Battle Royale Over California’s Clean Air Standards
It comes as no surprise that California has the strictest clean air legislation in the U.S., culminating in our bill “SB 32” that recently passed the state assembly and is not on its way to the senate. Yet, as one can readily imagine, the oil companies are working feverishly to eviscerate the terms of SB 32 and destroy our clean air standards.
As billionaire Tom Steyer (pictured above — the anti-matter of the Koch Brothers) says, Please share this petition with your friends and family. It’s time to send a message to Big Oil: We’re going to protect our kids, not oil company profits. Together, we can protect California’s clean air laws. Here’s the FAQ page from Steyer’s non-profit: NextGen Climate.
The dude really is amazing when you think about it:
Koch Brothers: Investing part of their combined $80 billion net worth so as to make even more money, at the cost of the health and safety of everyone on this planet.
Tom Steyer: Spending part of his money to achieve something important for all of us, a purpose that has nothing to do with his personal enrichment.
That’s quite a difference.
Craig,
SB 32 is clearly a matter for the voters of California. I don’t live in California, so I’m not affected by consequences. The wisdom or folly of the new legislation can only be decided by the people of California over the next decade.
The environment often suffers from well-intentioned, but ill-conceived/poorly monitored legislation. The US corn Ethanol industry is one example, while Soda Mountain, Ivanpah James River towers,etc, reveal how California’s wildlife and parks have been adversely by poorly planed alternate energy investments.
Tom Steyer is a very remarkable individual. To many, (not just those his political allies), he serves as an inspiration for good corporate responsibility and social conscience.
However, it must be remembered that Tom Steyer has been very politically active, and politically partisan, since his college days. To those who support his political views he’s a hero, but it must be also observed that he employs the same tactics as his opponents.
Steyer is one of the founders of the “Democracy Alliance” this organization funds hundreds of millions (even billions) into the campaigns of liberal candidates and causes.
There’s nothing wrong with that, except when leftist advocates cry “foul” when others fund conservative candidates.
Slightly off topic, but still relevant is a recent article published in Huffington Post by Professor Tristan Brown.
Professor Tristan Brown is an influential writer, academic and lawyer specializing in new and alternate energy technology and focuses on the intersection of energy policy and the economic feasibility of energy pathways.
Prof. Brown has advised Tom Steyer and other liberal minded individuals.
So it’s may surprise some to read his article relating to the wisdom of New York’s Attorney-General,Eric Schneiderman’s attempt to prosecute Exxon.
It’s a short article, so I’ve included it in full.
” Climate Inquisitors to Exxon: Do the Impossible
Summary
New York’s attorney general told the New York Times that his office’s investigation of Exxon Mobil is based on the firm’s recent predictions rather than its historical climate studies.
This new aspect of the investigation creates yet another worrying precedent for investors in both fossil and renewable energy firms by requiring management to accurately predict future policy.
This article demonstrates two of the major flaws with the investigation’s new course and the “stranded assets” theory on which it is based.
New York State attorney general Eric Schneiderman gave an eye-opening exclusive interview to the New York Times last week. In it he suggested that his office’s securities fraud investigation of Exxon Mobil (NYSE:XOM) is not based on a purported cover-up of the company’s own climate change research in the 1970s and 80s, as has been previously reported. Rather, Mr. Schneiderman believes that the company may have committed fraud by failing to properly account for the diminished value of assets that could be “stranded” in the future by climate change legislation:
“Early on, [Schneiderman’s] office demanded extensive emails, financial records and other documents from the oil company, leaving many observers with the impression that a deeper look into the company’s past was the focus of the investigation.
But in an extensive interview, Mr. Schneiderman said that his investigation was focused less on the distant past than on relatively recent statements by Exxon Mobil related to climate change and what it means for the company’s future.
In other words, the question for Mr. Schneiderman is less what Exxon knew, and more what it predicts.
For example, he said, the investigation is scrutinizing a 2014 report by Exxon Mobil stating that global efforts to address climate change would not mean that it had to leave enormous amounts of oil reserves in the ground as so-called ‘stranded assets’.”
In June I wrote about the dangers that the fraud allegations had for producers of both fossil and renewable energy. Specifically, I expressed concerns that expanding the definition of securities fraud to include a lack of reliance on environmental forecasting models could lead to a wave of politically-charged investigations given the magnitude and timing uncertainty that surround catastrophic climate change’s impacts. A number of legal experts at various universities and law firms criticized the investigation on similar grounds. Mr. Schneiderman’s comments are good news for energy investors, then, since his office’s investigation no longer threatens to set a precedent of politically-motivated climate change investigations in New York and other states.”
Yes, I see that’s where Schneiderman is going. I can’t comment, other than to suggest that he knows more about winning a criminal case than I do, so I trust his judgement as to how to proceed. Perhaps this is a little like prosecuting and convicting Al Capone on tax evasion charges. To me, it would be more fair, and thus more more satisfying, to go after XOM for suppressing the truth as it applies to the health and safety of billions of people, but again, I can’t make that call.
Marco I think you misunderstand the nature of the litigation and its implications. There are a few facts missing in the text above that makes the entire passage unclear. This is what is intended by “predictive” and “stranded assets:”
Oil companies stock valuation is based (loosely) upon their capitalization. So a company that had so much capital would be worth more than one that has less. Companies have to realistically report their capitalization. A misrepresentation is fraudulent and actionable.
Capitalization for an oil company includes not only the equipment but its oil reserves. Assuming those reserves are accurate and then adding in Exxon’s own research that connects carbon to climate change. Then we simply have to calculate the amount of carbon that would be produced from those reserves to determine the amount of global temperature change. Once this is in place we can calculate the effect of the temperature change.
What the attorney general is doing is assuming political action that will prevent the reserves from being turned into atmospheric carbon. These then become “stranded reserves” Once the reserves can’t be used then the statement of so many reserves as a part of capitalization is fraudulent.
So while it is not “because of the history,” it is based upon the historical documents as evidence of knowledge that should have changed how they reported reserves.
In a sense it is a bit like a tax evasion conviction for stolen money rather than a conviction for the thief.
@ Breath on the Wind,
I think you are misreading the legal opinion to suit your own political bias.
The oil reserves of oil companies are not “stranded assets”, any more than Exxon could be held accountable for assets which may be seized by Governments and nationalized or subject to natural disasters.
The idea that a company CEO or Board must be gifted with clairvoyance is absurd.
There was no “fraud’ or “misrepresentation” . For the last 40 years Exxon has been a hugely profitable corporation enriching not only it’s shareholders, but playing a vital role in the US economy.
The oil industry and Exxon are the single largest taxpayers in the US, the US superannuation and retirement industry is not funded by the government as in some nations, but in large part by oil dividends.
If 40 years ago Exxon had down-written, or sold cheaply its reserves because of a report about the possibility of the effects of climate change, then the CEO would not only have lost his job, but Exxon would have been sued by enraged shareholders.
How quickly you seem to forget that less than a decade ago, the main panic was a impending oil shortage !
Nor is Exxon’s reserves only of value to the US. Exxon is a multinational corporation, most Exxon reserves are held in foreign locations and subject to international valuation. Even if oil companies no longer manufactured gasoline or diesel, Oil reserves would still be immensely valuable for the 350,000 other essential products produced by the petro-chemical Industry.
The comparison with tax evasion is absurd, and has no merit in law. Eric Schneiderman is simply trying to misuse the power of a prosecutor for political purpose.
It’s the job of the legislature to enact legislation for political purpose not individual office holders.
Craig,
Hmmm.., as a judge would say in his address to a jury, “you must leave your personal prejudices and bias at the jury room door.”
The law and justice must apply to even those whom you dislike. If you just shrug your shoulders and say, “oh well, I trust politicians, prosecutors etc as long as they only pursue my political enemies “.
It only by protecting your enemies right to fair treatemnt, you insure your own. fail to do so and you may wake up one day and find yourself in the position of Pastor Niemöller when he observed ;
First they came for the Socialists, and I did not speak out,
because I was not a Socialist.
Then they came for the Trade Unionists, and I did not speak out,
because I was not a Trade Unionist.
Then they came for the Jews, and I did not speak out,
because I was not a Jew.
Then they came for me, but by then there was no one left to speak for me.
When even liberal famous, highly respected liberal lawyers condemn Eric Schneiderman’s politically motivated, grandstanding witch hunt. isn’t it time to reconsider where your support of such methods is leading?
There’s no chance of any legal victory, Schneiderman is simply abusing the power of his office for political gain. Surely, the damage done to the principles of justice are too great a price too pay for scoring off against people and corporations of whom you don’t approve ?
I know you feel that this is political grandstanding, etc. I actually can’t affirm that it isn’t. But when you say there’s no chance for a victory here, I guess we’ll see.
FWIW, I agree with you 100% that justice needs to be blind; I don’t think any decent person would say otherwise.
Craig,
It would appear that the California Legislature is in the one step forward, two back mode. (or maybe reality is dawning)
The California Air Resources Board (CARB) has been lobbying to legislate that 15% of new vehicles sold in the state would have to be emissions-free by 2025. The bill which has been withdrawn for procedural reasons received an unexpected amount of opposition, particularly from unions which have threatened to withdraw financial and voting support to Democrat candidates.
In 2012 California decreed that it would have 1.5 million zero-emissions vehicles on California’s roads by 2025. The highly publicized Multi-State ZEV Action Plan was announced promising a minimum of 3.3 million zero-emissions vehicles on road by 2022.
The program in California began unraveling with the failure of zero-emissions credit sales.
Although the scheme initially netted Tesla $57 million the actual number of EV’s, and California’s expensive subsidies, Tax credits and other incentives have certainly helped California to have almost 50% of the US market for plug-in vehicles, still fewer than one percent of California’s registered vehicles are of the plug-in variety (even less are EV).
There is still six years to go, but Natural Resources Defense Council and other environmental groups concede that California could reach its target by 2025 let alone 2012.
The problem is not one of inadequate incentives, or government action. The problem is the immaturity of alternative zero emission energy storage technology.
California or any other legislature can assist development, and help adoption, but once the level of support becomes to onerous and impractical, the political process kicks in and Joe Public refuse to take part in social engineering.
Laudable as the intention is of California’s legislators, push the public too far, and the public will provide a backlash that may sweep the baby out with the dirty bathwater.
This would be unfortunate since California has proved to be a very motivated model for the value of government incentives.