On behalf of the New Jersey Business & Industry Association, the state’s largest association representing the job creators of New Jersey, we are submitting this testimony in very strong opposition to Senate Bill No. 2338, the so-called “Climate Superfund Act.” We ask this committee to vote no on this bill.
There are numerous reasons to oppose this legislation, which essentially imposes a new energy and utility tax on consumers at a time when affordability, especially energy pricing, is the dominant concern of our state’s residents. These concerns are:
- Negative impacts on consumers;
- Unfairness of imposing a retroactive assessment;
- The impacts on jobs and the economy;
- The legislation ignores the necessity and benefits of fossil fuels;
- It is unconstitutional;
- The legislation sends the wrong message to the business community;
- Pension funds and the middle class are large owners of fossil fuel company stock:
- It does nothing to address climate change or to promote decarbonization; and
- The premise of the legislation is not supported by mainstream science.
Before we address the above concerns, it is important to go beyond the rhetoric of the advocates and understand the true intentions of this piece of legislation. Resiliency is a major concern for New Jersey. We are a coastal state that has experienced major storms for longer than humans have been recording those events. We need to be smart on how we protect our residents. NJBIA welcomes a conversation on resiliency strategies and how to pay for it.
However, this bill is not about resiliency. It is about trying to inflict enough economic harm on a vital industry so that investments will no longer be made, and fossil fuel refining and extraction no longer remains an attractive business model. Advocates first tried to get laws passed to ban the use of fossil fuels and failed. They next tried to bring lawsuits based on the same premises of this legislation, including a case brought by the New Jersey Attorney General, and they have also been failing. Now they are trying to use legislation in the guise of compensating for damages that do not exist to bankrupt legitimate, and vital businesses.
While the proscribed $50 billion price tag of this legislation may not be enough to put companies out of business, efforts to pass Superfund laws are being pushed in at least a dozen other states. The cumulative impacts can be devastating. The tactic is obvious: what advocates could not accomplish through policy and have failed in the courts; they are now trying to do with a backhanded legislative effort. We need to have an honest conversation about the benefits and necessity of fossil fuels while we look for affordable and realistic lower carbon options.
Impacts to Consumers: This bill will add to the affordability crisis in New Jersey. Advocates have made the fanciful claim that the costs imposed on fossil fuel companies will not be passed on to consumers. This claim is patently false. By imposing a multi-billion annual energy and utility tax against providers of gasoline and other fossil fuel products, to be paid over 20 years, consumers WILL pay the cost. There will be higher prices at the pump for gasoline and even higher utility bills. The costs of consumer goods will also rise as the cost to deliver those goods will rise as fuel prices increase.
According to an analysis of the U.S. Chamber of Commerce, Institute for Legal Reform the cost to consumers is estimated to be, per household, over 20 years, include:
Transportation: $387 annually or $7,740 total;
- Utilities: $128 annually or $2,551 total;
- Other cost impacts: $172 annually or $3,444 total.
- Total costs per household: $687 annually or $13,735 total.
The arguments that these costs will not be passed on are flawed. They do not account for the fact that 14 states, and perhaps more, are considering similar legislation. They ignore the fact that it is likely that these assessments will be imposed again in the future, and they equate the economics of worldwide prices for a barrel of oil to the cost at the pump. It is obvious to see that state policies impact the price at the pump as is easily seen by the different prices in each state, and even within a state, and by the fact that California policies are to blame for their nation highest price for a gallon of gasoline.
Unfairness: It is fundamentally unfair to impose a retroactive assessment against companies that were not only providing a legal product, but a product that was and remains necessary for society and the economy. We will need fossil fuels for decades to come. Even Bill Gates, a longtime advocate of decarbonization efforts, recently conceded that we are many decades away from eliminating fossil fuels which remain necessary for a functioning economy and society. Furthermore, the bill would only impose these charges against companies that refined or extracted fossil fuels but not on the businesses and consumers who used these products. The “polluter” is actually each and every one of us who uses fossil fuels every single day.
Impact of Jobs: New Jersey is home to only two refineries. In North Jersey, the Phillips 66 plant in Linden and in South Jersey the Paulsboro Refining Company in Paulsboro. These two New Jersey refineries alone, contribute $8.4 billion to the national economy, pay $1.4 billion in state and local taxes, pay $4 billion in labor income, and support 35,700 jobs in the state. New Jerseyans annually consume 3.5 billion gallons of gasoline, 1.1 billion gallons of diesel and home heating oil, and 806 million gallons of jet fuel, all products that are produced right here in the Garden State. The economic significance of the Bayway Industrial Complex is detailed in a recent NJIT/NJBIA study.
Passage of this bill would put those jobs in jeopardy and harm the state and regional economy. Predicting that this bill would harm our two remaining refineries is NOT fear mongering. The East Coast used to be the home to about 14 refineries - we now have four left, with two in New Jersey. The threat to these refineries from this bill is real.
Ignores Benefits of Fossil Fuels: The bill is one-sided in that it only looks at the assumed harm from the burning of fossil fuels, but it ignores the benefits. The world runs on fossil fuels. It built modern society. Over the last century, fossil fuel energy has resulted in more than a doubling of life expectancy and an extraordinary decrease in extreme poverty and hunger, even as the world’s population increased by over 6 billion people. In New Jersey, fossil fuels account for nearly all of the energy used in transportation, over 80% of the energy to heat our homes, and about 80% of the energy used to run our factories and office buildings. The necessity of fossil fuels for human well-being is obvious and overwhelming. There currently is no adequate and affordable substitute. Demand does not disappear because government makes supply more expensive.
Unconstitutional: If enacted, this law would likely be struck down on constitutional grounds. Not only does it seek to impose retroactive liability for previously legal actions, but courts have consistently found, in similar cases brought against fossil fuel companies, that the issues presented are ones of national and even international jurisdiction, and state laws should not govern. Passing this law will be a waste of time and money. New Jersey has better things to do with its revenues than to spend millions of dollars defending an unconstitutional law.
Message to Business Community: Attempting to hold businesses liable for activities that not only were legal, necessary for society, and even encouraged by government, sends a message to the business community that no company is safe from retroactive liability if they do business in New Jersey. Plus, even though this bill is limited to past activities, there is no guarantee that the state would not pass a similar law again for future activities. Passage of this legislation would send a message to the business community that you do business in New Jersey at your own risk, even if you follow every applicable law. It would make an already challenging business climate even worse. New Jersey is already hemorrhaging the flight of our major corporations. It's time to stop the bleeding.
The owners of fossil fuel companies are pension funds and the middle class: The inflammatory argument that fossil fuel companies can easily pay for these charges out of their profits misses the point of who has invested in these companies. Public pension funds and middle-class retirement accounts account for nearly half of all ownership of fossil fuel companies. John D. Rockerfeller doesn’t own Standard Oil anymore, your constituents do. Imposing exorbitant costs on these companies will hurt the middle class both at the pump and in their 401Ks.
Does nothing to impact climate change: New Jersey contributes just 1.7% of the United States’ GHG emissions and only 0.3% of worldwide emissions. Trying to impose climate policies from Trenton will have absolutely no impact on total emissions or on climate change. This bill will only impose large costs on New Jersey consumers and taxpayers without any benefit to the environment. A policy that punishes today's energy system before tomorrow's energy system is ready risks higher costs, lower reliability, and fewer jobs. We should focus our attention on real solutions.
Not supported by science: While this bill is premised on the presumption that New Jersey has experienced compensable harm from the impacts of climate change, the mainstream scientific understanding does not support this finding. The Intergovernmental Panel on Climate Change (IPCC), established by the United Nations, is considered the “gold standard” in compiling the latest studies and knowledge on climate change and its impacts. In its most recent report (AR6), the IPCC found that anthropogenic climate change has increased temperatures by about 1.2 degrees Celsius, and, as a result, we are experiencing a minor increase in heat waves and heavier rainstorms. However, it also found no evidence that we are experiencing GHG influenced increases in hurricanes, tornadoes, floods, fires, or most types of droughts. Sea level rise from climate change has also not impacted the state. Without a showing of actual damages caused by fossil fuels, there is no basis for this legislation. Yet, despite the lack of any scientific evidence of damages in New Jersey, the proponents of the legislation believe the retroactive assessment will be $50 billion.
For all the above reasons, this legislation should not move forward. We ask that the bill be voted down in committee. Thank you for your consideration.
