by Anne MacLennan
‘Climate change is a war. A category five hurricane releases energy equivalent to 10,000 times the nuclear bomb dropped on Hiroshima in 1945. Those countries on the path of hurricanes and cyclones and submerging coasts are on the front line.’
The 2022 Pakistan floods affected 33 million people, causing over 1,700 deaths. Loss and damage was estimated at over $30bn, but 90% of the financial help received was as loans, which added yet more financial burden to the reeling country. Meantime, oil and gas profits reached $4 trillion in 2022, so some redistribution is required.
A Climate Damages Tax (CDT) on fossil fuel companies is therefore proposed by organisations concerned about climate justice.
The CDT would be a regular and incremental fee (windfall taxes are one-offs) on the extraction of each tonne of coal, barrel of oil, or cubic metre of gas, based on that fuel’s embedded CO2 emissions. An estimated £580bn by the end of the decade would go to the Loss and Damages Fund agreed at COP27 for vulnerable nations who suffer major climate impacts while contributing little to global emissions. It is expected that the tax would also accelerate phase-out of fossil fuels by making production more expensive.