Climate activism discredits itself by relying on multiple variations of contorted logic. Its standard argument leapfrogs facts about present conditions, asserts worst-case conclusions, and proclaims the need for immediate remedies of intolerable cost. For example, activists first declare that a carbon-free energy economy is imminent then demand policies aimed at realizing the presumption, ignoring intermediate concerns such as feasibility and cost.
This approach continues to animate government, academia, and the media. But it increasingly repels the people who buy vehicle fuel and electric power. The activist political agenda, therefore, is stalling.
Beyond the fringe
New York pushes climate politics beyond the fringe with a legal ploy asserting an activist conclusion: that oil and gas companies should impair assets now to reflect how climate-change policies will devalue holdings in the future. This, of course, serves extremists’ desire to foreclose production of oil and gas.
In a civil lawsuit against ExxonMobil, New York Atty. Gen. Barbara D. Underwood alleges shareholder fraud in differences between the “proxy cost of carbon” the company postulates for long-range projections of energy demand and the costs it assumes for climate regulation in specific project assessments. ExxonMobil addressed this suspicion when former Atty. Gen. Eric T. Schneiderman conjured it earlier in an investigation he began nearly 3 years ago. In a June 2017 court filing, the company pointed out that it uses a proxy cost of carbon to assess “potential macro impacts” on demand for its products “of future aggregate greenhouse gas (GHG) policy” where future polices are unclear or might involve “a significantly broad suite of policy initiatives.” For capital projects in markets where policy directions and targets are clearer, it accounts for “current and reasonably anticipated GHG regulations” instead of applying the proxy cost. The combined approach dampens the company’s expectations for overall energy demand over time and moderates pricing assumptions in ExxonMobil’s investment decisions, the filing said.
Somehow, Underwood, who became AG when Schneiderman resigned in a sex-abuse scandal, still suspects fraud. The legal merit of what ExxonMobil called the AG’s “baseless allegations” will be determined in court. Of concern to the oil and gas industry at large is how the backward logic of climate activism twists itself into jurisprudence and obstructs work.
Arguing that ExxonMobil failed to act in accordance with its representations about carbon costs, the AG alleges the company “did much less than it claimed, deceiving investors as to the company’s true financial exposure to increasing regulations and policies adopted to mitigate the adverse effects of climate change.” The governing assertion here is that “increasing” climate regulation will force oil and gas companies to shrink. That’s what activists hope to achieve with their campaign to frighten investors about stranded oil and gas reserves and to thereby limit capital available for drilling and production. They want to restrict investment before the supposed reason to do so—increasing climate regulation—is in place. Underwood’s lawsuit contributes tactically to this insidious strategy.
Yet what assurance can there be that climate regulation will increase nearly to the extent activists hope? What if regulation undershoots activist ambition and lockstep media prejudgment?
Present evidence suggests activists will be disappointed and their media fans disproven. In many jurisdictions, notably in Europe, aggressive climate policies are easing as energy consumers feel the costs and respond politically. Several provincial governments in Canada are in various phases of retreat from hardship imposed to mitigate climate change. Last month, Canadian Prime Minister Justin Trudeau announced federal taxation of carbon dioxide emissions in four provinces not meeting his standards for climate remediation. In elections due by next October, Canadians will show whether his cash rebates sufficiently relieve the pain.
Political doom
Preemptive climate demands, dismissive of milder approaches and heedless of cost, doom themselves politically. Indeed, they increase chances that ExxonMobil someday will be shown to have assumed too much cost for climate regulation.
If that happens, an AG grandstanding for activists probably will sue the company for fraud.