calculated with the higher number.

Emails show Iwanika and others at Imperial Oil continued to question the methodology through at least 2016.

The existence of the economic study, written 25 years earlier, reveals that Imperial and Exxon have long-known that costs associated with potential future climate-change regulation would likely increase over time and could cause asset values to plummet. 

Ultimately Iwanika and the Canadian-based planners were instructed to use an “alternate methodology” that utilized numbers representing then-current local regulations. They were also told to assume those regulations would remain unchanged over time.

During testimony, former Exxon chief executive Rex Tillerson acknowledged that the extraction of bitumen from oil sands is an extremely carbon-intensive process.

“These were very challenged resources,” Tillerson told the court, referring to the company’s Canadian oil sands assets, which both then and now account for more than a quarter of its current reserves.

Exxon and the Carbon Tax

While on the stand, Tillerson spoke at length about Exxon’s long support of a carbon tax, something he has favored since 2009, when he said “a carbon tax may be better suited for setting a uniform standard to hold all nations accountable.”

There’s no evidence that Exxon or Imperial shared what they knew about effective carbon pricing with climate economists, who offered more conservative suggestions on effective carbon tax rates. 

That includes the Obama administration’s Interagency Working Group on the Social Cost of Carbon, which was criticized for suggesting a $45 per ton cost.

“That, 10 years ago, was decried by some as being this hyper-liberal, progressive push for ambitious climate policy. Well, turns out, looking back to 1991 and what Exxon knew back then, actually that looked conservative. It looked very conservative,” Wagner said. 

“The oil industry itself knew much better than that. Exxon knew in the late 70’s about the science and of course famously concealed it from us and from the investors. They knew about the economics apparently,” he said. “They knew that climate policy needs to be much, much more ambitious.”

A 2017 study by the University of Massachusetts found a carbon tax would have to reach $200 a ton to change consumer behavior and to keep low-income consumers from absorbing a disproportionately high amount of the costs.

The United Nations’ Intergovernmental Panel on Climate Change last year said to achieve needed emissions reductions, the price per ton of carbon dioxide pollution must range from $135 to $5,500 in 2030, and from $690 to $27,000 per ton by 2100.

Notably lower is the Exxon-supported AFCD, which earlier this month launched a six-figure ad campaign to convince the public—and members of Congress—to back the Baker Schultz plan, which would start with a $40 per ton rate. 

“Climate is such a big problem, a simple clean carbon tax bill simply just isn’t going to do it. If we’d done it in 1991, yeah, perhaps, sure. If we’d done it in 1997, yeah. 2005, maybe. Waxman-Markey 2008, sure, that would have made a difference,” Wagner said. 

“But by now, it is so late in the game—and that we keep going back to climate policies today that are less ambitious than Exxon itself knew was necessary in 1991, is just a very, very conservative, in every sense of the word, approach to trying to tackle the problem.”

Filed Under: Access to Courts, Exxon Climate Investigation, Featured, Liability Waivers

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