Is New York's new $75 billion climate law — the legal, economic and scientific questions — worth it?

On December 26, 2024, New York State Governor Kathy Hochul signed the Climate Change Superfund Act into law. The legislation aims to raise $75 billion from fossil fuel companies over 25 years to fund climate-related infrastructure and adaptation projects. The law raises serious questions about its legal, economic and scientific foundations as a mechanism to hold the fossil fuel industry accountable.

Framework and purpose of the Act

The Climate Change Superfund Act requires fossil fuel companies deemed to have emitted more than 1 billion tons of greenhouse gases between 2000 and 2018 to contribute to the state fund. The fund will allocate $3 billion annually for projects including coastal restoration, stormwater drainage improvements and infrastructure upgrades in areas labeled as “disadvantaged communities.”

The law is modeled on the state and federal toxic waste Superfund programs but operates under strict liability. Companies must pay based on their historical emissions, regardless of whether their actions were within the law at the time or whether their products were essential to modern life.

legal and economic issues

Federal priorities and constitutional issues

The fossil fuel industry has expressed interest in challenging the law, arguing that it conflicts with federal regulations governing energy and environmental policy. The federal priority principle enshrined in the U.S. Constitution may become a major obstacle for states. Furthermore, the retrospective application of liability raises due process issues. The holding company's financial responsibility for activities that were legal at the time represented an unprecedented legal approach.

economic impact

The financial burden on fossil fuel companies will almost certainly lead to higher costs for energy and other commodities as the companies pass the costs on to consumers. New York residents already struggling with high taxes and living costs may indirectly bear the burden of this legislation. The state claims the fines will offset taxpayer spending on climate adaptation, but it's unclear whether the funds will be spent effectively.

Legal precedent in other states

Vermont recently enacted a similar law, and New York's approach may inspire other states to follow suit. However, this could result in a fragmented regulatory environment, complicate interstate commerce, and increase uncertainty in business operations. This patchwork of laws could hinder investment and innovation in the energy sector.

Questions about the scientific basis of this law

The legislation claims that it is now possible to calculate a specific company's share of greenhouse gas emissions “with great accuracy”. This claim is highly controversial given the inherent complexities of attributing emissions to individual actors in global systems.

Selective time range

The law targets emissions from 2000 to 2018, a period chosen because climate science was said to have “mature” before 2000. decades. This selective accounting raises questions about legal fairness and objectivity.

ignore wider responsibilities

Fossil fuel companies are not the only entities responsible for emissions. Governments, industries and consumers who rely on these products play an active role in the demand for fossil fuels. By focusing solely on producers, the legislation narrows the accountability framework and ignores the interconnectedness of energy consumption and economic development.

Policy and Substantive Significance

Fund allocation and efficiency

While the law outlines the broad program scope of the Climate Change Superfund, history shows that government-managed programs are prone to waste, corruption and inefficiency. Provisions that 35-40% of funds benefit disadvantaged communities add a layer of complexity and possible waste, creating huge potential for political and bureaucratic inefficiency in the allocation of funds.

Alternative: Call for caution

Rather than rushing into punitive measures or alternative plans, policymakers should first address the uncertainties inherent in climate science. Predicting future impacts and attributing past impacts to specific actors remains a highly speculative endeavor. Imposing penalties or market-driven mechanisms like carbon pricing requires a level of precision that current climate science simply does not support.

Instead, energy policy might do better to focus on resilience and diversification, decoupling from climate assumptions. This includes ensuring reliable energy networks, maintaining affordable energy supplies and encouraging voluntary, market-driven innovation – not as a reaction to doomsday scenarios, but as a path to overall technological progress and economic stability.

Conclusion: questioning the premise

The Climate Change Superfund Act exemplifies the risks of decisions based on uncertain science. It assumes the ability to accurately quantify historical emissions, equitably allocate responsibility, and reliably predict future consequences. None of these premises hold up to scrutiny. The risks posed by the law's retroactive liability structure and its direct and indirect economic consequences may outweigh any speculative interests.

While the bill claims to champion accountability and adaptation, it sets a troubling precedent. By targeting fossil fuel companies without addressing wider society’s dependence on these fuels, it distorts the nature of responsibility. Worse, by taking an uncritical view of climate science, New Yorkers could risk years of increased costs and litigation with no guarantee of measurable benefits.

Instead of adopting climate alarmist policies, governments should adopt a stance of restraint. Policies based on uncertain science and controversial models are likely to do more harm than good. Policymakers should prioritize transparency, resist dogmatic pressures, and ensure that any intervention is based on sound science, clear economic benefits, and respect for legal principles. New York’s climate change Superfund bill may be ambitious, but unclear and misleading ambition is more likely to do more harm than good.

Relevant