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Vermont is going to make fossil fuel companies pay for climate change damage

Vermont has become the first state to enact a law requiring fossil fuel companies to pay a share of the damage caused by climate change after the state suffered catastrophic summer flooding and damage from other extreme weather.

Other states are already eyeing similar legislation, but the oil and gas industry is pushing back

A sign that reads " North Vermont 14," bent to one side and emerging a large puddle of brown water on muddy, flooded streets. A man rides green tractor in the background.

As It Happens6:45Vermont is going to make fossil fuel companies pay for climate change damage

It's high time the companies most responsible for climate change pay for the damage it causes, says environmental advocate Ben Edgerly Walsh.

Walsh is the climate and energy program director with the Vermont Public Interest Research Group. The non-profit environmental and consumer advocacy group has been pushing for legislation to force fossil fuel companies to shoulder some of the costs dealing with climate change.

On Thursday, the group achieved its goal when Vermont became the first state to enact such a law.

"The reality is they are the ones responsible for the pollution that caused the climate crisis. They've made an enormous amount of money on the product that caused that pollution. And they very clearly knew what they were doing," Walsh told As It Happens host Nil Köksal.

"We think it's only fair that they pay their fair share of the costs."

The American Petroleum Institute, the top U.S. lobbying group for the oil and gas industry, disagrees.

"This punitive new fee represents yet another step in a co-ordinated campaign to undermine America's energy advantage and the economic and national security benefits it provides," spokesperson Scott Lauermann said in a statement.

How did this come to be?

Vermont has a Democrat-controlled legislature, and a Republican governor who has repeatedly vetoed climate change related bills.

But this time, Gov. Phil Scott allowed the bill, known as the Climate Superfund Act, to become law without his signature.

In a letter to lawmakers, Scott acknowledged that fossil fuel companies are likely to fight the law in court, and he's concerned his small state can't afford to take on "Big Oil" by itself.

"I'm also fearful that if we fail in this legal challenge, it will set precedent and hamper other states' ability to recover damages," he wrote.

"Having said that, I understand the desire to seek funding to mitigate the effects of climate change that has hurt our state in so many ways."

A gray haired man, wearing a casual black spring jacket over a shirt and tie, stands in a parking lot. His mouth is open mid-sentence, and he's peering to one side.

Walsh says he believes Scott — who intends to run for re-election — allowed the bill to pass because of public pressure after last summer's summer's devastating torrential rains.

July 2023 saw flooding in Vermont that destroyed homes and businesses and washed out roads, costing the state and municipal government hundreds of millions of dollars.

How does it work?

The new law will allow Vermont to charge companies for their share of emissions going back nearly three decades, then use that money to fund projects and infrastructure that helps Vermont adapt to climate change and better withstand extreme weather events in the future.

Vermont's state treasurer, in consultation with the state's Agency of Natural Resources, will provide a report by Jan. 15, 2026, on the total cost to Vermonters and the state from the emission of greenhouse gases from Jan. 1, 1995, to Dec. 31, 2024.

It will look at the effects on public health, natural resources, agriculture, economic development and housing, then use federal data to determine the amount of covered greenhouse gas emissions attributed to a fossil fuel company.

WATCH | 2023 floods wreak havoc in Vermont:

Catastrophic flooding leaves Vermont under state of emergency

11 months ago

Duration 2:21

Vermont is under a state of emergency after the U.S. state was pummelled by two-months' worth of rain in just two days. The rain has let up for now but officials warn the flood risk is far from over with more rain in the forecast.

It's an example of what's known as a "polluter-pay" system, and it's modelled after the Superfund, a U.S. federal program established in 1980 that forces companies to pay for the environmental clean-up hazardous waste sites.

"The idea that polluters should pay to clean up their pollution is not new," Walsh said.

Several other states are eyeing similar laws, including Maryland, Massachusetts and New York.

"Their residents also deserve to be compensated for the costs that they are incurring," Walsh said.

Oil industry pushes back

But lawmakers who support this bill are in for a fight.

API said it's extremely concerned the legislation "retroactively imposes costs and liability on prior activities that were legal, violates equal protection and due process rights by holding companies responsible for the actions of society at large; and is pre-empted by federal law."

Walsh said "society at large" is already paying its share, and will continue to do so.

"What we're saying isn't these companies should have to shoulder the entire burden. We're saying they should have to pay their fair share," he said.

"Vermont taxpayers will have to make investments in climate resilience in addition to any funds that come in from this law. And, unfortunately, Vermonters are going to continue to be harmed by the climate crisis despite this law's passage."

State Rep. Martin LaLonde, a Democrat and an attorney, also expects the law to face legal challenges from the industry, but he believes Vermont has a solid legal case.

"Most importantly, the stakes are too high — and the costs too steep for Vermonters — to release corporations that caused the mess from their obligation to help clean it up," he said.

With files from the Associated Press. Interview with Ben Edgerly Walsh produced by Chris Habord.

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