State weighs who should pay for climate change costs: Energy companies or taxpayers

ALBANY — State government is facing a crossroads in combating the threat of climate change as legislative debate now focuses on who should pay most of the huge and growing bill — energy companies or taxpayers.

Gov. Kathy Hochul’s plan to address climate change by reducing use of fossil fuels was adopted in the state budget on May 1. It will require fossil fuel producers to buy “allowances” as an incentive to reduce emissions, and some of the money generated would be used to lessen the impact on consumers of the transition to greener energy. Government would still shoulder most of the cost of paying for damage from global warming and for measures to protect against its future threats.

But supporters of a bill headed into the final days of the legislative session say Hochul's method still puts taxpayers primarily on the hook for climate change damage, while fossil fuel generators have reaped record profits for decades.

Their proposed “climate change superfund” would make New York the first state to try to force producers of fossil fuel emissions to pay most of the cost of protecting against the damage caused by climate change including flooding, rising sea levels, and severe storms and droughts. The superfund would use the molecular makeup of emissions to determine the company and industry that produced them. Supporters say the plan would raise $3 billion annually for 25 years from the biggest oil and energy companies in the world.

Supporters say a provision in the bill and global market forces would keep the costs from being passed along to consumers.

“Climate damages are going to be an enormous strain on all New Yorkers’ pocketbooks going forward for as far as the eye can see,” said Lee Wasserman, director of the Rockefeller Family Fund, a charity that addresses social issues. “The climate change superfund bill is based on a very simple lesson we all learned in kindergarten, which is that if you make the mess you have to help clean it up.”

The bill, co-sponsored by Assemb. Jeffrey Dinowitz (D-Bronx), is advancing in the Legislature as the June 8 close of session approaches.

“Somebody is going to pay for this because we can’t get away without it,” said Sen. Liz Krueger (D-Manhattan), a sponsor of the superfund bill with Dinowitz. “They continue to cause damage to our world and our climate, while their profits are bigger than ever before.”

Hochul won't say whether she would sign the superfund bill into law if the State Legislature passes it.

The measure faces powerful lobbying opponents who are also major contributors to political campaigns, including the American Petroleum Institute, a trade group for oil companies. It argues in part that it would be “harsh and oppressive” to penalize companies today for greenhouse gas byproducts from past business activity that was legal, and that the superfund would hurt the nation’s economy.

“There is reason to believe that a court would view this legislation as unconstitutional,” the association stated in a memorandum of opposition to legislators. “The targeted companies’ actions were lawful during the relevant period, and the emissions were actually produced by others farther down the supply chain.”

The Business Council of New York State also opposes the superfund.

“This bill implies that the fossil fuel industry is solely responsible for climate change, and that the industry was the prime beneficiary of society’s widespread use of fossil fuels in housing, transportation, production feedstocks and for other purposes,” the council said in its formal opposition to legislators. “It is essential that the state’s implementation efforts are cost-effective, workable and avoid significant damage to the state’s economic climate.”

The climate change superfund is patterned after the federal superfund program that forces polluters of grounds and water supplies to pay for the cleanup, a program that was contested by companies in court for decades.

“This would be like that, but on steroids,” said Michael Gerrard, a professor at Columbia University’s Sabin Center for Climate Change Law.

Gerrard told Newsday that the bill could be challenged in court by questioning where in the supply chain — between energy producers and consumers — a fee should be assessed.

“There’s the question of whether a company can be held liable for lawfully producing fossil fuels that was not only permitted, but a matter of federal policy,” Gerrard said. He said no court has yet held a company financially liable for climate change, although several lawsuits are pending around the world.

The bill “is addressing a very important need — the money would go to adaptations, and we certainly need massive amounts of money for that purpose,” Gerrard said. “So, I certainly agree with that. But I think the fossil fuel industry would pull out all the stops in lobbying against it … they certainly would put up a massive fight.”

Krueger said she’s confident the bill would be affirmed in courts. The Senate and New York Public Interest Research Group said legal analysis has shown the novel approach is constitutional.

Meanwhile, superfund supporters say costs are mounting fast.

“The sticker shock to New Yorkers is going to be intense,” said Blair Horner, NYPIRG’s executive director. “The costs are already enormous and they will be staggering in a few short years.”

In April, the Long Island Regional Planning Council estimated the cost of higher taxes, fees, surcharges and other costs will total between $75 billion and $100 billion in Nassau and Suffolk counties. The cost includes new roads, bridges and other infrastructure, including elevated streets and fuel storage, protecting drinking water sources and treatment facilities, storm sewer and septic sewer systems to meet the climate change threat to neighborhoods and the environment. Several studies estimated sea level could rise 6 feet by the end of the century, wiping out or isolating parts of Long Island’s shores.

Last year, the U.S. Army Corps of Engineers reported the cost of protecting New York City alone could be $52 billion; the Rebuild by Design think tank estimated the cost of protecting the whole state from the ravages of climate change and to ward off some of its worst threats would be $55 billion; and a report in April by state Comptroller Thomas DiNapoli said local governments are already spending hundreds of millions of dollars a year on climate change action through local property taxes.

“Climate change poses significant threats to communities in New York,” DiNapoli said. “Local governments are shouldering much of the financial burden of climate change.”

By Michael Gormley

michael.gormley@newsday.com@GormleyAlbany

Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.