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Big Oil Faces Courtroom Showdown

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This is an extended and referenced version of my column in this month’s Recharge Magazine.

ExxonMobil is being investigated by the Attorney’s General of New York and California with a view to criminal charges for securities fraud and racketeering over their stance on climate change. The ramifications are enormous for the course of the global energy transition.

The oil and gas giant stands accused of lying to its shareholders for many years. On the one hand it professed that climate change was a green scaremongers’ invention, and paid many millions of dollars to organisations devoted to torpedoing the international climate negotiations that began in 1991. Meanwhile, on the other hand, it suppressed its own research proving the dangers of climate change, yet built assumptions of global-warming-driven sea-level rise into engineering of coastal and offshore infrastructure.

In my book The Carbon War I documented much of what its lobbyists did and said in and around the climate negotiations through the 1980s and 1990s. I know the company is guilty of malfeasance.

Now that ExxonMobil has finally been dragged into courtrooms, its problems are likely to escalate fast. Legal experts expect other States’ Attorneys General to launch suits. Presidential candidates Hilary Clinton and Bernie Sanders have called for the federal Attorney General to investigate. Class actions by investors will surely not be far behind. Existing investigative journalism makes it almost certain that other oil majors will soon stand accused with Exxon. Ongoing investigations will surely add to their legal woes, since Exxon and Mobil alumni are beginning to blow whistles. On top of this will come the evidence that subpoened internal communications will bring into the open.

The unfolding of this drama began in September last year when journalists at Inside Climate News, the Los Angeles Times and the Columbia School of Journalism began publishing a series of articles based on eight months of investigations. Their story, spanning four decades, was based on primary sources including internal company files dating back to the late 1970s and extensive interviews with former company employees. It showed that Exxon’s own internal research since the late 1970s had proved the dangers of global warming years before the issue came to wide public attention in 1988.

In November, New York’s Attorney General Eric Schneiderman issued a subpoena demanding a library of ExxonMobil’s financial records, e-mails and other documents. Legal experts immediately drew parallels with litigation against the tobacco industry.

In December, it emerged that Exxon’s peers knew all about the dangers of climate change as early as the 1970s too. The American Petroleum Institute, the oil majors’ umbrella lobbying organisation, ran a climate and energy taskforce between 1979 and 1983. Minutes of its deliberations suggested the dangers of climate change might require research and development to “investigate the Market Penetration Requirements of Introducing a New Energy Source into World Wide Use. This would include the technical implications of energy source changeover, research timing and requirements.”

An energy transition, in other words. That would have been civil minded, not to say timely. But instead, by the 1990s, the American Petroleum Institute, its member companies, and their million-dollar lobbying budgets, had formed the Global Climate Coalition: the main assault force trying to take down the climate negotiations, using denial that climate change involved significant dangers.

All the while, the companies had been bracing for climate change, factoring projected sea-level rise and wave heights into their engineering of infrastructure. For example, Mobil and Shell strengthened exploration and production facilities along the Nova Scotia coast. Shell increased the height of its $3 billion Troll gas platform.

In January, California Attorney General Kamala Harris began investigating Exxon, suspecting securities fraud over climate risks. California is a state currently well sensitised to cavalier treatment of its citizens, and worse, by the oil and gas industry. In October last year an old gas field used for gas storage by Southern California Gas sprang a huge leak. Residents nearby complained of headaches, nausea, vomiting and trouble breathing. More than 2,000 familiies were evacuated from their homes. It soon became clear that this was a gaseous equivalent of BP’s oil spill in the Gulf of Mexico: relief wells would need to be drilled to block the escaping gas, and they would take months to complete.

On 7th January California declared a state of emergency. Apart from the known short term health impacts, and unknown long-term impacts, the leak amounted to fully of a quarter of the state’s methane emissions.

On 2nd February, the inevitable happened: Los Angeles County District Attorney Jackie Lacey filed criminal charges against Southern California Gas. Eleven local, state and federal agencies are now either investigating or suing the gas company.

The leakage was finally sealed on 18th February, after nearly four months. But in the interim it had become clear that many other gas storage fields – the main storage mechanism for gas in the USA – are poorly regulated and in grave danger of leakage.

Would all this have happened if the American Petroleum Institute had taken its own advice about the need for a new energy source, and a global energy transition, in the early 1980s?

We can only wonder, as we watch the real-life episodes of The Good Wife unfold.

What do you think? Leave a comment below.

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