New Vermont law requires fossil fuel industry to pay for 'climate change' damage

Vermont is the first state to enact a law requiring the fossil fuel industry to pay for “climate change cost recovery.”

The bill became law without Republican Gov. Philip Scott signing it. In a May 30 letter to the Vermont General Assembly, he explained why.

“Vermont – one of the least populated states with the lowest GDP in the country – has decided to recover costs associated with climate change on its own,” he said. Vermont’s gross domestic product last year was slightly more than $35 billion.

He admitted he was “deeply concerned about both short- and long-term costs and outcomes” and “fearful that if we fail in this legal challenge, it will set precedent and hamper other states’ ability to recover damages.”

But because Vermont’s attorney general and treasurer endorsed the law, and the Vermont Agency of Natural Resources [VANR] “is required to report back to the Legislature in January 2025 on the feasibility of this effort,” Scott said he was “comforted.” The VANR report will enable Vermont to “reassess our go-it-alone approach,” he said. “For these reasons, this bill will become law without my signature. I hope those who endorsed this policy will follow through.”

The law penalizes “any entity … that during … the covered period was engaged in the trade or business of extracting fossil fuel or refining crude oil” that VANR determined “is attributable to for more than one billion metric tons of covered greenhouse gas emissions.”

Instead of raising taxes, cutting spending, or allocating funds to cover extreme weather costs, the Vermont legislature created the Climate Superfund Cost Recovery Program to charge the fossil fuel industry for its “Climate Change Adaptation Projects.” The projects were created “to respond to, avoid, … or adapt to negative impacts caused by climate change and assist human and natural communities, households, and businesses in preparing for future climate-change-driven disruptions.”

The projects include “flood protections; home buyouts; upgrading stormwater drainage systems, … roads, bridges, railroads, and transit systems; preparing for and recovering from extreme weather events; providing medical care … caused by … climate change; … sewage treatment plants; … energy efficient cooling systems; upgrading the electrical grid … including … self-sufficient microgrids; responding to toxic algae blooms; agricultural topsoil loss; threats to forests, farms, fisheries, and food systems,” among many others.

Entities VANR determines released more than one billion metric tons of carbon dioxide from 1995 to 2024 will be required to pay Vermont a monetary amount it determines.

The legislature allocated $600,000 for VANR to conduct an analysis “that will need to withstand intense legal scrutiny from a well-funded defense, we are not positioning ourselves for success,” Scott said. “Taking on ‘Big Oil’ should not be taken lightly.”

"Climate superfund bills are another billionaire-backed attempt to decimate the American energy industry using unproven attribution science,” Mandi Risko, a spokesperson for Energy In Depth, an educational outreach campaign of the Independent Petroleum Association of America, told The Center Square. “Just like climate litigation, these bills do little to advance real solutions and instead will raise prices on consumers by haphazardly penalizing a lawful and necessary industry on which we all depend."

Western Energy Alliance president Katheleen Sgamma also raised concerns. “It seems very legally tenuous to go after companies located outside the state for supposed impacts from climate change which are diffuse globally and nonattributable to any particular company,” she told The Center Square.

“Climate scientists haven’t figured out a way to determine if weather events are related to human-caused climate change, so how will Vermont determine damages and which companies are responsible?” she asked. “But perhaps the biggest problem is that Vermont attempts to shift blame for the greenhouse gas emissions that the state and its citizens emit so that they can drive their cars, turn on the light switch, and heat their homes. They want all the benefits of oil and natural gas but none of the responsibility.”

Unlike Vermont, Texas’ legislature and governor have taken a different approach – fostering domestic production. Texas leads the U.S. in production and emissions reductions.

Texas’ oil and natural gas industry also paid a record more than $26.3 billion in taxes last fiscal year – nearly as much as Vermont’s GDP. It finances three state funds (public schools, highway maintenance and reserves) and pays hundreds of millions of dollars to counties.

“Unlike some other states, including Vermont, Texas elected officials practice critical thinking and understand the importance of maintaining a pro-business environment by adopting sensible, not ideological or politically motivated, energy policy,” Ed Longanecker, president of the Texas Independent Producers and Royalty Owners Association, told The Center Square. “Texas continues to lead: providing access to affordable and reliable energy that fuels our state, country, and allies, from an economic and energy security perspective.”

The west Texas Permian Basin is leading in production and emissions reductions. As production increased by 416%, methane emissions intensity fell by nearly 85% over the same 10-year time-period. In 2022, the Permian reached its lowest methane intensity in a record production year, The Center Square first reported.

“These results are a testament to the dedication and innovation of the entire oil and gas industry, with Texas leading the way,” Longanecker said.