Lawsuit alleges Exxon lowballed impact of carbon pricing on oilsands projects

Exxon has tried twice to block the case

Alberta’s oilsands are at the centre of a court battle in New York this week that legal experts say could affect future climate lawsuits in Canada.

“The evidence that’s coming out through this case is absolutely relevant to other lawsuits,” said Martin Olszynski, a University of Calgary professor who teaches environmental law.

New York’s attorney general is accusing Exxon Mobil of misrepresenting the risks oilsands operations face as governments move to fight climate change.

In the case filed a year ago, the state claims Exxon told investors that it was evaluating projects based on a carbon price that was much higher than the one used in calculations. That led investors to believe they faced a lower risk and also inflated evaluations of Exxon’s oil reserves.

Exxon has tried twice to block the case. The company’s lawyer, calling the accusations bizarre and twisted, argued Tuesday that Exxon did nothing wrong.

Although the lawsuit deals with a wide array of the multinational’s operations, the oilsands feature prominently as Exxon is a major player through its subsidiary Imperial Oil.

“In these parts of its business, Exxon often applied a much lower price per ton to a small percentage of its (greenhouse gas) emissions … and held those lower costs flat far into the future,” court documents say.

“Exxon in effect … create(d) the illusion that it had fully considered the risks of future climate change regulation and had factored those risks into its business operations … The company was exposed to far greater risk from climate change regulations than investors were led to believe.”

The documents allege Exxon lowballed by $30 billion the impact of carbon pricing on 14 Alberta oilsands projects. They claim carbon costs at the Kearl project in northern Alberta were understated by 94 per cent.

The documents also allege that low carbon cost estimates falsely extended the economic life of some assets. It claims the life of Imperial Oil’s facility in Cold Lake, Alta., would be 28 years shorter if assigned a true carbon price.

Exxon says the lawsuit fails to consider the different ways the company accounted for increasingly strict climate regulations. Its lawyer says one method tries to predict how climate regulations may affect oil and gas demand while another measures how local regulators may tax emissions.

Imperial Oil declined to comment.

David Estrin, a Toronto lawyer who specializes in environmental law, said evidence emerging from the trial is likely to surface in future climate lawsuits in Canada. He predicts governments will be forced to eventually sue fossil fuel producers for damage caused by climate change.

“Governments at some level in Canada will certainly go after the carbon majors,” he said.

“With the kind of information that New York state is bringing out, that would allow suits to be brought on the basis of negligence. It’s an aggravating factor.”

Several municipalities are actively considering lawsuits against fossil fuel companies, he said.

Olszynski said Canadian lawyers involved in those efforts are likely to be closely watching the evidence being considered in New York and the case, if upheld, may encourage Canadian litigation.

“Some of the information that’s going to come out in the context of this (New York) lawsuit will inevitably inform the court of public opinion whether or not there is merit behind these lawsuits.”

Bob Weber, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Alberta’s chief medical officer of health, Dr. Deena Hinshaw, says the provincec has ordered 1.96 million doses of the flu vaccine. “That is a record for the province and 20 per cent more than last year,” she said. (Chris Schwarz/Government of Alberta)
COVID-19: Central zone active cases up Monday

‘We’ve now crossed the tipping point,’ says Hinshaw

Lacombe-Ponoka MLA Ron Orr speaks. (Emily Jaycox/Ponoka News)
Wreath laying ceremony held in Manfred

Ceremony marks 64th anniversary of Hungarian revolution, honours settlers

2020 Ponoka business awards
Ponoka chamber 2020 Business Award winners

The Ponoka and District Chamber of Commerce 2020 Business Awards were held… Continue reading

Ryen Williams, 11, with a lost miniature horse at JJ Collett Oct. 23. Photo by Don Williams
UPDATE: Owner found

Father and son found miniature horse while out for a walk at JJ Collett

Alberta has 3,651 active cases of COVID-19. (File photo)
432 new COVID cases sets another record Friday

Central zone holds steady at 126 active cases

The death of 19-year-old Jacob Michael Chitze of Edmonton has now been ruled a homicide following an ongoing RCMP investigation.
UPDATE: RCMP arrest youth for second degree murder of 19-year-old Jacob Chitze

Arrest made for the murder of Jacob Michael Chitze, 19.

(Black Press file photo)
Maskwacis RCMP welcomes new detachment commander

The Maskwacis RCMP detachment has a new detachment commander, Inspector Leanne MacMillan.… Continue reading

Pumpkins for the 46th Annual WDACS Pumpkin Ball on display at Vision Credit Union Wetaskiwin. Shaela Dansereau/ Pipestone Flyer.
46th Annual Pumpkin Ball held virtually this year

This year the pumpkins were sold over a six-day online auction.

Comedic actor Seth Rogen, right, and business partner Evan Goldberg pose in this undated handout photo. When actor Seth Rogen was growing up and smoking cannabis in Vancouver, he recalls there was a constant cloud of shame around the substance that still lingers. Rogen is determined to change that. (Maarten de Boer ohoto)
Seth Rogen talks about fighting cannabis stigma, why pot should be as accepted as beer

‘I smoke weed all day and every day and have for 20 years’

Leader of the Opposition Erin O’Toole rises during Question Period in the House of Commons Thursday October 22, 2020 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
O’Toole tells Alberta UCP AGM Liberals were ‘late and confused’ on COVID response

He says Alberta Premier Jason Kenney has taken charge and not waited to make things happen

Alberta Premier Jason Kenney arrives for an announcement at a news conference in Calgary, Alta., Tuesday, Sept. 15, 2020. THE CANADIAN PRESS/Todd Korol
Inquiry into oil and gas foes to deliver report next year: Kenney

A lawsuit filed by environmental law firm Ecojustice argues the inquiry is politically motivated

The Canadian border is pictured at the Peace Arch Canada/USA border crossing in Surrey, B.C. Friday, March 20, 2020. More than 4.6 million people have arrived in Canada since the border closed last March and fewer than one-quarter of them were ordered to quarantine while the rest were deemed “essential” and exempted from quarantining. THE CANADIAN PRESS/Jonathan Hayward
Majority of international travellers since March deemed ‘essential’, avoid quarantine

As of Oct. 20, 3.5 million travellers had been deemed essential, and another 1.1 million were considered non-essential

This photo provided by Air Force Reserve shows a sky view of Hurricane Epsilon taken by Air Force Reserve hurricane hunter team over the Atlantic Ocean taken Wednesday, Oct. 21, 2020.   Epsilon’s maximum sustained winds have dropped slightly as it prepares to sideswipe Bermuda on a path over the Atlantic Ocean.  The National Hurricane Center says it should come close enough Thursday, Oct. 22, evening to merit a tropical storm warning for the island.  (Air Force Reserve via AP)
Hurricane Epsilon expected to remain offshore but will push waves at Atlantic Canada

Epsilon is not expected to have any real impact on land

Most Read