New York Now Says Exxon Was Too Alarmist About Global Warming Risks
New York Attorney General Eric Schneiderman’s investigation into oil giant ExxonMobil has taken a surprising turn, according to new legal filings.
Schneiderman’s case against Exxon was purportedly inspired by allegations that Exxon downplayed the severity of global warming to the public and investors, but now the AG’s investigation seems to claim the oil giant was too alarmist about global warming.
Exxon presented its investors with a “proxy cost” for government taxes or regulations carbon dioxide emissions that got as high as $80 per ton in 2040 in some scenarios. Schneiderman now says documents show Exxon, specifically under now Secretary of State Rex Tillerson, used an internal carbon price proxy that was lower than they presented to public investors.
“Exxon told its investors it used one set of proxy-cost figures, when in fact the company’s internal policies set forth a second set of lower proxy costs (and therefore a less risk-sensitive version) for use in its internal business planning,” Schneiderman claimed in a Friday court filing, referring to documents dated from 2010 to 2014.
Basically, Exxon was too alarmist when presenting shareholders information about the risks global warming posed to its operations.
“For example, with regard to Exxon’s oil sands investments in Alberta, Canada, documents show that instead of applying its publicly-stated proxy cost that rises to an endpoint as high as $80/ton in 2040, Exxon applied the much lower [greenhouse gas] taxes then in place in Alberta and held those figures flat indefinitely into the future,” Schneiderman wrote in his filing.
“This substitution resulted in the alleged proxy cost of GHGs being reduced to a small fraction of what Exxon told investors would be applicable,” Schneiderman wrote.
“Exxon’s use of the lower GHG taxes instead of its publicly-stated proxy costs is particularly telling because Exxon’s own documents suggest that if Exxon had applied the proxy cost it promised to shareholders, at least one substantial oil sands project may have projected a financial loss, rather than a profit, over the course of the project’s original timeline,” the AG wrote in his legal filing.
Schneiderman launched his investigation into Exxon in November 2015, sparked by left-wing journalists at Inside Climate News and Columbia University who reported the oil giant knew the risks of global warming, but funded conservative groups that “deny” global warming.
Schneiderman’s investigation into Exxon swelled throughout 2016, growing to include AGs in Massachusetts and the U.S. Virgin Islands. AGs subpoenaed Exxon for communications with conservative groups and scientists skeptical of man-made global warming.
Schneiderman worked with environmental activists behind the scenes on strategies to go after Exxon. There’s also evidence he had colluded with activists for months before he began his investigation into Exxon.
The whole thrust of the AGs’ investigations into Exxon was to highlight their work with conservative activists to fight federal climate regulations and publicly cast doubt on global warming.
NPR reported in late 2015 the “goal is to examine whether back in the 1970s, Exxon Mobil funded groups to undermine scientific studies involving climate change” and to find if the “oil giant properly informed its investors of the profit risks that might arise as countries cut back on fossil fuels.”
But Exxon and others pushed back. The libertarian think tank, the Competitive Enterprise Institute intervened, and got Virgin Islands AG Claude Walker to drop his investigation. Exxon filed suit in Texas to block the investigation.
Schneiderman changed course in 2016. The New York Times reported he 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 fact, that 2016 article mentioned an Exxon report that didn’t seem to line up with more alarmist predictions. Exxon put out a 2014 report “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.'”
NYT noted that “some scientists predict will have to leave much of its oil in the ground, which means the company’s valuation of its reserves is off by a significant amount,” which Schneiderman seemed to agree with.
“If, collectively, the fossil fuel companies are overstating their assets by trillions of dollars, that’s a big deal,” Schneiderman said.
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