Marlo Lewis

Summary: Thirty-two House Democrats this week sent a letter to the CEOs of Chevron, ExxonMobil, ConocoPhillips, BP, Shell, and Peabody Energy posing 15 questions about the companies’ (alleged) funding of a “massive campaign of [climate] denial and disinformation.” The gist of the letter, which presumes guilt and demands confessions, is captured by the old joke question: “When did you stop beating your wife?”

In a letter sent this week to the CEOs of Chevron, BP, ExxonMobil, Shell, ConocoPhillips, and Peabody Energy, Reps. Ted Lieu (D-Calif.), Peter Welch (D-Vt.), and 30 other House Democrats ask numerous questions about the companies’ (alleged) role in funding a “massive campaign of denial and disinformation” to hide the terrible “truth” about global warming from policymakers and the public.

I reproduce the questions below and provide model answers the companies are welcome to use or adapt at their pleasure.

Q1: When did your company first become aware that using fossil fuels could result in climate change and warming of the planet?

A: The question assumes the idea of anthropogenic global warming is of recent vintage. In fact, the potential of carbon dioxide (CO2) emissions to warm the Earth was first estimated by Swedish scientist Svante Arrhenius in 1896. English engineer Guy Callendar made more observationally-constrained estimates in his 1938 study, “The Artificial Production of Carbon Dioxide and its Influence on Temperature.” Unlike many scientists (and non-scientists) today, Callendar did not assume anthropogenic climate change is inherently dangerous:

In conclusion it may be said that the combustion of fossil fuel, whether it be peat from the surface or oil from 10,000 feet below, is likely to prove beneficial to mankind in several ways, besides the provision of heat and power. For instance the above mentioned small increases of mean temperature would be important at the northern margin of cultivation, and the growth of favourably situated plants is directly proportional to the carbon dioxide pressure (Brown and Escombe, 1905): In any case the return of the deadly glaciers should be delayed indefinitely.

Since your letter refers to recent journalistic exposés of “what Exxon knew” about climate change, we assume you’re asking what our scientists knew in the 1970s and 1980s. Our answer (h/t David Middleton) is that some of our scientists knew then what NASA scientist James Hansen knew in 1988 — that CO2 emissions would cause two-to-three times more warming than actually occurred.

Figure explanation. Red: Hansen’s business-as-usual (no climate policy) scenario. Orange: Hansen’s emission freeze at 1980s level scenario. Yellow: Hansen’s drastic emission-reduction scenario. Light blue: Remote Sensing System (RSS) satellite temperature record. Dark blue: University of Alabama in Huntsville (UAH) satellite temperature record. Although emissions increased as much as in Hansen’s BAU scenario, observed temperatures are lower than in Hansen’s drastic emission-reduction scenario. Source: John Christy

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U.S. Climate negotiator Todd Stern has filed a Declaration with the D.C. Circuit Court of Appeals on behalf of EPA in State of West Virginia et al. v. U.S. Environmental Protection Agency. Twenty-seven States and three major industry groups have petitioned the Court to stay (suspend) the Clean Power Plan (CPP) while the rule is litigated on the merits. I discussed the coal industry’s petition here.

Petitioners argue the CPP will do irreversible harm to coal producers and coal state economies even if the Court later overturns the rule as unlawful. To implement the CPP, State legislatures and public utility commissions will have to start revising their electricity laws and regulations immediately, and the CPP has already begun to drive capital out of the coal industry. In contrast, delaying the CPP will not harm public health or welfare since the rule’s potential climatological impacts even in 2100 will be too small to detect, and States that want to cut carbon dioxide (CO2) emissions from their power sectors will still be free to do so.

Stern argues that because the CPP constitutes the biggest piece of the U.S. emission-reduction pledge (Intended Nationally Determined Contribution, or INDC) in the ongoing climate treaty negotiations in Paris, granting the stay could undermine U.S. climate leadership and, thus, other countries’ climate “ambitions.” Putting the CPP on ice could weaken the trust relationships on which the last best hope of earth allegedly depends:

UNFCCC [UN Framework Convention on Climate Change] Parties have previously noted the need for urgent action to hold the increase in the global average temperature below 2 degrees Celsius above pre-industrial levels, in order to lessen the impacts of climate change. . . .Based on my experience as the lead U.S. climate negotiator, I believe that the ambition and implementation of many other countries’ current and future emission control actions depends significantly on the understanding by their leaders of the seriousness of the U.S. commitment to address emissions. For many countries, willingness to take action depends on collective trust that the major emitters are taking action. If a stay of the Clean Power Plan is granted, there is a real threat that some other countries, including major emitters, might reduce the intensity or pace of their actions or even fail to achieve their commitments.

Melodramatic twaddle. As Manhattan Institute scholar Oren Cass explains in recent testimony, under COP21, nations’ INDCs are unverifiable and unenforceable, and the major developing countries — China, India, and Brazil — have essentially promised to achieve emission reductions that are projected to occur anyway. All INDCs combined would theoretically avert only 0.1ºC-0.2ºC of warming by 2100.

Besides, what the overwhelming majority of delegates at COP21 care about is not the Clean Power Plan but getting commitments from the United States and other industrialized nations to fork over $100 billion to $450 billion annually in foreign aid (renamed “climate finance”).

But it’s the legal theory implicit in Stern’s Declaration that the judges should find most interesting.

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Overview: EPA for the first time has set an overall Renewable Fuel Standard (RFS) blending target below the statutory target. The biofuel lobby threatens to sue. If they win and courts rule EPA may not consider market constraints (a.k.a. the blend wall) when setting RFS blending requirements, harsh consequences could ensue for consumers, the economy, and, ironically, biofuel manufacturers themselves.

EPA yesterday announced final volume obligations (RVOs) under the Renewable Fuel Standard (RFS) program for the years 2014, 2015 and 2016, and final volume requirements for biomass-based diesel for 2014 to 2017. EPA was two years late setting RVOs for 2014 and one year late setting RVOs for 2015.

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Overview: At the COP21 conference in Paris, President Obama claimed wind and solar are “finally cheaper” than fossil-fueled electricity in “parts” of America. He offered no evidence for that boast. Central station solar generation is clearly not cheaper on a levelized cost basis. Wind is not cheaper either once transmission, intermittency, fossil-fuel backup, and “broken window” costs are taken into account.

Addressing the First Session of the COP21 Paris climate conference today, President Obama took credit for helping create markets where wind and solar power “are finally cheaper” than coal and gas.

Over the last seven years, we’ve made ambitious investments in clean energy, and ambitious reductions in our carbon emissions.  We’ve multiplied wind power threefold, and solar power more than twentyfold, helping create parts of America where these clean power sources are finally cheaper than dirtier, conventional power.

Implication: There’s no risk of harm in regulating the world beyond coal- and gas-fired electricity, because renewables are already cheaper in “parts of America,” and in time they’ll be cheaper in most markets — maybe everywhere. But is it even true for “parts” of America today?

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Severe weather caused 333 fatalities in the United States in 2014, according to the National Weather Service (NWS). More evidence climate change is “worse than we thought”? Quite the contrary, the 2014 severe-weather death toll was the lowest in ten years:

For the third consecutive year, weather-related deaths dropped significantly. In 2014 there were 333 weather-related deaths, down from 446 in 2013 and 528 in 2012. The 2014 number is below the 10-year average (2005-2014) of 638 deaths.

But wait, wasn’t 2014 the warmest year on record? Maybe, maybe not. There was a 48% probability 2014 was the warmest year in NOAA’s land and sea-surface records, and a 38% probability in NASA’s. However, 2014 was the 3rd warmest and 6th warmest year, respectively, in the University of Alabama Huntsville (UAH) and Remote Sensing Systems (RSS) satellite records.

In any event, the relative warmth of 2014 had no discernible impact on U.S. weather-related fatalities. Indeed, with 57 victims, rip currents at beaches were the leading weather-related cause of death in 2014. Global warming connection: zero. As explained on HowStuffWorks.Com:

A rip current is a narrow, powerful current of water running perpendicular to the beach, out into the ocean. These currents may extend 200 to 2,500 feet (61 to 762 m) lengthwise, but they are typically less than 30 feet (9 m) wide. Rip currents can move at a pretty good speed, often 5 miles per hour (8 kph) or faster. . . . Rip currents are caused by the shape of the shoreline itself, and they may be sudden and unexpected.

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New reports by the Center for Regulatory Solutions (CRS), the research arm of the Small Business & Entrepreneurship Council (SBEC), detail the devastating impacts of the federal Renewable Fuel Standard (RFS) program on California and Illinois. The reports could not be more timely. EPA is expected next week to publish its final rule establishing biofuel quota (known as Renewable Volume Obligations or RVOs) for 2015 and 2016.

According to Fields of Deception: How the Corn Ethanol Mandate Harmed the Prairie State (released today), the RFS imposed roughly $5 billion in higher fuel costs on the people of Illinois between 2005 and 2014, with another nearly $17 billion to come through 2024. The ripple effects of those costs will depress labor income by almost $7 billion over 20 years, depress labor demand by more than 7,000 jobs annually, and impose hundreds of millions of dollars in higher feed costs on Illinois dairy and poultry farmers. Due to all those RFS impacts, Illinois will lose $12 billion in GDP growth by 2024.

“Contrary to conventional wisdom, our report shows that Illinois, an early supporter of ethanol, has lost thousands of jobs and incurred enormous economic costs as a result of the ethanol mandate,” said SBEC President Karen Kerrigan.

According to The Big Corn Sellout: How National Politics and Ethanol Mandates Are Hurting California’s Economy (released 11/17/2015), the RFS has imposed $13.1 billion in higher fuel costs on Golden State consumers since 2005, with another $28.8 billion to come over the next 10 years. The vast majority of that $42 billion “fuel tax” is a wealth transfer to out-of-state ethanol producers. The ripple effects of those costs will depress labor income by almost $18 billion over 20 years, depress labor demand by more than 17,000 jobs every year, and impose hundreds of millions of dollars in higher feed costs on California’s dairy and poultry farmers. Due to all those RFS impacts, California will lose $31.6 billion in GDP growth by 2024.

Both reports detail many other adverse economic and environmental effects of the RFS. Key findings follow.

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On Tuesday, the Senate passed S.J. Res. 23 and 24, Congressional Review Act (CRA) resolutions to overturn EPA’s so-called Carbon Pollution Standards rule and Clean Power Plan rule. CRA resolutions cannot be filibustered, so require only simple majorities to pass. Each resolution passed 52-46.

West Virginia Senator Joe Manchin is the chief Democrat co-sponsor of resolution 23. His floor statement, which summarizes a letter he recently sent to EPA Administrator Gina McCarthy, provides new information showing that carbon capture and storage (CCS) technology is still not “adequately demonstrated” as commercially viable — hence that the “Carbon Pollution Standards” rule is unlawful.

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As discussed in Part 1 of this series, New York Attorney General Eric Schneiderman has begun a Martin Act investigation of Exxon Mobil. He wants to prove Exxon Mobil defrauded its shareholders by lying about climate change and the associated political risks to the oil industry. At a minimum, he wants to cow other companies into preaching “consensus” climatology in their annual reports.

Schneiderman’s thesis — that Exxon Mobil concealed from investors the financial risks created by the “Keep It In The Ground” global warming movement — is loony. Nonetheless, he poses a real threat to the shareholders he pretends to be protecting. That’s because the Martin Act sets a very low bar for establishing guilt and places no limit on economic losses an AG may impose via damage awards and fines.

To win the case, Schneiderman does not have prove that Exxon Mobil intended to defraud anyone. Nor does he have to show that any shareholder was actually injured, that any shareholder relied on the company’s “misrepresentation” when purchasing stock, or that the company made false statements. He just has to persuade a jury that Exxon Mobil failed to present “material” facts — such as, presumably, the gloom-and-doom assessments of consensus climatology.

Schneiderman’s probe of Exxon Mobil is conveniently timed to feed off the green campaign to indict fossil-fuel industry executives under the Racketeer Influenced Corrupt Organizations (RICO) Act, and recent media reports claiming Exxon has known since the 1970s how bad its products are for the global climate system.

But the probe also appears to be part of a long-term strategy. Earlier this week, Schneiderman announced he had reached a Settlement Agreement with coal giant Peabody Energy — the culmination of a three-year Martin Act inquiry. Maybe he chose to go after the smaller opponent first to establish climate-related precedents for hunting bigger prey.

Let’s review the Settlement Agreement (SA) and consider how Peabody should respond to it.

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New York attorney general Eric Schneiderman could severely depress Exxon Mobil stock values while piously claiming to protect shareholders from fraud. Welcome to the Orwellian world of climate-policy sanctimony.

Schneiderman “has begun an investigation of Exxon Mobil to determine whether the company lied to the public about the risks of climate change or to investors about how such risks might hurt the oil business,” the New York Times reported last week. According to the Times, Schneiderman is investigating the company under the State’s 1921 Martin Act, the envy of regulatory bullies throughout the land. The statute gives New York’s AG “extraordinary powers and discretion” that “exceed those given any regulatory in any other U.S. State” (Wiki). As one commentator describes it:

The purpose of the Martin Act is to arm the New York attorney general to combat financial fraud. It empowers him to subpoena any document he wants from anyone doing business in the state; to keep an investigation totally secret or to make it totally public; and to choose between filing civil or criminal charges whenever he wants. People called in for questioning during Martin Act investigations do not have a right to counsel or a right against self-incrimination. Combined, the act’s powers exceed those given any regulator in any other state.

Now for the scary part: To win a case, the AG doesn’t have to prove that the defendant intended to defraud anyone, that a transaction took place, or that anyone actually was defrauded. Plus, when the prosecution is over, trial lawyers can gain access to the hoards of documents that the act has churned up and use them as the basis for civil suits. “It’s the legal equivalent of a weapon of mass destruction,” said a lawyer at a major New York firm who represents defendants in Martin Act cases (and who didn’t want his name used because he feared retribution by [former AG Eliot] Spitzer). “The damage that can be done under the statute is unlimited.”

According to Deschert LLP, the Martin Act sets a low bar for establishing guilt. To convict a company of fraud, the AG does not have to show evidence of scienter — an intent to mislead. All he has to show is that the company misrepresented a “material fact” about its securities, and the Act defines “misrepresentation” broadly to include omissions of material facts as well as affirmations of false facts. By that logic, if Exxon Mobil’s public statements on climate-change or oil-market projections omit worst-case scenarios the company does not regard as credible, then it is guilty of defrauding shareholders.

Apparently, Schneiderman wants to build a case that Exxon Mobil misrepresented the seriousness of climate change risks, hiding from investors the financial risks the company will face when science triumphs over denial and governments act to curb the production and use of fossil fuels. It’s a preposterous green fairy tale. [click to continue…]