New York to charge fossil fuel companies $75B under climate cost recovery law

The state of New York, the US, will assess oil and gas companies a collective $75 billion over 25 years under a new climate law signed by Governor Kathy Hochul on December 26, Report informs, citing S&P Global Ratings.

The Climate Change Superfund Act (S.2129-B) aims to shift the burden of climate mitigation from taxpayers to fossil fuel companies by charging them for the greenhouse gases they emitted between 2000 and 2018.

The funds, to be collected at a rate of $3 billion per year, will help pay for infrastructure upgrades, extreme weather response, cooling systems and other climate-related investments, which could "easily reach several hundred billion dollars" in state costs through 2050, according to the legislation's text.

The law applies to producers and refiners that emitted more than 1 billion tons of greenhouse gases over 18 years.

New York Senator Liz Krueger, a Democrat and lead sponsor of the legislation, said in a statement that the "polluter-pays model" mirrors existing state and federal Superfund laws, which tax companies to cover the cost of cleaning up hazardous waste sites.

But Scott Segal, a partner at Bracewell who advises energy companies, questioned the comparison to the US Environmental Protection Agency's Superfund program.

"While we all share the goal of addressing climate change, imposing retroactive liability on companies for legally conducted business activities sets a troubling precedent that could significantly impact New York's business environment and economic competitiveness," Segal said in an emailed statement.

Segal also warned that the fines could hurt consumers by raising energy prices.