NY considers charging oil firms billions for climate change fund
Governor Kathy Hochul is poised to make a critical decision on a controversial piece of legislation that could impose significant financial burdens on major oil, natural-gas, and coal companies. The proposed Climate Change Superfund bill, which has already passed both the Assembly and Senate, aims to hold these companies accountable for their contributions to climate change by requiring them to pay billions of dollars to the state.
Inspired by the federal Superfund program that has long sought to address the cleanup of abandoned toxic waste sites, this state-level initiative has drawn both support and criticism. Proponents argue that the bill is a necessary step for New York to secure funding for climate adaptation efforts. They liken it to the federal program’s attempt to make polluters pay for environmental damage. However, critics have raised concerns about the bill’s feasibility and potential unintended consequences.
An analysis conducted for the bill’s sponsors, State Senator Liz Krueger (D-Manhattan) and Assemblyman Jeffrey Dinowitz (D-Bronx), reveals that the proposed Superfund could generate approximately $3 billion annually, or $75 billion over 25 years. This revenue would come from assessments on both foreign-owned and American companies. For instance, Saudi Aramco, the oil giant owned by the Saudi Royal family, could face the largest annual fee of $640 million due to its significant greenhouse gas emissions from 2000 to 2020. Similarly, the Mexican state-owned oil company Pemex could be assessed $193 million, and Russia’s Lukoil could face a $100 million yearly fee.
The list of targeted companies includes major global and American petrochemical firms such as ExxonMobil, Chevron, Shell, BP, Total Energies, Petrobras, Glencore, Equinor, and ENI. The bill’s critics, however, question the practicality of collecting such fees from foreign corporations, especially those based in countries with potentially conflicting legal or political interests. Former State Public Service Commission Chairman John Howard has voiced skepticism about the feasibility of enforcing these financial obligations, particularly from entities like Saudi Aramco and Lukoil. He points out the challenges in enforcing payment and the potential for these companies to pass the costs onto consumers, potentially leading to higher prices at the pump.
Daniel Ortega, Executive Director of New Yorkers for Affordable Energy, has labeled the bill as unconstitutional and anticipates that it will face legal challenges. He argues that the bill could send a negative message to businesses, suggesting that even if they comply with existing regulations and taxes, they might still face additional penalties imposed by the state. This, he suggests, could deter companies from operating in New York.
On the other hand, supporters of the bill, including its sponsors, argue that the funds collected would be critical for addressing climate change impacts. They propose using the revenue for essential infrastructure projects such as coastal wetlands restoration, upgrades to storm-water drainage systems, energy-efficient cooling systems for buildings, and the construction of sea walls to protect against severe weather conditions. Krueger and Dinowitz estimate that the state’s climate adaptation investments through 2050 could exceed several hundred billion dollars, far surpassing the $75 billion expected from the Superfund.
Krueger is confident that the state can enforce the collection of greenhouse gas fees from foreign companies, citing their American-based operations that are subject to U.S. laws and courts. Dinowitz shares this optimism and believes the approach might serve as a model for other states to follow. Vermont has already enacted its own Climate Change Superfund Act, which took effect on July 1, potentially setting a precedent for similar legislative actions across the country.
As Governor Hochul reviews the bill, the future of New York’s approach to climate change funding hangs in the balance. The decision will not only impact the state’s climate adaptation efforts but could also shape how other states address climate accountability and corporate responsibility.
