How to sue Big Oil for money and win . . . maybe

Photo of judges hammer and money
Image: from NY Post

Last year (Jan 2018) New York City sued five major Oil & Gas companies — ExxonMobil, BP, SheIl, Chevron, and Conoco Phillips — for contributing to global warming and the resulting physical damage to city property. It asked the court to hold the oil companies liable for the damage they’ve caused, and award the city monitory compensation. But on July 20, 2018, the court dismissed the lawsuit in favour of the oil companies.

In dismissing the lawsuit, U.S. District Court Judge John F. Keenan, ruled that the city’s claims come under federal law involving greenhouse gas emissions that cross state lines, thus putting them under the jurisdiction of the Environmental Protection Agency (EPA). Problems associated with climate change, the judge said, should be tackled by Congress and the executive branch. In its brief to the Second Circuit Court of Appeals November 12, 2018, the city claims that Judge Keenan misunderstood the lawsuit. The appeal argues that the city did not ask the court to regulate emissions but, rather, to award the city damages on the basis of Public Nuisance, Private Nuisance, and Trespass, which, to a non lawyer, sounds pretty mild.

If Judge Keenan misunderstood the city’s lawsuit it’s because the city framed its 67 page brief around global warming as an international threat instead of what was intended, a limited and local demand for compensation. The titles of sections IV thru VIII in the brief give the flavour of the thing:

IV. Climate Change Impacts on New York City
V. Fossil Fuels Are the Primary Cause of Climate Change
VI. Defendants Have Produced Massive Quantities of Fossil Fuels—and Have Continued to Do So Even as Climate Change Has Become Gravely Dangerous
VII. Defendants Had Full Knowledge that Fossil Fuels Would Cause Catastrophic Harm
VIII. Despite Their Early Knowledge that Climate Change Posed Grave Threats, Defendants Promoted Fossil Fuels for Pervasive Use, While Denying or Downplaying These Threats

Within the brief, ‘greenhouse gas’ is mentioned 29 times, ‘emissions’ 46 times, ‘global warming’ 48 times, ‘climate change’ 100 times. On the other hand, the word ‘damages’ appears in the brief only 7 times. The impression given is that the city is afraid that the judge might not understand the situation unless provided with multiple reminders that global warming exists and that it’s a serious problem.

The fact is, the judge understands the issue very well. New York City framed its complaint in terms of global warming, an international problem that requires an international solution. The judge ruled accordingly. Fossil fuel companies are happy to defend themselves at the national or international level. They know how slow and ineffective national efforts to limit global warming are. They know how to influence those efforts so as to slow them down to a crawl. They even go so far as to promote placing taxes on CO2 emissions, knowing that that distances the production of fossil fuels from the possibility of direct control. It’s a tactic that also gets others to pay what  the oil companies should be paying.

If New York City’s lawsuit fails on appeal, it will show that the Nuisance and Trespass laws are not sufficient. What then? How can any city structure it’s climate lawsuits in such a way that the trans-boundary issue is sidelined?

Here’s my contribution to solving the puzzle:

1. The science linking fossil fuels to global warming , climate change, increasing damage from storms, drought, sea level rise, etc., is settled. Global Warming is happening now. The judges know it. The Oil & Gas companies do not deny it. They most certainly do not want to wind up in court fighting the science. They would lose. Instead, when sued for climate damages, oil companies fight back by attacking the lawsuit’s legal right to stand. There’s no need to stress the existence and effects of global warming when suing oil companies.

2. Even though oil companies have known for decades about the dangerous effects that result from the use of their products, they deliberately kept the knowledge to themselves.

3. New Yorkers generate pollution while engaged in manufacturing, transportation, electricity generation, day to day living, etc. The energy used in these activities includes fuels purchased from the oil companies. New York takes responsibility for the pollution it generates and is working to abate it.

4. As New Yorkers use fossil fuels purchased from the oil companies, carbon dioxide (CO2) molecules are released into the atmosphere. All of those CO2 molecules released by New York to date, remain in the atmosphere and will remain there indefinitely, doing their part in causing the atmosphere to heat up. Once in the atmosphere, those molecules that originated in New York cannot be controlled or regulated by any agency. 

5. The CO2 molecules released by New York from the fossil fuels supplied by the oil companies, add to the burden of CO2 molecules that have built up in the atmosphere over time from other sources. It follows that the atmospheric heating and consequent damage has increased by some measure due to New York’s use of those fossil fuels. To put it another way, if New York had not used any of those fossil fuels, the amount of damage inflicted on New York would be less by some measure (see item 7).

6. The oil companies learned in the 1980’s or earlier about the dangers posed by their products.  Had they behaved honestly and, at that time, informed New Yorkers about the dangers, it’s reasonable to assume that the city would have acted earlier to reduce its dependence on fossil fuels by at least 50% of what it is today. The oil companies should pay the costs flowing from that failure to tell the truth.

7. According to the U.S. Government Accounting Office (report dated Oct. 24, 2017), damage from Climate Change has cost U.S. taxpayers $350 billion over the past decade (2007 to 2017). When adjusted for population size, New Yorkers’ share of that cost was 2.6% or $9.1 billion. 

Considering all the above, how much money should the oil companies pay New York in damage compensation?

For the period 2007 to 2017 (see item 7), 50% of $9.1 billion = $4.55  billion in the form of a lump sum payment.

Since climate damage is ongoing, annual costs following 2017 will be one tenth of $9.1 billion = $0.91 billion per year (see item 7). Oil companies should therefor pay 50% of 0.91 = $0.455 billion per year starting in 2018. For how many years should the oil companies pay that annual amount. Idefinitely or until they go bust.

Photo of Verrazano bridge taken Oct 2012 during Hurricane Sandy
Verrazano bridge from Brooklyn waterfront, NYC, during Hurricane Sandy Oct. 29, 2012. Image credit: Carlos Ayala

Oil & Gas Industry aims to make global warming even warmer

Photo of oil well pumps
Oil well pumps. Image credit: CBC

There’s a growing mass mobilisation of world opinion against oil, which is “beginning to … dictate policies and corporate decisions, including investment in the industry” Mohammed Barkindo, the secretary general of OPEC said. Climate activists are “perhaps the greatest threat to our industry going forward”, he also said.
— from The Guardian and other press reports, July 5, 2019.

Mr. Barkindo is like the arsonist who sets fires for money and then complains that fire engines are threatening his business. He should know that ‘climate activists’ are not the only people delivering unwanted messages to the Oil & Gas Industry about global warming. Similar (although milder) messages are originating from within the industry’s own ranks. The problem is that, as yet, most of the industry’s bosses refuse to listen.

The International Energy Agency (IEA) is an intergovernmental body established in 1974 following the 1973 oil crisis. The agency’s purpose at the time was to respond to disruption in the supply of oil. Its mandate has since expanded and the agency now acts to provide member states, as well as as Russia, China, and India, with information and policy advice on energy security, economic development, and Environmental Protection.

The following chart in the IEA’s World Energy Outlook, shows the Agency’s estimate of total world energy demand to 2040 under what it calls its New Policies Scenario (NPS). The NPS, the report says, “Incorporates existing energy policies as well as an assessment of the results likely to stem from the implementation of announced policy intentions.” In other words, the chart represents the IEA’s business-as-usual prediction. The chart shows demand for fossil fuels (Natural Gas + Coal + Oil) steadily rising beyond 2020.

Estimated World energy demand by IEA
Estimated world energy demand to 2040 – business as usual. Image: International Energy Administration (IEA)

The next chart is from the same page of the same IEA report. It shows the Agency’s estimate of total world energy demand to 2040 under what it calls its Sustainable Development Scenario (SDS). The SDS, the report says, represents “an integrated approach to achieving internationally agreed objectives on climate change, air quality and universal access to modern energy.” In other words, the chart shows what the IEA estimates will happen to world energy demand, should the signatories to the Paris Accord follow up on on their commitments. Result: fossil fuel production falls.

The IEA’s estimated world energy demand to 2040 - Sustainable Developmemt Scenario. Image: IEA
The IEA’s estimated world energy demand to 2040 – Sustainable Development Scenario. Image: IEA

In what way is the Oil & Gas Industry reacting to this obvious policy message from a respected industry policy advisor? (1) It tries to ignore it. (2) It works to undermine the message in any way It can. One way it works to undermine the message is to produce estimates of its own showing that the world needs more fossil fuels, not less.

The following bar chart from BP’s ‘2018 Energy Outlook’ shows estimates of GROWTH in total worldwide energy consumption to 2040 according to nine different fossil-fuel focused organizations. All of them predict growth in the consumption of fossil fuels ranging from 0.3% to 0.9% per year. Note that BP has included an IEA estimate (4th from left), but one that is based on the Agency’s business as usual scenario, not on its Sustainable Development Scenario.

Bar chart showing growth to 2040 in worldwide energy consumption according to various organizations
Estimates of GROWTH to 2040 in total worldwide energy consumption according to various fossil-fuel-focused organizations. Image: from BP 2018 Energy Outlook

BP =   BP plc (formally British Petroleum)
CNPC = China National Petroleum Corporation
EIA = U.S. Energy Information Administration
IEA = International Energy Agency (OECD)
IEEJ = Institute of Energy Economics (Japan)
IHS = IHS Inc (a London based ‘Information Handling Services’ Company)
OPEC = Organization of Petroleum Exporting Countries
Statoil = Statoil ASA (Norwegian state oil co. now called Equinor)
XOM = ExxonMobil Corporation

Here’s what  BP says about its prediction labeled ‘BP ET scenario’ (first bar in the chart): Our report’s “Evolving Transition scenario suggests that a continuation of the recent progress and momentum in policies and technologies is likely to cause the growth in carbon emissions to slow markedly relative to the past. But this slowing falls well short of the sharp drop in carbon emissions thought necessary to achieve the Paris climate goals. We need a far more decisive break from the past .” (my underlining)

In other words, BP’s prediction assumes ‘business as usual’ as do all the other predictions shown in the chart. BP tries to distance itself from the implications of its own report by stating that the scenarios in its report “are not predictions of what is likely to happen or what BP would like to happen.” Nevertheless, its business as usual ‘scenario’ is taken by other Oil & Gas Industry heavyweights as a valid prediction that supports the industry’s business as usual behaviour.

For example, while ExxonMobil’s report titled ‘2019 Energy and Carbon Summery’ is peppered with references to emissions reduction and the goals of the 2015 Paris Accord, the company’s true position is exposed by two statements on page 9: “Natural gas will expand its role, led by growth in electricity generation and industrial output” and  “Rising oil demand will be driven by commercial transportation and the chemical industry.” See last bar in the chart.

BP’s ‘2018 Energy Outlook’ contains a surprisingly frank statement (underlined above) concerning the Paris Accord and how to achieve its goals. “We need a far more decisive break from the past” the writer of the report states.  Very true. Thing is, the decisive break from the past is going to hit the industry whether it likes it or not. More storms, more droughts, more floods, and more climate activists will see to that.

In the mean time, there’s only one way to meet the Paris climate goals and that is to cut fossil fuel production. Taxing carbon emissions will not do the trick; that’s just a silly game and the fossil fuel pushers know it. Taxing fossil fuels at the well or mine head and/or at ports of entry will work. Better still, mandate the elimination of fossil fuels as some jurisdiction are already beginning to do. One thing for sure: don’t expect help from the fossil fuel crowd. They are not part of the solution, they are the problem.