Big Oil’s scorched-earth legal approach to climate change
By Keith Stewart, March 14, 2016
I want to believe the oil company CEOs who say they’ve seen the light and now support action on climate change. I really do.
But it’s hard to take them at their word when their lawyers are simultaneously engaged in what one legal scholar has called “the first case in which a party has challenged the constitutional validity of any federal greenhouse gas regulations.”
A consortium of seven oil companies is challenging the right of the federal government to adopt a regulation designed to substitute renewable energy for fossil fuels — in part on the grounds that “that the production and consumption of petroleum fuels is not dangerous and does not pose a risk to human health or safety”, and so, “there is no evil to be suppressed”.
Those words are taken from a 2014 legal ruling against the companies. The judge in that case went on to refute their argument at length: “The evil of global climate change and the apprehension of harm resulting from the enabling of climate change through the combustion of fossil fuels has been widely discussed and debated by leaders on the international stage. Contrary to Syncrude’s submission, this is a real, measured evil, and the harm has been well documented.”
Or maybe not. Syncrude was back in court last November to appeal that ruling.
Few Canadians have heard of Syncrude because it’s a consortium of oil companies that jointly operate three massive tar sands mines. Suncor became Syncrude’s largest shareholder when it bought Canadian Oil Sands earlier this year, but the mines’ day-to-day operations are managed by Imperial Oil, the Canadian subsidiary of ExxonMobil.
It’s no surprise to see Exxon involved in this case; the company has a long history of opposing action on climate change. Exxon is now under investigation in New York and California for publicly claiming that the science of global warming was too murky to warrant policy action by governments — even as the company redesigned its drill rigs and pipelines destined for the Canadian Arctic based on company scientists’ predictions of a warming world. Exxon also was the only major oil player not on stage with Alberta Premier Rachel Notley as she announced the province’s ambitious new climate policy.
Yet it’s surprising to see companies like Suncor — which are trying to rebrand themselves as climate leaders — involved in such legal shenanigans. In his assessment of the original case, University of Calgary law professor Nigel Bankes wrote that this litigation “suggests that at least the sector of big oil represented by the Syncrude interests will fight federal greenhouse gas regulations in all of its forms and that it will fight them hard.
“There was no stone left unturned in this litigation. Counsel for Syncrude pursued every possible avenue, no matter how small the chance of success or creative the argument. Big carbon may be just like big tobacco in protecting its turf.” — University of Calgary law professor Nigel Bankes
That doesn’t sound like something climate leaders ought to do.
As the largest shareholder, Suncor should tell their colleagues to withdraw this appeal. They should then take the money they were spending on lawyers and use it to map out how their businesses can thrive in a world that has moved beyond fossil fuels.
Keith Stewart is the head of the climate and energy campaign at Greenpeace Canada, and teaches a course on energy policy at the University of Toronto
US taxpayers subsidising world’s biggest fossil fuel companies
Shell, ExxonMobil and Marathon Petroleum got subsidises granted by politicians who received significant campaign contributions from the fossil fuel industry, Guardian investigation reveals
By Damian Carrington and Harry Davies, 12 May 2015 07.00 EDT
The world’s biggest and most profitable fossil fuel companies are receiving huge and rising subsidies from US taxpayers, a practice slammed as absurd by a presidential candidate given the threat of climate change.
A Guardian investigation of three specific projects, run by Shell, ExxonMobil and Marathon Petroleum, has revealed that the subsidises were all granted by politicians who received significant campaign contributions from the fossil fuel industry.
The Guardian has found that:
A proposed Shell petrochemical refinery in Pennsylvania is in line for $1.6bn (£1bn) in state subsidy, according to a deal struck in 2012 when the company made an annual profit of $26.8bn.
ExxonMobil’s upgrades to its Baton Rouge refinery in Louisiana are benefitting from $119m of state subsidy, with the support starting in 2011, when the company made a $41bn profit.
A jobs subsidy scheme worth $78m to Marathon Petroleum in Ohio began in 2011, when the company made $2.4bn in profit.
“At a time when scientists tell us we need to reduce carbon pollution to prevent catastrophic climate change, it is absurd to provide massive taxpayer subsidies that pad fossil-fuel companies’ already enormous profits,” said senator Bernie Sanders, who announced on 30 April he is running for president.
Sanders, with representative Keith Ellison, recently proposed an End Polluter Welfare Act, which they say would cut $135bn of US subsidies for fossil fuel companies over the next decade. “Between 2010 and 2014, the oil, coal, gas, utility, and natural resource extraction industries spent $1.8bn on lobbying, much of it in defence of these giveaways,” according to Sanders and Ellison.
“Subsidies to fossil fuel companies are completely inappropriate in this day and age,” said Stephen Kretzmann, executive director of Oil Change International, an NGO that analyses the costs of fossil fuels. OCI found in 2014 that US taxpayers were subsidising fossil fuel exploration and production alone by $21bn a year. In 2009, President Barack Obama called on the G20 to eliminate fossil fuel subsidies but since then US federal subsidies have risen by 45%.
Tax credits, defined as a subsidy by the World Trade Organisation, are a key route of support for the fossil fuel industry. Using the subsidy tracker tool created by the Good Jobs First group, the Guardian examined some of the biggest subsidies for specific projects.
Shell’s proposed $4bn plant in Pennsylvania is set to benefit from tax credits of $66m a year for 25 years. Shell has bought the site and has 10 supply contracts in place lasting up to 20 years, including from fracking companies extracting shale gas in the Marcellus shale field. The deal was struck by the then Republican governor, Tom Corbett, who received over $1m in campaign donations from the oil and gas industry. According to Guardian analysis of data compiled by Common Cause Pennsylvania, Shell have spent $1.2m on lobbying in Pennsylvania since 2011.
A Shell spokesman said: “Shell supports and endorses incentive programmes provided by state and local authorities that improve the business climate for capital investment, economic expansion and job growth. Shell would not have access to these incentive programmes without the support and approval from the representative state and local jurisdictions.”
ExxonMobil’s Baton Rouge refinery is the second-largest in the US. Since 2011, it has been benefitting from exemptions from industrial taxes, worth $118.9m over 10 years, according to the Good Jobs First database. The Republican governor of Louisiana, Bobby Jindal has expressed his pride in attracting investment from ExxonMobil. In state election campaigns between 2003 and 2013, he received 231 contributions from oil and gas companies and executives totalling $1,019,777, according to a list compiled by environmental groups.
A spokesman for ExxonMobil said: “ExxonMobil will not respond to Guardian inquiries because of its lack of objectivity on climate change reporting demonstrated by its campaign against companies that provide energy necessary for modern life, including newspapers.”
The Guardian is running a campaign asking the world’s biggest health charities, the Bill and Melinda Gates Foundation and the Wellcome Trust, to sell their fossil fuel investments on the basis that it is misguided to invest in companies dedicated to finding more oil, gas and coal when current reserves are already several times greater than can be safely burned. Many philanthropic organisations have already divested from fossil fuels, including the Rockefeller Brothers Fund whose wealth derives from Standard Oil, which went on to become ExxonMobil.
A spokesman for Marathon Petroleum said: “The tax credit recognises the enormous contribution we make to the Ohio economy through the taxes we pay and the well-paying jobs we maintain. We have more than doubled the 100 new jobs we committed to create.” The spokesman said the company paid billions of dollars in income and other taxes every year across the US.
“Big oil, gas, and coal have huge influence on politicians and governments and they get that influence the old fashioned way – they buy it,” said Kretzmann. “Through campaign finance, lobbying, advertising and superpac spending, the industry has many ways to influence candidates and government officials seeking re-election.”
He said fossil fuel subsidies were endemic in the US: “Every single well, pipeline, refinery, coal and gas plant in the country is heavily subsidised. Big Fossil’s lobbyists have done their jobs well for the last century.”
Ben Schreiber, at Friends of the Earth US, said. “There is a vibrant discussion about the best way to keep fossil fuels in the ground – from carbon taxation to divestment – but ending state and federal corporate welfare for polluters is one of the easiest places to start.”
Schreiber also defended subsidies for renewable energy: “Fossil fuels are a mature technology while renewable energy is nascent and still developing. It makes sense to subsidise technologies that are going to help solve climate change, but not to do the same for those that are causing the problem.”
Often dismissed as unwise by oil industry proponents and criticized as a distraction even by supporters of action on climate change, the divestment movement is no longer being ignored.
Look no further than CeraWeek, an annual get-together of North America’s fossil fuel elite. On April 22, amid discussion panels such as “Asia: Still the Promised Land for New Energy Investment?” or “Canada’s role in the rising North America energy powerhouse,” there was also a session dedicated to divestment and the implications for energy companies. The conversation analyzed how sustainable the business model is for fossil fuel companies as the world moves towards regulating carbon emissions.
The attention paid to the divestment at CeraWeek suggests that the growing publicity and success from the environmental movement’s ability to secure divestment commitments from universities, banks, pension funds, churches, and other wealth funds are starting to be perceived as a threat by the fossil fuel industry.
A few weeks earlier, The Guardian made a splash with its “Keep it in the Ground” campaign, a very firm declaration in support of divestment. The Guardian Media Group vowed to divest its £800 million fund as well.
The growing concern over carbon pollution raises the possibility of a regulatory or tax crackdown, both at the national and international level. Newsweek reported on April 21 that HSBC wrote in a private note to its clients that there is an increasing risk that fossil fuel companies will become “economically non-viable.” As a result, HSBC advised its clients to divest from fossil fuels because they may be too risky. If investors fail to get out of fossil fuels, the bank says, they “may one day be seen to be late movers, on ‘the wrong side of history.’” As the divestment campaign builds up steam, major oil and gas companies are starting to see the writing on the wall.
But there could be a way to adapt. The Carbon Tracker Initiative (CTI) just published a “blueprint” for fossil fuel companies to adapt to a carbon-constrained world. The blueprint provides several recommendations. For example, oil companies should avoid high cost projects such as the struggling Kashagan field in Kazakhstan or expensive oil sands projects in Canada. High-cost projects put companies at risk when they are hit with unforeseen events, such as an oil price crash, a decline in demand, or a change in tax regimes. Instead, companies should invest in lower risk projects with higher rates of return, CTI says. CTI also insists that corporate governance within fossil fuel companies is critical – management needs a clear-eyed prognosis of how exposed their assets are to a potential scenario in which their oil and gas reserves are no longer wanted.
It is far from clear whether or not the oil majors will heed CTI’s advice on adapting their companies. In mid-April, 98 percent of BP’s shareholders voted in favor of an initiative that would force the company to disclose which of its assets would become “unburnable” in a low-carbon world. The results of that analysis will be much anticipated. ExxonMobil undertook a similar study, but summarily dismissed the likelihood that its assets would be affected in the future by climate action.
“Our analysis and those of independent agencies confirms our long-standing view that all viable energy sources will be essential to meet increasing demand growth that accompanies expanding economies and rising living standards,” William Colton, ExxonMobil’s vice president of corporate strategic planning, said in a March 2014 statement. In other words, investors have little to fear — ExxonMobil will be fine.
However, much has changed since then. The divestment movement has gathered quite a bit of momentum as protests hit more campuses and city halls. The U.S. and China reached a landmark agreement to reduce their greenhouse gas emissions. More countries will set policies to reduce energy demand ahead of international negotiations in Paris later this year. Oil prices have crashed, highlighting the vulnerabilities of many over-leveraged oil companies. And clean energy continues to make inroads, amid falling costs for solar, wind, and energy storage.
Oil companies ignore the divestment campaign – and other threats to their business models – at their own peril.
U.N. Panel Issues Its Starkest Warning Yet on Global Warming
By JUSTIN GILLIS, NOV. 2, 2014
COPENHAGEN — The gathering risks of climate change are so profound that they could stall or even reverse generations of progress against poverty and hunger if greenhouse emissions continue at a runaway pace, according to a major new United Nations report.
Despite growing efforts in many countries to tackle the problem, the global situation is becoming more acute as developing countries join the West in burning huge amounts of fossil fuels, the Intergovernmental Panel on Climate Change said here on Sunday.
Failure to reduce emissions, the group of scientists and other experts found, could threaten society with food shortages, refugee crises, the flooding of major cities and entire island nations, mass extinction of plants and animals, and a climate so drastically altered it might become dangerous for people to work or play outside during the hottest times of the year.
“Continued emission of greenhouse gases will cause further warming and long-lasting changes in all components of the climate system, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems,” the report found.
In the starkest language it has ever used, the expert panel made clear how far society remains from having any serious policy to limit global warming.
Doing so would require leaving the vast majority of the world’s reserves of fossil fuels in the ground or, alternatively, developing methods to capture and bury the emissions resulting from their use, the group said.
If governments are to meet their own stated goal of limiting the warming of the planet to no more than 3.6 degrees Fahrenheit, or 2 degrees Celsius, above the preindustrial level, they must restrict emissions from additional fossil-fuel burning to about 1 trillion tons of carbon dioxide, the panel said. At current growth rates, that budget is likely to be exhausted in something like 30 years, possibly less.
Yet energy companies have booked coal and petroleum reserves equal to several times that amount, and they are spending some $600 billion a year to find more. Utilities and oil companies continue to build coal-fired power plants and refineries, and governments are spending another $600 billion or so directly subsidizing the consumption of fossil fuels.
By contrast, the report found, less than $400 billion a year is being spent around the world to reduce emissions or otherwise cope with climate change. That is a small fraction of the revenue spent on fossil fuels — it is less, for example, than the revenue of a single American oil company, ExxonMobil.
The new report comes just a month before international delegates convene in Lima, Peru, to devise a new global agreement to limit emissions, and it makes clear the urgency of their task.
Appearing Sunday morning at a news conference in Copenhagen to unveil the report, the United Nations secretary general, Ban Ki-moon, appealed for strong action in Lima.
“Science has spoken. There is no ambiguity in their message,” Mr. Ban said. “Leaders must act. Time is not on our side.”
Yet there has been no sign that national leaders are willing to discuss allocating the trillion-ton emissions budget among countries, an approach that would confront the problem head-on, but also raise deep questions of fairness. To the contrary, they are moving toward a relatively weak agreement that would essentially let each country decide for itself how much effort to put into limiting global warming, and even that document would not take effect until 2020.
“If they choose not to talk about the carbon budget, they’re choosing not to address the problem of climate change,” said Myles R. Allen, a climate scientist at Oxford University in Britain who helped write the new report. “They might as well not bother to turn up for these meetings.”
The Intergovernmental Panel on Climate Change is a scientific body appointed by the world’s governments to advise them on the causes and effects of global warming, and potential solutions. The group, along with Al Gore, was awarded the Nobel Peace Prize in 2007 for its efforts to call attention to the climate crisis.
The new report is a 175-page synopsis of a much longer series of reports that the panel has issued over the past year. It is the final step in a five-year effort by the body to analyze a vast archive of published climate research.
It is the fifth such report from the group since 1990, each finding greater certainty that the climate is warming and that human activities are the primary cause.
“Human influence has been detected in warming of the atmosphere and the ocean, in changes in the global water cycle, in reductions in snow and ice, and in global mean sea-level rise; and it is extremely likely to have been the dominant cause of the observed warming since the mid-20th century,” the report said.
A core finding of the new report is that climate change is no longer a distant threat, but is being felt all over the world. “It’s here and now,” Rajendra K. Pachauri, the chairman of the panel, said in an interview. “It’s not something in the future.”
The group cited mass die-offs of forests, such as those killed by heat-loving beetles in the American West; the melting of land ice virtually everywhere in the world; an accelerating rise of the seas that is leading to increased coastal flooding; and heat waves that have devastated crops and killed tens of thousands of people.
The report contained the group’s most explicit warning yet about the food supply, saying that climate change had already become a small drag on overall global production, and could become a far larger one if emissions continued unchecked.
A related finding is that climate change poses serious risks to basic human progress, in areas such as alleviating poverty. Under the worst-case scenarios, factors like high food prices and intensified weather disasters would most likely leave poor people worse off. In fact, the report said, that has already happened to a degree.
In Washington, the Obama administration welcomed the report, with the president’s science adviser, John P. Holdren, calling it “yet another wake-up call to the global community that we must act together swiftly and aggressively in order to stem climate change and avoid its worst impacts.”
The administration is pushing for new limits on emissions from American power plants, but faces stiff resistance in Congress and some states.
Michael Oppenheimer, a climate scientist at Princeton University and a principal author of the new report, said that a continuation of the political paralysis on emissions would leave society depending largely on luck.
If the level of greenhouse gases were to continue rising at a rapid pace over the coming decades, severe effects would be avoided only if the climate turned out to be far less sensitive to those gases than most scientists think likely, he said.
“We’ve seen many governments delay and delay and delay on implementing comprehensive emissions cuts,” Dr. Oppenheimer said. “So the need for a lot of luck looms larger and larger. Personally, I think it’s a slim reed to lean on for the fate of the planet.”