×

Big Oil throws California’s climate change hypocrisy back in its face

  • Several California cities and counties are suing Big Oil for allegedly suppressing evidence of climate change dangers.
  • But those same cities downplay or even refute those dangers in some of their recent municipal bond offerings.
  • That hypocrisy spreads to many other state policies, including road building projects and building codes.
San Francisco
Compassandcamera | Getty Images
San Francisco

There has always been hypocrisy in politics and government. But several cities in California may be taking that standard to a new level when it comes to their supposed battle against climate change.

Here's the kicker: The people pointing that accusatory finger at the Golden State's top cities are none other than the lawyers for ExxonMobil.

It turns out that Big Oil is trying to turn the tables on Big Government when it comes to a series of public nuisance lawsuits filed by California cities and counties last year.

Those suits are using an argument similar to the successful cases brought against Big Tobacco in the 1990s. That is, they claim the oil companies have long known about the damaging effects fossil fuels have on the environment. They further allege those companies have worked to suppress and fraudulently refute scientific climate data in order to protect their industry and avoid any responsibility for climate change-related damages.

But ExxonMobil's attorneys did some legwork and found something interesting in municipal bond offerings of many of the same cities and counties suing them. Those offerings include several examples of climate change threats being downplayed or even completely ignored.

The Big Oil lawyers also note that:

  • San Francisco has twice made bond offerings for its Municipal Transportation Agency since 2014 that do not contain the words "global warming" or "climate change."
  • San Mateo County is suing the oil companies because it says in its complaint that it is "particularly vulnerable to sea level rise" and that there is a 93 percent chance the county experiences a "devastating" flood before 2050. But San Mateo noted in bond offerings in 2014 and 2016 that the county "is unable to predict whether sea-level rise or other impacts of climate change or flooding from a major storm will occur."
  • Imperial Beach, California claims in the lawsuit that it faces a very high danger from sea level rise and its economic vulnerability from climate change is valued at more than $106 million. But the city has never warned investors that such disasters await them.

The sanctimonious climate change alarmism only gets worse when you throw in the rhetoric some of the political leaders have used recently.

For example, Imperial Beach Mayor Serge Dedina excoriated the oil companies in front of the news media last summer, exclaiming: "They knew about sea-level rise. They knew the damage it would cause, and they should be held accountable!"

I guess Imperial Beach's bondholders could say the same about him.

The California plaintiffs have not yet formally responded to the ExxonMobil countersuit claims, though a few of their representatives have been quoted saying they won't be intimidated or or dissuaded by the company's "attempted end-run around the California courts."

The funny thing is you don't have to look at bond offerings to find blatant cases of state and local governments saying one thing about climate change and doing the opposite when it comes to putting their money where their mouths are.

For example, California is still building its roads and freeways to accommodate more vehicles, not less. Remember the 2011 405 Freeway "Carmageddon," when the state paid almost $2 billion to widen the highway to make way for more cars? Where was the concern for climate change there? Yes, California has the strictest emissions regulations and other policies like pursuing high-speed rail. But the car-based culture of the state, which includes a near-religious to devotion to keeping the overwhelming majority of its highways toll free, is still dominant.

Others note that California still has massive regulations that make it very hard to build residential property in densely populated areas. That leads to more sprawl, more driving, and more fossil fuel use.

Of course California is hardly alone in this hypocrisy. This is a national problem. The civil engineering organization and website StrongTowns.org has long documented the massive costs to our finances and environment caused by almost every state government's reliance on car-centered infrastructure policies. That includes New York state, which has just decided to also sue the oil companies for the same claim of climate change science suppression.

There's also a more widespread problem of dozens of cities and counties not being entirely truthful in all aspects of their municipal bond offerings. The SEC began a major crackdown on that in recent years that continues today.

But the climate change hypocrisy is especially egregious, considering the hyperbole and public shaming the politicians engage in when discussing the environment. It's one thing for climate alarmists and global warming skeptics to fight it out in the political or scientific arena. But politicians warning us about global warming and higher sea level dangers can't keep pretending that reality is something else when they go to the banks and big investors.

We're either in serious danger from climate change or we aren't. Our leaders need to figure out the answer and respond accordingly.

Commentary by Jake Novak, CNBC.com senior columnist. Follow him on Twitter @jakejakeny.

For more insight from CNBC contributors, follow @CNBCopinion on Twitter.