A proposed state law that would force dozens of fossil fuel companies to shell out $50 billion to help pay for the cost of climate change has taken another step forward in New Jersey.
On Thursday, an Assembly committee voted 4-2 to advance A3735: the “Polluters Pay to Make NJ More Affordable Act.”
Formerly known as the Climate Superfund Act, the bill targets companies that have “engaged in the trade or business of extracting fossil fuel or refining crude oil” since 1995, and have been responsible for more than one billion metric tons of greenhouse gas emissions.
The legislation would generate $2.5 billion annually from an estimated 82 fossil fuel corporations, its sponsors say.
The money collected from companies in violation of the law would be earmarked for flood protection, stormwater and sewage system upgrades, extreme weather preparation, health care related to climate change, upgrades to the electrical grid and energy-efficiency projects, among other uses.
Supporters of the bill say the legislation would direct $50 billion over 20 years into infrastructure, flood protection, energy cost reductions and disaster response – without raising taxes or fees on Garden State residents.
The proposed law has also seen vocal criticism, especially from pro-business advocacy groups (see below).
The proposed law has been referred to the Assembly Commerce and Economic Development Committee for further review. A companion bill, S-3545, continues to work its way through the Senate.
New York and Vermont have already enacted similar laws, with New York's assessment set at $75 billion.
LAWMAKERS REACT
The bill’s Democratic sponsors in the Assembly cheered for Thursday’s committee vote.
Flooding, extreme heat, severe storms and other wild weather has caused more than $109 billion in damages in New Jersey – and it’s projected to cost hundreds of billions more in the coming decades, they said.
“This legislation is about holding polluters accountable and not asking taxpayers to shoulder the burden of fixing issues caused by fossil fuel companies for decades,” Assemblywoman Alixon Collazos-Gill said.
“My district of Burlington County is home to numerous farms that have been negatively impacted by climate change, and I’ve seen firsthand the devastation my constituents have faced because of flooding and freezes,” Assemblywoman Carol Murphy said.
“As we combat climate change head-on, it’s important that those who have been polluting our state be the ones who fund critical projects that will set us on a course for a greener future,” she added.
Other prime sponsors of the Assembly bill include Shama Haider and Michael Venezia.
Meanwhile, some Republican state lawmakers have blasted the proposed law, including Sen. Declan O’Scanlon.
“Make no mistake, the Democrats ‘Superfund’ policy – supposedly to punish the evil oil companies for providing a product we all demand – would result in a massive, $2.5 billion yearly increase in energy costs on New Jersey residents,” O’Scanlon argued at a recent legislative hearing.
“Democrats are essentially saying “Don’t worry! We can charge oil companies $50 billion and they’ll just take the hit to their profits! They won’t simply pass the costs on to us! Trust us!’” he added. “It’s sheer lunacy.”
IMPACT ON BUSINESSES, NJ RESIDENTS
Experts disagree on what the bill would mean for Garden State businesses.
Gernot Wagner, a climate economist at Columbia Business School, said the proposed law won’t impact prices or production levels.
“Prices and production decisions are driven by what it costs to produce the next barrel of oil,” Wagner said. “A one-time fee based on past conduct does not change that.”
Other business experts say the bill is unconstitutional – and it will “unquestionably add costs to New Jersey residents.”
The New Jersey Business & Industry Association (NJBIA) provided written testimony to the Assembly committee ahead of Thursday’s vote, arguing that the bill would retroactively penalize New Jersey fossil fuel companies $50 billion for legally providing an essential product used by all New Jerseyans.
“Advocates have made the fanciful claim that the costs imposed on fossil fuel companies will not be passed on to consumers,” NJBIA deputy chief government affairs officer Ray Cantor said.
“This claim is patently false,” Cantor said. “By imposing a multi-billion annual energy and utility tax against providers of gasoline and other fossil fuel products, consumers will pay the cost.”
In his testimony, Cantor pointed to an analysis of the U.S. Chamber of Commerce’s Institute for Legal Reform, which states the bill will cost each New Jersey household an additional $13,735 for transportation, utilities and other cost impacts over 20 years.
“There will be higher prices at the pump for gasoline and even higher utility bills,” Cantor said. “The costs of consumer goods will also rise as the cost to deliver those goods will rise as fuel prices increase.”
Two pro-business advocates – Michele Siekerka of the NJBIA, and Christina Renna of the Chamber of Commerce of Southern New Jersey – recently argued against the Climate Superfund Act in an op-ed posted to NJ Spotlight News.
According to Siekerka and Renna, the bill – which stalled during the lame duck session under former Gov. Phil Murphy – is an “unfair, misguided and likely unconstitutional cash grab.”
“New Jersey contributes just 1.7 percent of the United States’ greenhouse gas emissions and only 0.3 percent of those worldwide,” Siekerka and Renna wrote. “Yet, it would still impose penalties based on worldwide emissions – despite the minor contributions coming from the Garden State.”
‘I HAVE PANIC ATTACKS EVERY TIME IT RAINS HEAVILY’
Despite the concerns of pro-business groups, supporters of the Polluters Pay Act continue to push for the bill.
Several people spoke in its support during Thursday’s committee hearing, including Liz Ndoye, a Hoboken resident whose home was damaged by Superstorm Sandy.
“I have panic attacks every time it rains heavily in Hoboken,” Ndoye said. “We have to make New Jersey more resilient than the storms ahead and more affordable by making the fossil fuel companies pay their fair share towards the growing costs of the climate crisis.”
Other advocates argue that New Jersey families and small businesses are already footing the entire bill for worsening floods, storms and extreme heat – costs that show up in higher property taxes, insurance premiums and utility rates.
“Not only do our homes flood, but we get stuck paying higher property taxes and utility bills to rebuild our infrastructure,” commented Cuqui Rivera, outreach director of the Latino Action Network.
“This is $50 billion for infrastructure that New Jersey really needs, all at no cost to taxpayers,” said Jim McAsey, staff representative at CWA, a labor union representing more than 70,000 New Jersey workers.
“This will take some of the burden off of working-class families and create tens of thousands of good-paying union jobs in the process,” McAsey said. “Making polluters pay is a no brainer.”
Earlier this week, more than 230 clergy and faith leaders from every county in New Jersey wrote a joint letter to state lawmakers, encouraging them to “protect the planet” and pass the proposed law.
“We know that the oil and gas industry has continually earned enormous profits and has the ability to pay for their share in damages and still remain extremely profitable,” the clergy members wrote.
“The fossil fuel industry must take responsibility for the climate chaos and damage they have created, repair the harm they have caused and fund mitigation projects against future harms,” their letter stated.
“For more than 50 years, fossil fuel companies knew their products were destabilizing the climate and putting communities at risk,” said the Rev. Fletcher Harper, executive director of GreenFaith.
“Now New Jersey families are paying the price through stronger storms, flooding, rising costs, and damaged infrastructure,” Harper said. “That's why people of faith across New Jersey are saying with one voice: Make Polluters Pay.”
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