Fueling Climate Action: Taxing Big Fossil Fuel Firms for $900bn by 2030

According to a recent report, implementing a fresh tax on fossil fuel corporations headquartered in the most affluent nations globally could yield hundreds of billions of dollars. The Climate Damages Tax report, unveiled recently, projects that an additional levy on major fossil fuel players from the wealthiest Organisation for Economic Co-operation and Development (OECD) nations could amass a substantial $720 billion (£580 billion) by the decade’s end.

The report’s authors advocate for a novel extraction tariff to bolster the loss and damage fund aimed at aiding vulnerable nations in grappling with the increasingly severe repercussions of climate change. This fund was established following a hard-fought victory by developing countries at the Cop28 summit in Dubai, signaling an anticipated commitment from developed, polluting nations to furnish financial assistance in mitigating the ongoing devastation.

David Hillman, director of the Stamp Out Poverty campaign and co-author of the report, emphasized that the findings underscore how the wealthiest nations, bearing the greatest historical responsibility for climate change, can effortlessly tap into their fossil fuel industries to generate tens of billions in additional revenue annually.

The authors contend that implementing the levy could be seamlessly integrated into existing tax frameworks. Their calculations indicate that if introduced in OECD countries in 2024, starting at $5 per tonne of CO2 equivalent and escalating by $5 annually, the tax could amass a total of $900 billion by 2030.

$720 billion of this sum would be allocated to the loss and damage fund, while the remaining $180 billion would be designated as a “domestic dividend” to facilitate a just climate transition for communities within wealthier nations.

This proposal has garnered support from numerous climate organizations globally, including Greenpeace, Stamp Out Poverty, Power Shift Africa, and Christian Aid.

Areeba Hamid, a joint director at Greenpeace UK, stressed that governments can no longer passively watch as ordinary citizens foot the bill for the climate crisis, while “oil magnates reap profits from soaring energy prices.”

“We urgently need unified global leadership to compel the fossil fuel industry to halt extraction and take responsibility for the widespread damage they are inflicting worldwide. Implementing a climate damages tax could serve as a potent instrument to achieve both objectives: unlocking substantial funding for those most impacted by the climate crisis while expediting a swift and equitable transition away from fossil fuels globally.”

The world has borne witness to the catastrophic consequences of the climate emergency, ranging from severe droughts in Africa to fatal floods in Pakistan and Afghanistan.

Hamid emphasized, “The devastating impact of extreme weather is claiming lives and wreaking havoc worldwide. Yet, it’s the communities least responsible for this crisis that are bearing its brunt. Meanwhile, households across Europe are grappling with exorbitant energy bills. Despite this, the fossil fuel industry continues to reap immense profits without being held accountable for its historical and ongoing role in exacerbating the climate crisis.”

The release of the report coincides with the inaugural meeting of the newly established loss and damage fund board in Abu Dhabi. This gathering aims to chart the course for financing the fund, a critical step in addressing the escalating challenges posed by climate-related disasters.

Simultaneously, ministers convene at the G7 climate, energy, and environment meeting in Turin, Italy. The report underscores the potential for action within these influential nations. By implementing a climate damages tax, particularly in G7 states home to numerous international oil and gas corporations, substantial funds could be raised for the loss and damage fund. The report suggests that such a tax could yield $540 billion by the decade’s end, with an additional $135 billion earmarked for domestic climate initiatives across the G7.

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