Oilsands part of second U.S. fraud lawsuit against Exxon over carbon pricing

There is a second fraud lawsuit in the United States against ExxonMobil involving Alberta’s oilsands.

The lawsuit, filed on Thursday by the state of Massachusetts, accuses the oil multinational of misleading investors about what climate change measures could cost its operations — especially those in the oilsands.

“ExxonMobil’s misrepresentations falsely justified to investors its riskiest long-term investments, including Canadian bitumen oilsands projects,” says the state’s complaint, which has not been tested in court.

A similar action by New York’s attorney general went to trial this week.

An Exxon lawyer, calling them “bizarre and twisted,” has denied the accusations in that case. He said the allegations fail to take into account all the ways Exxon priced carbon risk into its decisions.

As in the New York case, Massachusetts alleges that Exxon told investors it evaluated its projects with a high and increasing price on carbon when it used a much lower figure that remained stable.

It points to extensive public documents and speeches by company executives assuring investors that projects were assessed with a carbon price as high as $80 a tonne.

It cites internal company directives suggesting the price that Exxon actually used was no more than $40 a tonne.

The lawsuit alleges the misrepresentation was even bigger for the oilsands, where Exxon is a major player through its Canadian subsidiary Imperial Oil.

Imperial has declined comment on the fraud cases and referred questions to its parent company.

The lawsuit quotes internal documents referring to an “alternate methodology.” It alleges the company would evaluate risk based on legislation that was in place at the time.

“For certain Canadian oilsands projects … ExxonMobil assumed … that existing climate legislation would remain in place, unchanged, indefinitely into the future.”

Alberta rules in place in 2015 were based on emissions intensity and have been calculated to have imposed a cost of $15 a tonne on carbon emissions.

“ExxonMobil applied these flat, lower proxy costs to both investment decisions at Canadian oilsands projects and reserves assessments,” the lawsuit claims.

“For the purposes of evaluating company reserves, ExxonMobil assumed that no new costs would be imposed in Alberta and that only 20 per cent of emissions would be taxed, indefinitely into the future.”

The “alternate methodology” had the effect of reducing apparent carbon costs at Imperial’s Kearl oilsands mine by 94 per cent, the lawsuit alleges.

The lawsuit also quotes internal documents in which Imperial Oil employees pointed out that actually using the carbon price the company said it was using would result in large writedowns of oilsands assets.

The lawsuit also accuses Exxon of deceiving the public.

“ExxonMobil claims that it is ‘working to decrease our annual carbon footprint,’ while in fact the company continues its unabated, business-as-usual rapid exploration, development and production of fossil fuel reserves, including its most carbon-intensive reserves, such as those in the Canadian oilsands.”

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

Just Posted

Alberta announces 98 new cases of COVID-19

City of Red Deer has no COVID-19-related deaths

The Red Deer Public Market will not open next month

It’s being postponed indefinitely to reduce public gatherings

Women’s Fun Run is ‘re-imagined’ for May 9

Families can register for free and do any activity at home

WATCH: Red Deer emergency call centre hours change starting next week

Hours at the City of Red Deer’s COVID-19 emergency call centre will… Continue reading

Alberta Health Services provides COVID-19 prevention tips

Alberta Health Services has a number of recommendations for people amid the… Continue reading

Alberta government website has latest COVID-19 statistics

Red Deer Advocate readers can stay up to date on the COVID-19… Continue reading

David Marsden: Hospital parking should always be free

If you need to visit a patient at a hospital or other… Continue reading

Woman scared for brother in Calgary long-term care home with COVID-19 deaths

Woman scared for brother in Calgary long-term care home with COVID-19 deaths

Person connected to Red Deer College tests positive for COVID-19

‘I wish this individual well,’ says president

COVID-19 crisis distracting from flood-prone First Nation’s plight: NDP

COVID-19 crisis distracting from flood-prone First Nation’s plight: NDP

Judge sides with woman accused of spying for Russia, orders new hearing

Judge sides with woman accused of spying for Russia, orders new hearing

Ont. court upholds murder conviction in death of girl found in burning suitcase

Ont. court upholds murder conviction in death of girl found in burning suitcase

Most Read