COP29: Climate tax on oil giants could fuel billions to UN fund, says report

New Delhi: A UN fund meant to address climate emergencies could significantly benefit from taxing seven of the world’s biggest oil and gas companies, two nonprofits suggested in a joint report issued on the sidelines of the UN climate conference in Baku.

Nonprofits Greenpeace International and Stamp Out Poverty called for a long-term climate damages tax on fossil fuel extraction, with year-on-year increases combined with taxes on excess profits and other levies.

The UN Fund for Responding to Loss and Damage (FRLD) currently has $702 million, as against the $100 billion annually pledged by developed nations. The fund was announced at the 27th UN climate conference in Egypt and operationalised at the following meeting in UAE to help developing countries compensate for the impact of natural disasters caused by climate change.

The Greenpeace-Stamp Out Poverty study estimated that levying a climate damages tax on seven major international oil and gas companies could contribute $15.02 billion to the UN fund in the first year. 

If introduced across countries belonging to the Organization for Economic Cooperation and Development (OECD), the climate damages tax could raise an estimated $900 billion by 2030 to support governments and communities around the world, the study estimated.

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The 29th edition of the Conference of the Parties of the UN Framework Convention on Climate Change, or COP29, is being held in a year that has seen a series of extreme weather events due to climate change. Among those were Hurricane Beryl and Hurricane Helene in the US, heatwaves in India, Super Typhoon Carina in the Philippines, and floods in Brazil, Kenya and Tanzania.

Such extreme weather events have claimed thousands of lives this year. The financial impact has also been severe—a total loss of $64.6 billion, including $25 billion because of the heatwaves in India, according to the Greenpeace-Stamp Out Poverty report.

According to a UN report in July, India reported 40,000 cases of suspected heat strokes and more than 100 deaths till mid-June as temperature, especially in the northern regions, shot up to nearly 50℃.

Extreme heat has caused more than 400,000 deaths each year globally between 2000 and 2019, with 45% of those in Asia, according to the report.

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At COP29, India has called for developed countries to commit to at least $1.3 trillion yearly as part of a new collective quantified goal until 2030. 

The NCQG is the focus of the climate conference at Baku and is to set a new financial target to support developing countries in their climate actions post-2025. It will replace the previous commitment of $100 billion per year that developed nations had pledged in 2009 but which hasn’t come through.

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‘A moral imperative’

Fossil fuels are responsible for around 70% of carbon dioxide emissions that have led to climate change since the industrial revolution, with the rest resulting from farming and deforestation, according to the report.

One-third of fossil fuel emissions between 1965 and 2018 were caused by the output of just 20 fossil fuel firms, it added.

“Taxing the fossil fuels industry is not just an economic strategy, it’s a moral imperative,” Avinash Chanchal, deputy program director for campaigns at Greenpeace South Asia, said in the report. “The funds raised through a climate damages tax can be crucial in addressing the loss and damage borne by the most vulnerable communities, particularly in the Global South.”

David Hillman, director of Stamp Out Poverty, added: “A climate damages tax—along with other levies on fossil fuels and high-emitting sectors—will make polluters pay for the cost of climate impacts, as well as supporting workers and affected communities in the transition to clean energy, jobs, and transport.”

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The report suggested imposing a climate damages tax of $5 per tonne of CO₂-equivalent emitted by the world’s top seven oil and gas companies in the first year, and annually increasing the tax rate by $5 per tonne per year plus inflation.

According to the report, the seven oil and gas companies—Exxon Mobil Corp., Shell Plc., Chevron Corp., TotalEnergies SE, BP Plc., Equinor ASA, and ENI SpA—earned almost $150 billion last year.

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