Oil Companies vs. Citizens: The Battle Begins Over Who Will Pay Climate Costs

Home / Blog / Oil Companies vs. Citizens: The Battle Begins Over Who Will Pay Climate Costs

Today, lawyers for five large oil companies will stand in front of a federal judge and tell him a story about the history of climate change. The companies—BP, Chevron, ConocoPhillips, ExxonMobil, and Royal Dutch Shell—are being sued by San Francisco and Oakland for contributing to climate change impacts that will cost the cities billions of dollars.

Since 1988, when global recognition of human-caused climate change led to the establishment of the Intergovernmental Panel on Climate Change, more than 70% of the world’s industrial greenhouse gas emissions have come from just 100 fossil fuel companies. Including the ones in front of the judge today – many of whom knew the risks of climate change long before the rest of the world did.

The lawsuit is part of a growing trend to bring oil companies to court for their role in causing climate change, and for their decision to continue producing fossil fuels even after knowing the implications. San Francisco and Oakland have provided convincing evidence that the companies not only knew that their products would lead to dangerous levels of climate change; they actively misled consumers in order to slow the transition to cleaner energy sources. Now the oil industry will have to convince a court to believe its version of the story, which has previously relied more on public relations spin than scientific evidence.

The hearings for this landmark case will begin in an unusual way: the judge has ordered each of the two sides to present a “tutorial” on the history of climate science. Both environmentalists and the oil industry will be watching the event closely. As Marco Simons, EarthRights’ General Counsel, explained, “The court is forcing these companies to go on the record about their understanding of climate science, which they have desperately tried to avoid doing.”

In the past year, nine communities in the United States, including San Francisco and Oakland, have brought lawsuits against oil companies, seeking compensation for the costs of protecting their citizens and economies from climate change. The costs run into the hundreds of millions or billions of dollars in each case. Currently, taxpayers are paying the cost.

Rising sea levels have already intensified the flooding of low-lying areas in San Francisco and Oakland and will continue to get worse. In the coming decades, both cities will experience property destruction, shoreline erosion, saltwater intrusion into water treatment systems, and other expensive damages. Meanwhile, the cities are grappling with the costs of building sea walls and other structures to protect against the increased risk of catastrophic storm surges. The San Francisco and Oakland governments have calculated that climate impacts will cost them billions of dollars. They allege that it is unfair for taxpayers to pay for damages caused by these companies’ climate pollution, so they have asked the court to order the companies to pay their fair share.

And it is more than fair for these companies to contribute. Climate change is already irreversible, and fossil fuel production is largely responsible for the dangerous levels of greenhouse gas emissions that are now in our atmosphere. In 2015, for example, 77% of greenhouse gas emissions in the United States came from fossil fuel use. Pedro Faria, technical director at CDP, the organization that published the groundbreaking 2017 Carbon Majors Report, said, “A relatively small set of fossil fuel producers may hold the key to systemic change on carbon emissions.”

The five oil companies being sued by San Francisco and Oakland are “the five largest investor-owned fossil fuel corporations in the world as measured by their historic production of fossil fuels.”

The lawsuits have alarmed the oil companies so much that one of the defendants, ExxonMobil, has responded in extreme ways. Exxon has issued subpoenas to harass local government officials and lawyers involved in several of the lawsuits, alleging fraud and conspiracy. (Exxon has also sued state officials in New York City and Massachusetts who are investigating allegations that the company misled investors about climate change impacts.) The courts will most likely dismiss Exxon’s claims, but their real purpose is to create a chilling effect that discourages other cities from suing. Stuart Leavenworth of McClatchy’s observed, “If you live in a city or county that sues oil companies over climate change, prepare for a blowback.”

Exxon’s intimidation tactics are inappropriate, but its sense of alarm is understandable. If any of these lawsuits is successful, it could have national, or even global, significance.

Court decisions in favor of the taxpayers, represented by their local governments, could help correct one the world’s greatest market distortions. Because the oil industry is currently permitted to shift billions of dollars in costs onto taxpayers, it effectively receives a subsidy that artificially props up fossil fuel production. If the courts shift the true cost of fossil fuel products back onto the companies, the markets are more likely to favor low-carbon energy sources.

This type of “cost shifting” is common in U.S. tort law: if someone causes you harm, you can sue them in court to receive compensation for the damages caused. This places the costs of risky activity on those who cause the harms.

In this case, not only did the companies know the risks – they’ve known it for a long time.

San Francisco’s and Oakland’s complaints describe in detail how the five oil companies have known since the 1960s that their products would cause dangerous levels of global warming, and yet they “engaged in large-scale, sophisticated advertising and public relations campaigns to promote pervasive fossil fuel usage and to portray fossil fuels as environmentally responsible and essential to human well-being.”

Journalist Neela Banerjee of Inside Climate News called this effort “one of the longest and most consequential campaigns against science in modern history.”

During today’s hearing in San Francisco, the oil companies will likely claim that they did not downplay the risks of climate change during the past several decades, but rather that the impacts were too uncertain to act upon. There are many problems with this argument.

For the communities that brought these lawsuits, the question of “certainty” or “uncertainty” is a parlor game that is meaningless when planning for the future. Climate impacts are here and will—with certainty—get worse. The risk of catastrophic impacts is high enough to deserve immediate action, as oil industry scientists have been warning for half a century.

As the impacts of climate change worsen, local communities across the United States will face enormous costs to protect their citizens and their local economies, and to pay for the damages that occur. Litigation is a promising option to recover these costs, because the evidence rests so strongly on the taxpayers’ side.

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