By Kaitlin Sullivan
A report documenting that electric utility companies, like the oil industry, understood climate change as far back as the 1960s could potentially make them the next target of climate liability lawsuits.
The report was released by the Energy and Policy Institute (EPI), a group that works to counter attacks on the renewable energy industry. It documents that utility companies understood as far back as the late 1960s how burning fossil fuels impacts climate change and describes how the utilities nonetheless continued to push coal, the largest emitter of carbon dioxide among fossil fuels, as an energy solution.
The information is similar to what has been uncovered about the oil industry. Journalistic investigations have over the past several years uncovered that the major producers have known for decades that their product overwhelmingly drives global warming but worked to create doubt about that science and vigorously opposed government action to combat climate change.
Those investigations, based on troves of industry documents, helped spawn two state investigations into potential climate fraud by the world’s biggest oil producer, ExxonMobil. It has also prompted more than a dozen communities across the U.S. to file liability lawsuits against the oil industry to hold it accountable for climate damages.
The EPI report suggests similar documents from electric utility companies could give way to similar lawsuits against utilities.
The two industries are not exactly parallel, however, said Carroll Muffett, president and chief executive of the Center for International Environmental Law. Because oil producers and utilities sit at different positions in the fossil fuel supply chain, their potential liability for climate damages would not be the same.
“It is reasonable, though, to look at this information about what they knew and when and ask: what are the legal liabilities?” Muffett said.
A spokesman for one of the utilities mentioned in the report, Edison Electric Institute of Washington DC, did not address the legal liability question, instead claiming the utility industry is working to lower emissions.
“As of 2017, the electric power industry’s carbon dioxide emissions were 28 percent below 2005 levels, the lowest annual emissions level since 1988,” said Brian Reil, spokesman for EEI.
But statistics from the Environmental Protection Agency tell a different story. In 2016, electricity production accounted for more than 28 percent of total greenhouse gas emissions in the U.S. and those emissions decreased just 1 percent between 1990 and 2016. Similar data from the U.S. Energy Information Administration shows that nearly 63 percent of the electricity generated in the U.S. in 2017 was dependent on fossil fuels. More than 30 percent of total emissions were from coal.
Past climate lawsuits have already targeted electric utility companies. In 2011, the U.S. Supreme Court ruled unanimously in favor of five private electric power companies in American Electric Power Company v. Connecticut, determining that corporations cannot be sued for greenhouse gas emissions under federal common law.
Federal lawsuits against oil companies have run up against similar precedent because federal courts have typically ruled that because the EPA is responsible for regulating greenhouse gases, the courts do not have jurisdiction over the issue. Federal judges last year dismissed climate liability suits filed by New York City, San Francisco and Oakland under that reasoning.
Those cities are appealing the dismissals, but they illustrate why the other communities that have filed suits are striving to keep them in state courts, where experts believe they have a better chance of succeeding under state common law.
Connecting the Legal Dots
The cases against oil companies have been bolstered by extensive research that has been able to tie specific amounts of greenhouse gas emissions, and thus global warming, to individual companies. That research, dubbed the Carbon Majors, attributes 70 percent of global warming to just 100 fossil fuel companies and 27 percent to five of the largest companies, including Exxon.
There is not yet similar research quantifying the responsibility of utility companies, although there is already one lawsuit underway that attempts to hold a major utility responsible for climate impacts. A German court has agreed to hear a lawsuit by a farmer in Peru against Germany’s largest utility, RWE, that seeks compensation for climate damage in his village of Huaraz.
Muffett said a more likely legal action in the U.S. would be a suit brought by ratepayers whose money was used to build new energy plants reliant on fossil fuels. Though it’s still unclear exactly how climate lawsuits will be structured going forward, Muffett predicts courts will see more in the coming years.
“The report on the utilities is useful in that it provides a lot of detail that we didn’t have before— it could be the first very important step in unraveling potential lawsuits,” Muffett said.
Climate lawsuits are still relatively new in the U.S. and have most commonly included oil and gas companies. Most of those suits remain in their early stages, and even those already dismissed are being appealed. The process, like many major liability actions including tobacco, asbestos and lead paint, could take years to sort out.
But even when court rulings favor industry, the lawsuits could shift the energy industry’s reliance on fossil fuels.
According to Joshua M. Pearce, an engineering professor at Michigan Tech, the threat of being held liable for their emissions could push energy companies to invest in renewable energy. “When you factor in liability, how much is their energy really worth?” he said.
Pearce was part of a team that devised formulas to calculate the financial liability of greenhouse gas emissions. He said utility companies should consider investing in renewable energy as a way to mitigate future liability in lawsuits seeking compensation for climate change-related damages.
“As the science gets better, their risk of being held liable increases,” Pearce said.