NYU Law Institute for Policy Integrity Shows How Making Climate Polluters Pay Won't Cost Consumers

ALBANY, NY (02/16/2023) (readMedia)-- Legislation in Albany to force oil companies to NY's climate costs will not raise the price of gas or home heating, according to an analysis from the think tank Institute for Policy Integrity at NYU Law. The report makes clear that opponents' claims otherwise are false.

The legislation, The Climate Change Superfund Act, assesses the largest greenhouse gas emitters to pay $3 billion annually for the next 25 years to offset the expected tens of billions of dollars in expected climate damages that will have to be paid by the state. The legislation is modeled on the existing toxics superfund law (which deals with land and drinking water contamination) that makes polluters financially responsible for the environmental damages that they have caused.

The paper analyzed the legislation and found: "The Act is unlikely to alter the price of gasoline at the pump in New York or the price of crude oil more generally. The Act's compensatory payments would be based on companies' historical contributions to the existing stock of greenhouse gas emissions such that these payments would reflect past sales of petroleum, and not current or future sales. Oil companies would therefore treat these payments as one-time fixed costs. Regardless of market structures, oil companies are unable to pass on increases in fixed costs to consumers due to economic incentives and competition."

And later: "Beyond the design of the Act, oil companies would also be unable to retaliate against New York by raising retail gasoline prices in the state due to the interconnectedness of the national and global energy markets and existing U.S. antitrust laws."

The analysis also argues, "as climate change is likely to disrupt energy markets, revenue generated by the Act will likely temper future energy cost impacts in the state... Infrastructure projects launched as a result of this fund will likely lower energy companies' future expected costs in New York, including for the distribution of petroleum and the production and distribution of future oil substitutes. Thus, future energy prices related to transportation will likely be lower in the state as a result of the Act's ability to stimulate adaptation to future impacts of climate change."

2022 was a record profit year for big oil, with the top companies' combined profits reaching an astounding $215 billion. In order to make these massive profits, big oil companies blamed the war in Ukraine, using the human rights crisis to price-gouge consumers. Meanwhile, they delivered unprecedented returns to shareholders while doing little to address the climate crisis they knowingly created. Starting in the 1970s, scientists working for Exxon made "remarkably accurate projections of just how much burning fossil fuels would warm the planet." Yet for years, "the oil giant publicly cast doubt on climate science, and cautioned against any drastic move away from burning fossil fuels, the main driver of climate change."

Read the full analysis here.

Big oil is at fault for climate change, and it can certainly afford the costs - which are uniquely necessary - and expensive - in New York. A new report from Rebuild by Design "Atlas of Disaster: New York State'' identifies the impacts of recent climate disasters across New York State at the county level, for the years 2011-2021. The data shows that every single county in New York has experienced a federal climate disaster between 2011-2021, with 16 having five or more disasters during that time. More than 100 New Yorkers died as a result of climate-driven disasters. In a separate report, Rebuild by Design estimated that the climate costs to New York could be $55 billion by the end of this decade. Furthermore, the U.S. Army Corps of Engineers estimated that it would cost $52 billion to protect NY Harbor alone. And while storms get worse, sea levels are rising and groundwater poses a higher risk of flooding - and we don't even know how much yet. Clearly, New York is facing staggering – and growing – climate costs.

The Climate Change Superfund Act isn't just necessary – it's popular. According to a poll from Data for Progress, 89% of New Yorkers support fossil fuel companies covering at least some of the cost for climate damages.

Background

The Climate Change Superfund Act (S.2129 Krueger/A3351 Dinowitz) requires companies most responsible for greenhouse gas emissions to pay a total of $75 billion over twenty-five years ($3 billion annually) for the environmental damage they have done. The funds allow New Yorkers to invest in massive and life-saving infrastructure improvements, upgrade stormwater drainage and sewage treatment systems, prepare the power grid for severe weather, create systems to protect people from extreme heat, and respond to environmental and public health threats.

In December, 200+ groups including NYPIRG, WE ACT, Food & Water Watch, and League of Women Voters NYS sent a letter to Governor Hochul urging her to include the Climate Change Superfund Act in the executive budget. In their letter, the groups wrote that the fossil fuel industry should be subject to the state's climate costs since their "decisions led to global warming; justice requires that they-not New York's other taxpayers-be financially responsible for the tragically enormous climate crisis impacts that they created."