Energy News Beat
ENB Pub Note: The New York legislators and Gov Hochul are not looking at things in a “what is best for my constituents” type of model. This article points out that this will trigger a mass exodus, or in my opinion, speed up the exodus of businesses and tax-paying consumers leaving New York. We just have to watch what is happening in real-time in the EU, UK, Germany, and California to see that New York will be failing with the same green policies.
Albany’s rainmakers have found a new way to shower cash into the state’s dwindling coffers.
The day after Christmas, Gov. Hochul signed Bill S2129A into law, deputizing the Department of Environmental Conservation to fine fossil fuel companies billions of dollars for past greenhouse gas emissions.
The money will go into a Climate Change Slush — er, “superfund” that will be used, ostensibly, to prepare for and manage adverse weather events, like floods.
Sponsored by five Senate Democrats — Liz Krueger (28th Senate District) Joe Addabbo (15th), Neil Breslin (46th), Jabari Brisport (25th), and Samra Brouk (55th) — and following on the heels of a law Vermont passed last year, the Climate Change Superfund will retroactively levy a fee on firms that “engaged in the trade or business of extracting fossil fuel or refining crude oil” during a “covered period” from Jan. 1, 2000 to Dec. 31, 2018; that exceeded 1 billion metric tons of emissions; and that sold their products into the Empire State — big foreign producers like China National Petroleum Company and Rosneft needn’t worry.
The scheme sets a target of $75 billion to be collected from such firms over a 25-year period. From that (arbitrary) dollar starting point the scheme will portion a “cost recovery demand” to the big American energy players that constitute the “responsible parties” based on their historic emissions tallies. Where will the money go?
As Manhattan Institute legal fellow and cities director John Ketcham has pointed out, the fund will dole out cash to well-connected trade unions working on infrastructure projects, “disadvantaged” communities, and special interest groups under a system of “poorly defined preferentialism.”
The new scheme styles itself in the fashion of the US Environmental Protection Agency’s 1980 superfund law, but bears little resemblance to that law in reality.
The EPA superfund holds polluters liable for the direct environmental damage they have caused by releasing hazardous waste — harms that are specified, local, particular, and attributable.
The climate superfund idea simply slaps retroactive fees onto a group of companies that sold products the state no longer views favorably. While in aggregate global fossil fuel use has amplified the greenhouse effect, these companies have emitted just a sliver of the world’s total.
The state can’t credibly say Company X’s emissions caused damage Y, which is why it’s not troubling itself with this necessary specificity.
The scheme doesn’t even hold the decision-makers from the “covered period” accountable; it is today’s company shareholders who are on the hook.
In the end, these companies’ customers, the everyday users of fossil fuel products, will bear the cost of the superfund in the form of higher prices on heating bills, at the gas pump, and on all the myriad goods to which oil and natural gas contribute.
The Climate Change Superfund is a carbon tax shorn of economic logic. At least a carbon tax or a cap-and-trade system levied fair and square across an economy would give emitters an incentive to abate emissions.
That the state’s time-machine taxation targets only firms with a legal tie to New York sets an obvious and different incentive: to flee.
Fossil fuel companies, the alcoholic beverage industry, Big Tech, and anyone else in a line of business that might find itself afoul of the public mood now have reason to consider leaving the state.
The retroactive nature of the law will sow deep concern about the state’s commitment to the rule of law itself.
The practices in which so-called responsible parties engaged were entirely above board and they have not been found liable for any particular harm. In a very real sense, “cost recovery demand” is a euphemism for the expropriation of justly earned profit.
Though signed into law, what happens now with the superfund remains uncertain. On paper, Gov. Hochul is required to publish a report providing compliance guidance for companies before the end of April and companies are required to begin paying their bills next year. In practice, challenges in federal court are sure to draw out the process.
At issue is whether states like New York, Vermont, and Hawaii can impose liability on interstate and international greenhouse gas emissions or are preempted by the US Clean Air Act.
Regardless of what the courts say, though, New York has made it clear to businesses that the state isn’t worthy of trust. Meant to mitigate flood damage, the Climate Change Superfund will prompt an exodus.
Jordan McGillis (@jordanmcgillis) is the economics editor of City Journal.
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