
A Landmark Climate Trial Turns on Whether Exxon Cooked the Books - pseudolus
https://www.bloomberg.com/news/features/2019-10-22/landmark-climate-trial-turns-on-whether-exxon-cooked-the-books
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dwaltrip
I was pretty surprised by the smallness of the claimed fraud. $500M - $1.5B is
barely half a percent of the Exxon's market value, which is $300B. Does this
mean that the internal projections regarding climate change were / are
relatively accurate? What benchmark is being used as the "true cost" in the
case?

I had seen before the articles about Exxon's own scientific studies and
internal documents showing a very clear understanding of climate change back
in the 70s, so I was expecting much more meaningful numbers for the claimed
fraud, given how much one would expect it to impact their business across the
decades.

~~~
makomk
Those articles seem to overstate their case a tad. For example, here's a quote
from one of the internal-use-only documents being bandied around as proof
Exxon knew about the impacts of climate change:

"However, the quantitative effect is very speculative because the data base
supporting it is weak. The CO2 balance between the atwosphere, the biosphere
and the oceans is very ill-defined. Also, the overall effect ofi ncreasing
atmospheric CO2 concentration on the world environment is not well understood,
Finally, the relative effect of other impacts on the earth's climate, such as
solar activity, volcanic action, etc. may be as great as that of CO2."

Sound familiar?

In any case, that doesn't seem to be what this lawsuit is about. If I'm
understanding it correctly, Exxon used a higher proxy cost of carbon ($60/ton)
in their externally-published justification for why their fossil fuel reserves
are unlikely to become "stranded" (economically unviable to extract) due to
carbon taxes than they used internally when deciding what would be most
profitable to invest money in ($40/ton). The prosecutor alleges that by doing
this, they mislead investors into thinking they were applying higher projected
carbon costs than they were actually using.

Frankly, it doesn't sound like a very good case. The stranding analysis
literally says "We do not publish the economic bases upon which we evaluate
investments due to competitive considerations." In addition, higher carbon
taxes can affect the profitability of future investments in both directions -
making efficiency improvements and clean energy investment more profitable but
ones that produce more carbon emissions less so - but only increases the risks
of reserves being stranded, so it seems highly prudent to use a higher carbon
tax figure than they're actually expecting when assessing the risk of
stranding, especially given that it could entirely wipe out the value of their
reserves.

~~~
zrail
As Matt Levine puts it, Everything Is Securities Fraud

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jandrese
They cooked the books like they cooked the Earth.

~~~
jeffreyrogers
And you and everyone else benefited from the cheap energy that oil provided.

~~~
makerofspoons
I don't recall being given an alternative option. My local power utility burns
natural gas, the buses run on diesel, and the local supermarket has only
recently begun stocking items that do away with unnecessary plastic. Can
someone really be a hypocrite if they are forced out of necessity to use
fossil fuels due to a system they had no hand in designing?

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sampo
The article is paywalled to me, so I googled another article about the same
trial. It says: "The industry had the science 30 years ago and knew what was
going to happen but made no warning so that preemptive steps could have been
taken." [1] Seems like they're just looking for convenient scapegoats. We had
public, publicly funded, published science already 40 years ago [2,3].

[1] [https://insideclimatenews.org/news/04042018/climate-
change-f...](https://insideclimatenews.org/news/04042018/climate-change-
fossil-fuel-company-lawsuits-timeline-exxon-children-california-cities-
attorney-general)

[2]
[https://en.wikipedia.org/wiki/Jule_Gregory_Charney#Charney_R...](https://en.wikipedia.org/wiki/Jule_Gregory_Charney#Charney_Report)

[3] [https://phys.org/news/2019-07-charney-years-scientists-
accur...](https://phys.org/news/2019-07-charney-years-scientists-accurately-
climate.html)

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Bostonian
The pretext of the lawsuit is that Exxon misled its investors, but the real
aim is to attack a fossil fuel giant. Suing Exxon obviously hurts its
shareholders. There is a Wall Street Journal editorial on "New York’s Climate
Show Trial" [https://www.wsj.com/articles/new-yorks-climate-show-
trial-11...](https://www.wsj.com/articles/new-yorks-climate-show-
trial-11571698112) .

~~~
jfengel
Note that it is widely said that the WSJ does good news, but that its
editorial section is considered by many to be biased. To quote Wikipedia's
summary of that view, "The Journal editorial board has promoted
pseudoscientific views on the science of climate change, acid rain, and ozone
depletion, as well as on the health harms of second-hand smoke, pesticides and
asbestos." They go into more detail at [1].

That's not a statement one way or the other about this particular editorial,
but the WSJ editorial page does have a history of climate denial and I'd take
their views on this trial with a grain of salt.

[1]
[https://en.wikipedia.org/wiki/The_Wall_Street_Journal#Editor...](https://en.wikipedia.org/wiki/The_Wall_Street_Journal#Editorial_page_and_political_stance)

~~~
wayoutthere
The WSJ has gotten much, much worse since it was purchased by the Murdoch
empire a decade ago. Even their non-opinion stuff reads like a business
tycoon's lens on Fox News. It is absolutely a mouthpiece in the alt-right
Murdoch propaganda machine.

~~~
josephpmay
I think you may be reading a different WSJ than I am

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travisoneill1
And what do these people think would have happened if Exxon had made their
findings public? Everyone would have dropped everything and suddenly stopped
using oil? How many other companies factor in climate change when valuing
their assets? (none) I have nothing but contempt for these activists who try
to blame corporations instead of recognizing that it is their own desire for
modern convenience that creates demand for oil.

~~~
dontreact
We could have had a carbon tax years ago and this is a clear example of the
deception that corporations have done in order to avoid that outcome.

~~~
travisoneill1
It's 50 years later and we still don't have a carbon tax even though everyone
has known about global warming basically the whole time and much more
comprehensive research than Exxon ever did is now public domain. There is
about a 0% chance this would have been different if Exxon had released its
research.

~~~
dontreact
The point is that if Exxon went public with these findings (and in general was
more honest about climate change sooner) it would be harder for them and
others to lobby politicians against a carbon tax.

Even though the science is clear, nearly every republican congressperson on
the relevant committees doubts that humans are the main driver of climate
change which is pretty necessary belief if you want to put in a carbon tax.

This same type of argument applies to the large subsidies that exist to this
day. It would have been politically much harder to secure subsidies of the
magnitude that exist today if they too had research out that supported the
scientific consensus.

~~~
travisoneill1
The political hurdle to a carbon tax has nothing to do with Exxon's lobbyists.
Politicians are scared shitless of raising gas prices. When France tried to do
it recently it caused massive riots.

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vkou
French riots were caused by a large number of things, but the pro-global
warming lobby managed to focus public anger on the carbon tax, instead of all
the other causes for their economic woes.

Mailing each man, woman, and child two equal cheques, with the words 'CARBON
PROPSPERITY TAX', one at Christmas, and one at Thanksgiving would very quickly
turn public opinion _towards_ a carbon tax.

~~~
jfengel
It wouldn't be as easy as that. A carbon tax will result in higher prices of a
lot of goods, including food: anything that has to be shipped has some carbon
built into the price, and farming uses a lot of oil-fuelled machines. It
wouldn't necessarily be a large increase, but it would make a potent talking
point against it. Even if you got it passed, they would see prices rise before
the "carbon prosperity check" arrived.

It's a good idea even though there are more difficulties than I mentioned. But
it's not an easy sell.

