Greenhouse gas litigation is disincentiving energy innovation, Pacific Research Institute finds

With gas prices now above $6 in California and continuing to rise, a new Pacific Research Institute brief has found that all the litigation over greenhouse gas emissions is hurting consumers and disincentivizing robust innovation in the energy sector.

The strategy to pursue climate policy change through the courts is both regressive and controversial, Dr. Wayne Winegarden, PRI senior fellow in business and economics, said in an email response to the Northern California Record.

Winegarden is also author of the brief, Counterproductive: Why state and municipal climate lawsuits are anti-growth, anti-innovation, and anti-environment.

“To the extent the lawsuits are successful, the payment to the states/cities increase the costs on the oil companies; these costs will get priced into the cost of gas, which raises prices for consumers,” Winegarden told the Record. “These payments will also impact the profitability of the companies, diminishing the funds available for clean energy innovation.”

And perhaps equally important, the lawsuits are a negative signal for potential innovators, Winegarden said.

“Just like natural gas was once heralded as an important low-emission source but is now subject to lawsuits, the litigation creates a new risk for today’s potential innovators that their technologies will be subject to future lawsuits,” Winegarden said. “The increase in risks requires a higher return, which means less innovation.”

The brief also references a 2011 U.S. Supreme Court decision, in which the court wrote it is not the role of the judiciary to prescribe climate policy.

California’s highest-in-nation gas prices amount to a tax that’s particularly difficult on middle- and lower-income families.

Current prices are largely due to the taxes and regulations of the state, Winegarden said. While a number of lawmakers have proposed suspension of California’s 51-cent a gallon gas tax to help counter inflation pressure, such measures have not advanced in Sacramento.

Winegarden noted the lawsuits aren’t likely to bring about change other than less innovation.

“There is a large profit opportunity for the development of clean energy innovation; the litigation acts as a disincentive,” Winegarden said. “Curbing the litigation removes this disincentive and thus removes a barrier to innovation.”

Among the brief’s key findings is that the lawsuits being filed by California cities are counterproductive. 

“They are attempts to usurp the legislative power, to implement environmental policy through the court system,” Winegarden said. “The result will be higher costs for consumers and less innovation.”