Vermont Will Charge Big Oil for Past Climate Change. Should Massachusetts Follow?
BU’s Robert Kaufmann thinks this approach will not be effective in curbing climate change
Floodwaters, attributed partly to climate change, overran parts of Vermont last year in a disaster that helped prod state lawmakers to penalize fossil fuel companies. Photo by AP/Charles Krupa
Vermont Will Charge Big Oil for Past Climate Change. Should Massachusetts Follow?
BU’s Robert Kaufmann thinks this approach will not be effective in curbing climate change
As Vermont goes, so goes Massachusetts?
In May, our neighbor to the north became the first state in the nation to require Big Oil—extractors, refiners, and producers—to pay for past damages that had contributed to climate change, damages they were responsible for. (Massachusetts is among several other states weighing similar laws.) Rain-induced flooding devastated Vermont last year, and again last week—lethally—when remnants of Tropical Storm Beryl swept at least two people to their deaths.
The 2023 floods came one and a half years after a study warned that the state was “becoming warmer and wetter due to climate change.”
Under the new law, any company that pumped more than one billion metric tons of greenhouse emissions globally between 1995 and this year will be assessed a payment according to its respective share of emissions. (Companies report such data to the federal government.) The money will pay for protective and adaptive measures for climate change in Vermont. Republican Governor Phil Scott allowed the bill to become law without his signature, warning that while he supported the goal, his state lacked the resources for likely legal challenges and should have partnered with bigger, richer states.
The American Petroleum Institute objects to penalties for an activity that was, and remains, perfectly legal. However, says Madison Condon, an associate professor at Boston University’s School of Law, “I do think laws of this type have a substantial chance of being upheld.” Condon teaches environmental law and a seminar on climate risk and financial institutions.
“There is ample evidence that fossil [fuel] corporations knew the dangers of burning fossil fuels, and for many decades worked to cover up this information, so I don’t feel that this is a strong argument on their part,” Condon says. “The original federal Superfund act that makes chemical companies pay to clean up toxic waste also applies retroactively…and that has been repeatedly upheld to be legal.” And any corporate challenge to tying specific events, like Vermont’s floods, to climate change runs into the fact that this “attribution science has become increasingly sophisticated,” she says.
But from an environmental perspective, even a supporter of the law noted in the New York Times that it “does not restrict future production by fossil fuel companies. They can still drill to their corporate hearts’ content and pay nothing more to Vermont.”
The Massachusetts bill, which wasn’t passed, but will be refiled next year, is also retroactive. “We specifically chose that avenue because it would not impact energy prices going forward,” says the bill’s sponsor, state Rep. Steve Owens (D-Cambridge/Watertown). “Our intent was to make sure that those responsible for the carbon pollution that is currently wreaking havoc on our climate are contributing to the cost of the cleanup and the resiliency measures.”
Robert Kaufmann, a professor of earth and environment at the College of Arts & Sciences and an expert on climate change and world oil markets, discussed these state efforts with BU Today.
Q&A
with Robert Kaufmann
BU Today: How effective will Vermont’s law be and by extension, perhaps the Massachusetts one? Will it help mitigate climate change?
Kaufmann: If you can pollute going forward, it seems—not perverse, but there’s no incentive structure here. You want them to pay for those [past] damages, then you should probably sue them. But the whole idea of a carbon tax is to incentivize producers and consumers away from fossil fuels towards clean energy. If the fee ends now and doesn’t go forward, there’s no incentive, which doesn’t seem like good policy to me.
It doesn’t strike me as serving any purpose other than to get some money out of these companies. Vermont may need money to pay for that [flood] damage. But going forward, you could raise the money based upon current emissions, not past emissions. If you’re going to tax, the most logical way to do this is just impose a tax on the price of motor gasoline. And then everybody who buys motor gasoline in the state of Vermont has to pay the tax. Ultimately, you want to send a signal to the market that you don’t want to buy gasoline, you want to put electricity in your car, or you don’t want to buy heating oil, you want to run a heat pump system or something like that.
BU Today: Do you think that the Vermont law and the Massachusetts proposal will affect the price of gas or home heating oil?
Kaufmann: It’s unlikely. You’re selling into a world market. So you can’t say, “Oh, I need to recoup this money, I’m going to charge you more for my oil or for my gasoline.” Other companies are not going to charge that [if] they’re not paying the tax. Who’s going to buy your more expensive [products]? You can’t just arbitrarily raise prices, especially if you’re a small player.
If you can pollute going forward, it seems—not perverse, but there’s no incentive structure here.
BU Today: States are saying, if we wait for the federal government to address this, the planet will burn. What about states taking this on individually, separately, piecemeal?
You will burn if you wait for the federal government.
Several years ago, I bought a Chevy Bolt. And I got rebates from the federal government, but I also got rebates from the state. So [incentives] can be quite effective. And, you’re insulating the economy from wild swings in motor gasoline prices, reducing pollution—never mind just greenhouse gas pollution, but the air itself in cities is cleaner—if [carbon taxes] are done right. It produces more than just lower carbon emissions.
BU Today: The American Petroleum Institute calls the Vermont law unfair because it retroactively assesses liability on what was—and continues to be—a legal activity. Do they have a point?
It strikes me as not fair, because they were just following the law. If you want to sue them and say, your product caused these damages, that’s a fair thing; then they have an opportunity to say, oh, no, it didn’t, and a jury can decide.
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