Hochul signs climate change law charging oil and gas companies billions

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A controversial measure that charges oil and gas companies billions of dollars was signed into law by Gov. Kathy Hochul Thursday. 

The Climate Change Superfund Act imposes a total of $3 billion a year in fees to the largest oil and gas firms for the negative impacts that fossil fuels have on climate change. The fund, which will last 25 years, aims to eventually collect a total of $75 billion. 

The state Department of Environmental Conservation will implement the program, notifying and collecting payments from companies with the highest amounts of emissions. A company is considered to produce over 432,000 metric tons of carbon dioxide for every 1 million barrels of crude oil. 

The DEC will also identify infrastructure projects related to resiliency to climate change events that the superfund will give money towards. The state Department of Taxation and Finance and the state attorney general’s office will be tasked with enforcing the terms of the program. 

According to a statement from the Fiscal Policy Institute, some 30 to 40 oil and gas firms will be affected, including ExxonMobil and other U.S. companies and foreign firms such as Saudi Aramco and BP.  

“The eight largest fossil fuel companies earned nearly $400 billion in profits in 2022 alone, indicating that the $3 billion in total annual fees imposed by the superfund would be less than 1% of industry profits in some years,” according to the FPI statement. 

State Sen. Liz Krueger, lead sponsor of the legislation, said repairing from and preparing for extreme weather caused by climate change will cost more than half a trillion dollars statewide by 2050.  

“That’s over $65,000 per household, and that’s on top of the disruption, injury, and death that the climate crisis is causing in every corner of our state,” Krueger said in a written statement. 

In 2023, Hochul announced $2.2 billion in taxpayer funding for climate-related infrastructure repairs and upgrades and resilience projects.  

Environmental and other policy groups applauded the new law. 

“The governor’s approval of the Climate Change Superfund Act is a welcome holiday gift for New York taxpayers,” Blair Horner, executive director of New York Public Interest Research Group (NYPIRG), said in a written statement. “Until her approval, New York taxpayers were 100% on the financial hook for climate costs.  Now Big Oil will pay for much of the damages that they helped cause. As a result, New Yorkers will have their future tax burden reduced by $3 billion annually. This legislation is also designed to ensure that the oil industry will protect consumers from climate superfund costs being passed along.  It’s a win for taxpayers and consumers.” 

New York becomes the second state in the nation following Vermont to require fossil fuel companies to pay for climate damages. Similar bills have been introduced in Massachusetts, California and Maryland, while lawmakers in Minnesota and Oregon are also developing legislation following New York’s model.   

However, several business groups opposed the climate change legislation, claiming it would drive costs higher for businesses and consumers. 

In a letter sent to Hochul earlier this month from 37 business groups opposing the bill, including the Long Island Association and the Plumbing Contractors of Long Island, the groups warned that the law would face legal challenges and is discriminatory.  

“Under this legislation, New York State would be imposing a $75 billion assessment on the energy sector during a time of heightened concerns of affordability facing households and businesses alike,” the letter read. “While opinions may differ as to how the cost of this legislation may be directly allocated, there is concern that these payments could impact the state’s overall economy and individual households.” 

Kyle Strober, executive director of the Association for a Better Long Island, said, “ABLI is very concerned about this legislation as it may result in unintended consequences with increased costs for households and businesses.  It is clear that affordability is at the forefront of Long Islanders’ minds. Affordable energy is a key to continued growth and investment on Long Island, and this bill could make energy more expensive while we wait for renewable energy sources to become available and scale up to all of Long Island. We need to invest in renewable energy, but punitive measures like this can do more harm than good.”