Push to Make Big Oil Pay for Climate Damage Losing Steam in California Legislature

Only weeks ago, new science had buoyed state legislation to calculate the costs of climate change in California and force fossil fuel companies to pay for it. A study in Nature published last month took the reported emissions of major oil companies and modeled their effects on temperatures, finding their pollution led to $14 trillion in worldwide economic losses due to extreme heat alone. 

Yet in Sacramento, the science of making “polluters pay” is losing momentum in an unfavorable political environment. Rather than risk rejection from their colleagues, the lawmakers who backed the Climate Superfund Act — Assemblymember Dawn Addis (D-San Luis Obispo) and state Sen. Caroline Menjivar (D-San Fernando Valley) — postponed hearings for their bills in hopes of a better reception later this summer.
 

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Since 2013, when a researcher first compiled company emissions data, scientists, regulators and campaigners have tried to tie individual corporations to extreme weather events. At the same time, improved ways of computing global climate models have yielded more refined data on worsening heat and flooding at the local level. Combining the methods offers a chance to charge companies money for climate damage in a specific region. 

But the mood for such a far-reaching approach has soured in the California Legislature, after lawmakers and Gov. Gavin Newsom spent years challenging oil companies by imposing rules on gasoline supplies to prevent price hikes at the pump. Advocates of the climate superfund are now reframing their advocacy, focusing on its potential to serve as a “common-sense revenue generator” amid the state’s projected budget shortfall. 

Blame it on anxiety over the costs of living — the focus of the oil industry’s public relations campaign since last year. That, in addition to threats from President Donald Trump to eradicate state emissions policies, have left lawmakers reluctant to take on the industry. One high-ranking legislative staffer, who asked not to be identified to protect their job, told Capital & Main that the “rancid” political vibe in Sacramento is hampering all things climate oriented.

In January, the urban wildfires in Los Angeles caused billions in property losses, according on an estimate by the county’s Economic Development Corporation. Researchers at UCLA found unusually warm temperatures that dried out foothills were “the clearest way” climate change may have intensified the blazes. 

The fires inspired legislation that would have allowed victims and insurers to seek reimbursement from oil companies. That idea appealed to Ken Adams, an Altadena resident whose house burned to the ground on Jan. 7. 

“These big companies and executives, what are you going to do with all the money you make?” Adams said in an interview with Capital & Main. But lawmakers rejected that bill, proposed by state Sen. Scott Wiener (D-San Francisco), in committee, citing the potential loss of oil jobs and a rise in gasoline prices. So three bills meant to make oil companies pay for the damage they helped cause fizzled just months after what were likely the costliest climate-influenced fires in state history. 

While the states of New York and Vermont have passed climate superfund laws, California is the first major oil-producing state to consider it. On average, there were 38,558 annual jobs as of September 2022 in the oil and gas industry, according to the latest available data from the U.S. Bureau of Labor Statistics. Almost a quarter of those jobs were at oil refineries. 

At an April 21 Assembly hearing for one of the climate superfund bills, dozens of representatives for trade unions affiliated with the California Building Trades Council lined up to voice opposition. The unions hold project labor agreements to maintain equipment at the refineries. Lawmakers who once championed tougher climate rules now discussed balancing other concerns.

Assemblymember Al Muratsuchi (D-Torrance), whose 2022 bill to accelerate California’s emissions cuts became law, noted that the impending closure of the Phillips 66 refinery in his South Bay district could impact both workers and drivers. A week before the hearing, Valero announced that it would shutter or “restructure” its refinery in the Bay Area city of Benicia, raising similar fears.

“We have switched from hypotheticals to, you know, what’s happening in real time,” Muratsuchi said at the hearing. He did not respond to messages from Capital & Main. 

Supporters argue that fossil fuel companies have externalized painful costs onto society while profiting by tens of billions of dollars, including $129 billion in 2022 for Exxon, Shell, Marathon, Valero and Phillips 66 — each of them hitting record profits that year. “The public is exponentially paying for climate damage, and we have to make a change,” Assemblymember Addis told Capital & Main a week before postponing the hearing for her bill. 

Earlier this year, Vermont said it would issue a contract to assess past and future damage from heat and flooding — with other effects to be determined “in a stepwise fashion.” At the same time, the state will undertake a study of global emitters using a dataset produced by the organization Carbon Majors, which says its collection of records for 180 major oil, gas, coal and cement corporations is the only one to trace companies’ greenhouse gases to total worldwide emissions. 

A U.S. Chamber of Commerce and American Petroleum Institute lawsuit filed against Vermont in December called Carbon Majors’ data and methods “flawed” and claimed it is impossible to attribute effects from climate change to a specific source of emissions. While “the climate is changing,” the plaintiffs’ lawyers wrote, the fault lies with consumers who use fossil fuels. They made the same claims in an identical suit filed against New York. On May 1, the U.S. Justice Department also sued Vermont and New York, alleging overreach. 

Christopher Callahan, a postdoctoral researcher at Stanford’s Department of Earth System Science who co-authored the Nature study, said the Chamber of Commerce-American Petroleum Institute lawsuits offer an “inaccurate read of the science.” 

It is easier to link heat to economic slowdowns, he explained, because its relationship to climate change is clearer and data exists showing tropical nations experiencing larger drops in gross domestic product during pronounced heat waves relative to temperate regions. Putting dollar amounts on other forms of damage, like wildfires and flooding, and tying it to the global emissions of individual companies is less straightforward. But “the science is developing quickly,” Callahan added.

Various sources try to estimate the disparate costs of climate change for California. 

The Los Angeles Economic Development Corporation estimated the broader costs of the Los Angeles fires, including economic impacts, deaths and health care, add up to a quarter trillion dollars. Under the Superfund Act, regulators could decide whether to account for this expansive figure or one tailored more specifically to property losses ranging from $28 billion to $53.8 billion. 

And they would need to separate the influence of climate change from other factors, such as land mismanagement. One study, from World Weather Attribution, modeled the occurrence of fire weather in Southern California by inputting historical rain, humidity, wind and temperature data with and without the influence of climate change. The scientists concluded with “high confidence” that human-induced warming from burning fossil fuels made the fire 35% more likely and 6% more intense. 

Other effects will require regulators to be similarly discerning. A legislative analysis for the Climate Superfund Act noted that some future drought scenarios raise the potential costs of providing water to Western states by $750 billion. Storms and rising seas could crush $119 billion in property values, though that figure is from 2010. The legislation tasks the California Environmental Protection Agency with generating fresh numbers. Even then, there are myriad impacts to physical and mental health, food security and other suffering “impossible to quantify.” 

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