On Wednesday, New York City announced that it would sue the five oil majors—ExxonMobil, Chevron, ConocoPhillips, Royal Dutch Shell and BP—over their role in fueling climate change.
Also, New York City Mayor Bill de Blasio said that the city’s $189 billion pension fund would divest itself of fossil fuels, although such a move would need to be approved by the funds’ trustees. “This is a tragedy that was wrought by the fossil-fuel companies,” de Blasio said at a news conference. “We are going after those who have profited. And what a horrible, disgusting way to profit.” The proposal would withdraw the $5 billion it has in fossil fuel investments.
The lawsuit seeks compensation for the cost that the city would incur to insulate itself from the effects of climate change, which would include a long list of actions, such as upgrading sewer and water infrastructure, coastal defenses, seawalls, and a variety of public health measures. “In this litigation, the City seeks to shift the costs of protecting the City from climate change impacts back onto the companies that have done nearly all they could to create this existential threat,” the complaint from NYC said.
The oil majors largely dismissed the suit. Chevron said the compliant was “factually and legally meritless,” according to the WSJ. The other oil majors intimated similar messages, while also acknowledging that there needs to be some sort of large-scale effort to address climate change, although they were vague on what that actually meant in practice.
“Reducing greenhouse gas emissions is a global issue and requires global participation and action,” Exxon Mobil spokesman Scott Silvestri said. “Lawsuits of this kind -- filed by trial attorneys against an industry that provides products we all rely upon to power the economy and enable our domestic life -- simply do not do that." Related: Grading 2017 Oil Price Predictions
That remains to be seen, but the lawsuit does face long odds. The cities of San Francisco and Oakland previously sued fossil fuel companies for damages related to their role in climate change.
As Bloomberg notes, the lawsuit in New York hinges on the concepts of “public nuisance” and “private nuisance,” well-worn legal concepts that have yet to be applied to a problem as complex as climate change. “There isn’t anything you can point to and say, ‘This is exactly like that case,’" Michael Burger, executive director of the Sabin Center for Climate Change Law at Columbia Law School, said in a Bloomberg interview. “This is new.”
Other lawsuits in the past were unsuccessful. Several years ago a group of states sued using federal public nuisance laws targeting power plants, but the Supreme Court ruled in 2011 that enforcement for greenhouse gases was left to the EPA, preventing states from bringing suits.
But the latest effort from New York City alleges that the oil companies have violated state law. Part of the allegations stem from decades of knowledge and scientific research on behalf of the oil industry into climate change. The claim is that ExxonMobil and its peers had a sophisticated understanding of climate change but denied it to the public. This echoes a separate investigation by New York Attorney General Eric Schneiderman into ExxonMobil.
“Defendants are also responsible for leading the public relations strategy for the entire fossil fuel industry, downplaying the risks of climate change and promoting fossil fuel use despite the risks,” the complaint said. In this sense, the suit has parallels to the tobacco industry, which mislead the public about health risks of smoking.
The divestment of the city’s pension fund will take time, comptroller Scott Stringer said. “We’re setting a formal goal to divest from fossil fuels,” he said, before adding that any decision would take time and would need to be viewed through a “lens of sound fiscal stewardship.”
Critics of the fossil fuel divestment movement typically point out that such actions have little to no impact on company share prices. Even if stock prices took a hit, that would merely create a buying opportunity for other investors.
But that ignores the larger significance of the proliferating number of commitments from public and private institutions to fossil fuel divestment. The more major institutions line up against oil companies, the more it mars their images and the more pressure it builds for the policy and regulatory measures that would ultimately force the oil industry to keep reserves in the ground. It remains to be seen if such a campaign will bear any fruit, but getting New York City on board is one of the most significant actions to date.
By Nick Cunningham of Oilprice.com
More Top Reads From Oilprice.com:
- 3 Million Barrels Per Day Could Go Offline In 2018
- Blockchain Tech Is Transforming The Energy Industry
- Expect A New Wave Of Oilfield Service IPOs In 2018