Fossil fuel tax could raise $720bn by 2030

2nd May 2024


Taxing the extraction of fossil fuels in the world’s most advanced economies could raise $720bn (£575bn) by 2030 to support vulnerable countries facing climate damages, analysis has found.

In a new report, over 100 climate organisations including Greenpeace, Christian Aid, and Stamp Out Poverty propose that OECD countries introduce a fee per tonne of CO2 embedded within domestic extraction of coal, oil and gas.

A low initial rate of $5 per tonne increasing by the same amount each year would raise a total of $900bn by the end of the decade, with the report recommending that 80% go to the Loss and Damage Fund for climate-vulnerable countries.

The remaining 20% would provide a $180bn "domestic dividend" for countries that introduce the tax, which could be “easily administered” within existing systems of royalty payments or similar that fossil fuel companies already have to pay.

David Hillman, director of Stamp Out Poverty and co-author of the report, said It would be “unforgivable” if wealthy nations fail to deliver the funds needed for the Loss and Damage Fund, which was operationalised by world leaders at COP28 in Dubai last year.

“The richest, most economically powerful countries, with the greatest historical responsibility for climate change, need look no further than their fossil fuel industries to collect tens of billions a year in extra income by taxing them far more rigorously,” he continued.

“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.”

Around $700m has been pledged for the fund so far, which has been estimated to equate to less than 0.2% of the irreversible economic and non-economic losses developing countries are facing from global heating every year.

According to the report, the total sum raised by a fossil fuel tax by 2030 could pay for rebuilding and recovery from the damage caused by Cyclone Freddy – which displaced over half a million people in Southern Africa last year – more than 1,300 times over.

If introduced solely in the G7, it could raise $540bn for vulnerable countries by the end of the decade, with a $135bn domestic dividend across the member states.

As well as generating funds to help countries least responsible for the climate crisis, the tax would help accelerate the phase out of fossil fuels by making their production more expensive through progressively ratcheting up the proposed tax rate each year.

The report also suggests that the domestic dividend would ensure workers and communities in developed countries reap benefits from the tax to ensure a just transition towards renewable energy and other green infrastructure.

Areeba Hamid, joint executive director at Greenpeace UK, said: “A climate damages tax would be a powerful tool to help achieve both aims: unlocking hundreds of billions of funding for those at the sharp end of the climate crisis while helping accelerate a rapid and just transition away from fossil fuels around the world.”

Image credit: Shutterstock

Subscribe

Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.


Transform articles

Fake news

Disinformation about the impossibility of averting the climate crisis is part of an alarming turn in denialist tactics, writes David Burrows

6th June 2024

Read more

Rivers and waterways across England and Wales are increasingly polluted by sewage spills. What is causing the crisis and what is being done to tackle it? Huw Morris reports

31st May 2024

Read more

In January, the Welsh government consulted on a proposed white paper, 'Securing a Sustainable Future: Environmental Principles, Governance and Biodiversity Targets for a Greener Wales'.

31st May 2024

Read more

Gillian Gibson calls for urgent action to avoid environmental tipping points

20th May 2024

Read more

Support for net zero remains high across the UK and the EU, but the majority of citizens don't believe that major emitters and governments will reach their climate targets in time.

16th May 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close