New York state is following on the heels of Vermont with a law that requires fossil fuel companies to shoulder some of the escalating costs of climate adaptation, estimated at US$75 billion over the next 25 years.
Governor Kathy Hochul signed theClimate Change Superfund Act into law on December 26 to establish a cost recovery program that requires fossil fuel companies “to bear a share of the costs of needed infrastructure investments to adapt to climate change.”
“We refuse to let the entire burden of climate change fall on the backs of our taxpayers while Big Oil reaps record profits at the expense of our future,” state assembly member Jeffrey Dinowitz said in a release. “By ensuring the fossil fuel industry pays for some of the damages it has caused, we’re addressing the staggering costs of climate adaptation and setting a precedent for the nation to follow.”
Like a similar act passed in Vermont last May, the New York legislation relies on the polluter pays principle, which holds companies responsible for environmental damages caused by their business activities. The two states modeled their legislation on a federal superfund law that requires companies to pay to clean up toxic waste. The New York act singles out fossil fuel companies—rather than all air-polluters—to pay the state US$75 billion over 25 years, with each company’s fees determined by its share of emissions from 2000 to 2018, writes Inside Climate News.
These state actions followed from an attempt to impose similar requirements at the federal level, which never passed, writes Third Act co-founder Bill McKibben.
New York Senator Liz Krueger said the state faces costs of more than half a trillion dollars by 2050 to “[repair] from and [prepare] for extreme weather caused by climate change.”
“That’s over $65,000 per household, and that’s on top of the disruption, injury, and death that the climate crisis is causing in every corner of our state.”
The New York Department of Environmental Conservation will now work to fill in the regulatory details of the law, and will start billing the companies in 2028, reports the New York Times.
Fossil fuel companies are expected to bring legal challenges against both the New York and Vermont acts. Vermont governor Phil Scott, and other lawmakers who opposed the legislation, noted as a particular concern that the state could not afford to go toe-to-toe with the companies in court. But whereas Vermont’s economy is smaller than every other state, New York’s has the third-largest economy in the U.S., comparable in size to all of Canada, putting the state and the companies on more equal footing.
And, as McKibben writes, New York also has a powerful attorney general’s office headed by Letitia James, who is not likely to shy away from taking on companies like ExxonMobil. James is, among other things, known for being game for suing a sitting president.
Business groups have come out opposing the law. Ken Pokalsky, vice president of the 3,200-member New York Business Council, told the New York Times the legislation presents a narrative that unfairly casts climate change as caused by “solely the fuel industry and major businesses.”
“We have all benefited from the use of fossil fuels over the time period covered by this law when there were really no other broadly available alternatives,” he said. Pokalsky’s association, along with the National Fuel Gas Company, the New York Farm Bureau, and the National Mining Association, had called for Hochul to veto the legislation.
Industry organizations also maintain the act will make gas prices higher for consumers. But in a November 30 letter to Hochul, Nobel Prize-winning economist Joseph Stiglitz said that’s unlikely because “strong market forces…will deter any cost shifting by the covered companies.”
The companies affected by the legislation “can easily afford these costs,” Stiglitz added.
“The world’s largest oil companies all enjoy significant operating revenue and significantly large profits,” he wrote, noting that ExxonMobil alone made $36 billion in profits just last year.
