The Turning Tide

Last week featured some remarkable developments relating to climate policy.

Some events last week sent a strong signal that the tide is turning against fossil fuels.  Each of the events standing alone would have been noteworthy. The clustering of these events dramatizes an important shift.

To paraphrase Churchill, this may not be beginning of the end for fossil fuels, but at least it is the end of the beginning of the campaign against them.

Two of the events involved striking decisions in lawsuits in other countries involving fossil fuels. A federal court in Australia ruled that the government had a “duty of care” toward its young people to protect them from climate change. Accordingly, it could be found guilty of negligence if it failed to take their interests into account when considering a request to expand a coal mine.  The court said that “it is difficult to characterise in a single phrase the devastation that the plausible evidence presented in this proceeding forecasts for the children,” with today’s Australia lost and “the world as we know it gone as well.”  This harm, the judge said, “will largely be inflicted by the inaction of this generation of adults, in what might fairly be described as the greatest inter-generational injustice ever inflicted by one generation of humans upon the next.”

On the opposite side of the world, a Dutch court mandated a 40% cut over the next ten years in carbon emissions by Shell Oil, including the emissions resulting from the ultimate use of its oil and gas.  The judge used the Paris Agreement as the benchmark for setting the company’s obligations.  Like the Australian decision, this was a lower court ruling, and it remains to be seen what will happen on appeal.  Still, these lower court decisions are notable for their willingness to take bold steps in the climate arena.

Two other developments involved shareholder revolts against oil company management.  In a hard-fought campaign in which the two sides spent over $65 million dollars, Exxon shareholders installed independent directors on the Exxon board. The move was supported by major institutional investors, including BlackRock and Vanguard. The corporate insurgents were seeking a sharp shift in corporate strategy, embracing clean energy rather than defining itself in terms of fossil fuels.  Historically, Exxon has been the most recalcitrant of all the major oil companies, and it has been a major funder of climate change denial. This shareholder revolt seems to have been unprecedented in the company’s history. This is an extraordinary development, as if the Catholic Church had added rabbis and imams to the College of Cardinals.

Meanwhile, Chevron shareholders also revolted against management. By a large margin, the shareholders passed a resolution to require the company to begin cutting emissions from use of its product — which essentially means reducing the use of fossil fuels.  Two other resolutions were very narrowly defeated, one to require the company to plan for a possible scenario requiring zero carbon by 2050, and the other to require it to reveal its lobbying activities.

Some other encouraging news stories: Indiana, a deeply conservative state with significant coal mines, now has more solar generators requesting to connect with the grid than California.  Speaking of California, we finally got federal approval to begin offshore wind projects off two parts of the coast. On the corporate front, Ford announced it would invest $20 billion on electric vehicles over the next four years. It expects that EVs will account for 40% of global sales by the end of the decade.

We shouldn’t overestimate the immediate impact of these events. Court rulings may be reversed, shareholder revolts and market moves may fizzle. Nevertheless, they are a sharp shift away from business as usual, and signs that more changes are in the wind.

Perhaps, at long last, “the times they are a-changin’.”

Chevron, Climate Change, climate litigation, corporate sustainability, ESG, Exxon, international environmental law, Oil, Shell Oil and Climate Change