New Law Targets Fossil Fuel Giants for Emissions Accountability

Pen on paper near signature line

New York Governor Kathy Hochul signs a landmark law charging fossil fuel companies $75 billion for climate change damages, sparking debate and potential legal challenges.

At a Glance

  • NY’s Climate Change Superfund Act requires major fossil fuel polluters to pay for climate-related damages
  • Companies must contribute $3 billion annually for 25 years, totaling $75 billion
  • Funds will support climate adaptation projects and infrastructure improvements
  • Critics argue the law is unworkable and may increase costs for consumers
  • Legal challenges are expected from the energy industry

New York Takes Bold Step in Climate Accountability

Governor Kathy Hochul has signed into law the Climate Change Superfund Act, a groundbreaking piece of legislation that requires major fossil fuel companies to pay for climate change damages in New York State. The law mandates that oil, natural gas, and coal companies contribute a total of $75 billion over 24 years to fund climate adaptation and mitigation efforts across the state.

The new law targets companies responsible for significant greenhouse gas emissions between 2000 and 2018. It is modeled after the federal Superfund law, which holds polluters accountable for toxic waste cleanup. Under this legislation, companies that have produced over one billion tons of greenhouse gas emissions globally in the past 24 years will be required to contribute to a state fund for infrastructure projects aimed at mitigating and repairing climate change impacts.

Financial Implications for Energy Companies

An analysis suggests that both foreign and American companies will be required to pay approximately $3 billion annually over 25 years. Saudi Aramco could face the largest annual fee of $640 million for emissions from 2000 to 2020. Other companies facing assessments include Pemex, Lukoil, Exxon, Chevron, Shell, and BP.

The funds collected will be channeled into critical infrastructure improvements and environmental conservation projects, such as restoring coastal wetlands to buffer against climate change effects. This approach aims to shift the financial burden of climate adaptation from New York taxpayers to the companies deemed responsible for significant carbon emissions.

Industry Response and Potential Challenges

The petroleum industry views the law as a declaration of war against energy providers in New York. Over three dozen energy firms and business advocates urged Governor Hochul to veto the bill, citing policy and constitutional concerns. The American Petroleum Institute criticized the legislation as a punitive fee on American energy.

“This type of legislation represents nothing more than a punitive new fee on American energy, and we are evaluating our options moving forward.” – American Petroleum Institute

Critics argue that the law is unworkable and likely to face legal challenges. A former state energy utility regulator has expressed doubts about the law’s legal sustainability and questioned the feasibility of collecting funds from foreign firms. The energy industry is expected to mount legal challenges to the legislation.

Support and Implementation

The law has garnered support from climate change activists, including the Sierra Club and Environmental Advocates NY. The New York State Department of Environmental Conservation backs the law, viewing it as a means to hold polluters accountable and complement state efforts to reduce emissions.

“Establishing the Climate Superfund is the latest example of my administration taking action to hold polluters responsible for the damage done to our environment and requiring major investments in infrastructure and other projects critical to protecting our communities and economy.” – Hochul

Before imposing penalties, the state must establish regulations to identify liable parties and develop a fund allocation system. The implementation of this law coincides with other climate-related initiatives in New York, including the reinstatement of congestion pricing in New York City and upcoming “cap and invest” rules.

Sources:

  1. Climate Change Superfund Act
  2. Hochul signs NY law that will charge $75B to oil, gas and coal companies for climate change — but critics say customers will pick up tab
  3. Hochul Signs Law That Penalizes Companies for Greenhouse Gas Emissions
  4. NY Governor Signs Law That Charges Companies for Greenhouse Gas Emissions