How realistic is a global fossil fuels tax to aid the green transition?
The Climate Damages Tax proposes a fee per tonne of CO2 embedded within the domestic extraction of coal, oil and gas.
A new report has claimed that a tax on the extraction of fossil fuels could raise $720bn by the end of the decade for to support the green transition in the world’s poorest countries.
Led by Stamp Out Poverty and backed by the likes of Greenpeace, Climate Action Network and Christian Aid, the Climate Damages Tax report, published earlier this week, examines the proposal that OECD countries, in particular members of the G7, should “lead in introducing a fee per tonne of CO2 embedded (CO2e) within the domestic extraction of coal, oil and gas.”
The report outlines that, if introduced in OECD countries in 2024 at a low initial rate of $5 per tonne of CO2e increasing by $5 per tonne each year, the tax would raise a total of $900bn by 2030. This, it says could be split so that 80% ($720bn) went to the newly established Loss and Damage Fund for helping developing countries with in responses to climate losses and damages and 20% ($180bn) was retained by countries for use domestically.
Certainly, ways to ensure money finds its way to transition efforts are necessary, with upwards of $100trn of global spending typically estimated as being required by 2050 – and some estimates being closer to $300trn.
David Hillman, director of Stamp Out Poverty and co-author of the Climate Damages Tax report said of the proposed tax: “This is surely the fairest way to boost revenues for the Loss and Damage Fund to ensure that it is sufficiently financed as to be fit for purpose.”
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