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Real Clear Energy Op-ed: Exposing Baltimore’s Short-Sighted, Frivolous Climate Lawsuit against Energy Companies

For decades, Congress has been unable to pass effective climate legislation. Presidential administrations have tried to use the regulatory process to shape climate policy with limited results. Out of frustration with these legislative and regulatory shortcomings and an overzealous belief that they know best, some climate activists have tried to use the judicial system to impose their energy and climate policies on the American people—even if their ideas don’t make sense.

The climate activists are doing this by filing lawsuits against energy companies to try and make them pay for local climate change impacts.  These lawsuits want to use state laws to obtain compensation for damages related to sea level rise and extreme weather such as more intense hurricanes. It is faulty logic to suggest these companies “caused” climate change and should have to fix it. The effort to use state law is significant because federal courts have already said that there is no legal or factual foundation for these lawsuits.

One of the most prominent current lawsuits is from Baltimore. On January 25, the Court of Appeals for the Fourth Circuit will begin hearings on the venue and applicable law governing this, and by extension, many other such lawsuits.  Although technical legalities could determine the outcome of this hearing, the lawsuit raises issues that should not be ignored. 

First, climate change is a global phenomenon and we all, through our consumption, share responsibility for its creation and resolution. U.S. energy companies did what consumers and successive U.S. governments wanted them to do. They provided reliable and affordable energy to improve the lives of hundreds of millions of Americans over multiple generations. The lawsuits reveal a lack of concern for the immediate affordability, reliability, and security of America’s energy supply.

Second, the lawsuits are not about climate justice and will not do anything to solve climate change; they are about money—just ask the municipalities and their lawyers. For states and municipalities, potential revenue windfalls are a major incentive for participation. For trial attorneys, the Manufacturers’ Accountability Project has pointed out that attorneys working for the plaintiffs could get paid up to 25 percent of the potential damages; in other words, the plaintiffs’ lawyers stand to make millions or billions of dollars. 

For climate activists, the lawsuits are a backdoor way to cripple the U.S. energy industry and make energy too expensive for us to buy, thereby theoretically accelerating the transition to a lower carbon economy.  However, crippling the U.S. energy industry and putting the cost of energy out of reach of many Americans will create massive and dangerous energy shortages, shift energy market power back to OPEC and a very hostile Russia, and hurt us all.  If anyone doubts this, they should look at the largely self-inflicted and ongoing European energy disaster.

Third, making a few energy companies pay billions of dollars is completely arbitrary and discriminatory.  Climate change has many causes from farming, to energy use, to personal and community land use. Tens of thousands of companies from across multiple industries, in scores of countries, and over generations produced the carbon products that are now warming the globe. Unremarked upon by the plaintiffs is that the largest cumulative greenhouse gas (GHG) producers are not the corporations targeted in these lawsuits but state-owned or quasi state-owned energy companies. Why not sue them? 

Shall we sue meat producers or rice farmers?  How about companies supplying hospitals with anesthetic gases?  All of these companies make highly GHG emitting products.  Why not just sue every person who consumes any product that emitted GHG during its creations or consumption?

The truth is that activists and their local backers do not want you and me—motorists, meat or rice eaters, or people who received anesthesia while in hospital— to be directly punished for our energy use.  Doing so would create a political backlash ending activist efforts to stop fossil fuel consumption. It also would expose the logical flaws in their reasoning.  Hence, the next best strategy is to wage a legal war on the energy industry in the hopes of so damaging its business prospects that they can no longer operate.

Climate change is not the fault, either today or in the past, of the energy industry. If we are going to solve the climate problem, it will come through innovation, new technologies, and government-private sector collaboration, including with the energy industry. Local and state officials should not engage in meritless lawsuits that exacerbate our problems, and taxpayers certainly should not tolerate this activity.

Jonathan Chanis manages New Tide Asset Management, LLC, a Maryland-based company investing in commodities and listed equity. He formerly taught at Columbia University and worked at several financial firms, including Citigroup and Goldman Sachs. 

Read the full op-ed here.