Two transparency bills in the California Legislature would require corporations to disclose more information about their emissions and their efforts to fight the climate crisis. The oil and gas industry is spending millions to kill them.
The bills would force big companies that do business in California to report all of their emissions and require firms that buy or sell carbon offsets — which are credits that represent a reduction in greenhouse gas emissions — to disclose more information in an effort to crack down on bogus climate claims. Both SB 253 and AB 1305 have momentum but could be blocked by moderate Democrats historically aligned with corporate interests.
Since the legislation would make new information available beyond California, the two bills could represent a watershed moment for holding big polluters accountable when they claim climate bonafides, supporters say.
Reporting requirements for corporate emissions are currently fragmented, and SB 253 would be a landmark law pinning down the climate impacts of some of the world’s largest companies. And as more companies market themselves as partners in the climate fight, greater oversight over voluntary carbon trading markets could help verify their claims. Challenges range from a lack of information on who is buying and selling credits to credits handed out for emissions reductions that never actually happened. AB 1305 requires this information to be reported publicly.
The bills are opposed by the Western States Petroleum Association, which has already spent $2.38 million on lobbying and advocacy groups this year. While some oil and gas companies in California have expressed their support for rolling back climate change, industry opposition fits into an agenda of delaying action, said Ryan Schleeter, communications director at the Climate Center.
“Delay is the new denial,” said Schleeter. “Climate denial won’t fly in this state, and companies are smart enough to figure that out, so they delay as long as possible and squeeze out as much profit as they can.”
“We Can’t Improve What We Don’t Measure”
Lawmakers are evaluating the bills as the climate crisis intensifies around the world. Halfway into 2023, smoke from extreme wildfires blanketed Canada and the U.S. Record-breaking temperatures have struck Texas, Mexico, Ireland, Britain, Puerto Rico, Europe, Northern Africa and Asia.
In California, WSPA insists that it wants to be part of the “climate conversation,” according to Kevin Slagle, the association’s vice president of strategic communications.
WSPA’s opposition to the transparency bills “is based not so much on not wanting to progress, as it is how we get to those places,” he continued, noting areas where the oil and gas industry is promoting solutions like hydrogen and biofuels. “Is it that we are often pushing too far, too fast?”
But industry warnings about pace and ambition contrast with the U.N.’s insistence that deep, rapid and sustained reductions are needed now. And the bills are in line with recommendations from a group of experts convened by the United Nations, which concluded that companies should annually report their emissions and reliance on carbon offsets as early steps to eventually ending fossil fuel production.
When pressed on the matter, Slagle deflected, offering his view that the oil and gas industry has been unfairly painted as “evil” due to its frequent opposition to climate accountability measures. In public comments and written testimony, WSPA representatives have said little about why they oppose reporting requirements proposed under SB 253. The California Chamber of Commerce, which has spoken for a broader opposition coalition that includes WSPA and other business associations, cites compliance costs.
Companies that participate in California’s cap and trade system already report emissions information to the state, including Scope 3 emissions, which account for the vast majority. These are from burning oil and gas sold by fossil fuel companies. Scope 1 and 2 refer to emissions from a business’s day-to-day activities and electricity usage.
SB 253, authored by Sen. Scott Wiener (D-San Francisco), expands reporting requirements to all companies generating revenues of more than $1 billion a year. It’s more expansive than a rule currently under consideration by the U.S. Securities and Exchange Commission, and the disclosures have the potential to affect climate action worldwide, said Mary Creasman, CEO of California Environmental Voters.
“This would be pretty monumental,” said Creasman, whose organization is sponsoring the legislation. “There is a movement to say we can’t improve what we don’t measure, full stop.”
Sometimes companies claim to reduce their climate pollution by buying offset credits, which can be used by a company or a country to offset their own emissions.
But offsets have dubious track records across industries and regions. One study into offsets for cooking stoves found that only one in seven represented actual reductions.
Another study found 93% of Chevron’s offsets over the last two years were likely junk. The company, a WSPA member, opposes AB 1305 and spent $1.27 million on lobbying this spring, the most of any oil company. It plans to use offsets while continuing to produce oil and gas.
In a legislative filing, WSPA called the bill’s reporting requirements unclear and redundant, pointing to the SEC’s rulemaking process.
For Assemblymember Jesse Gabriel (D-Woodland Hills), who authored AB 1305, the argument holds little water. Financial filings by one WSPA member company, the refining giant Valero, warned that disclosure rules could “be used to advance agendas that disfavor the fossil fuel industry.”
“If these companies want to get the benefit of showing they are on the right side of history, [AB 1305] will encourage them to show that they are purchasing offsets that will actually make a difference,” Gabriel said.
Moderate Democrats Will Decide Bills’ Fate
A nearly identical version of SB 253 failed last year by one vote in the Assembly. It’s now headed to committees in that chamber that must approve it before a floor vote.
Democrats dominate the chamber, 62 to 18 Republicans. This supermajority means opponents are focusing on swaying moderate Democrats, who are historically more likely to oppose regulations on businesses than progressive lawmakers.
In addition to all Assembly Republicans, one Democrat who is still in the Assembly — Sharon Quirk-Silva (Buena Park) — voted against climate disclosures last year. Fifteen others who registered “no vote recorded” in 2022 will have an opportunity to vote if the bill reaches the floor this year.
Combined, these legislators have received millions from the California Chamber of Commerce, as well as the oil and gas industry and other corporate interests.
“It’ll be a tough bill to pass in the Assembly,” said Creasman. “We’re hopeful this year, because it’s part of a strong package of other corporate leadership and accountability bills.”
Meanwhile, AB 1305 passed by a large majority in the Assembly and is now moving through the Senate. Gabriel is hopeful about its chances.
“I actually think the bills would fit together nicely in terms of creating a regulatory architecture that’s going to really just provide more accountability and transparency,” Gabriel told Capital & Main.
As scrutiny of the fossil fuel industry has grown, companies have cloaked themselves as climate warriors, said Melissa Aronczyk, an associate professor of media studies at Rutgers University who studies the history of the industry’s public relations strategies.
The public has caught on to squishy climate claims in recent years, but oil majors still often announce actions or aspirations that are impossible to measure.
“These are efforts to sidestep real rules, regulation or other frameworks, to actually hold these companies accountable,” Aronczyk said. “The irony is that it is a very simple need that we have, which is to phase out fossil fuels. It’s straightforward.”
