Fossil fuel tax proposed to cover rising costs of wild weather

KATOWICE, Poland, (Thomson Reuters Foundation): Taxing the extraction of fossil fuels could help pay for the growing costs of damage from harsher storms, wildfires, floods and rising seas, while providing a stronger incentive to wean the world off carbon-heavy energy, green groups said on Monday. 

A “climate damages tax” levied on oil, gas and coal companies could raise $ 300 billion a year by 2030 to bail out communities bearing the brunt of global warming, said a proposal supported by WWF, Practical Action and others. 

The tax would lay the cost of rising disaster losses directly on the industries most responsible for them, they said in a report released at UN climate negotiations in Poland. 

Besides assisting those in need overseas, a large share of income from the government-levied tax could help poorer groups at home take up green jobs, energy and transport, backers said. 

Spending on social justice measures is seen as crucial to avoiding the kind of protests France has seen in recent weeks over rising living costs, sparked partly by hikes in fuel taxes. 

“The injustice of climate change is that the impacts are felt first and hardest by those with the least responsibility for its causes,” Ralph Regenvanu, Vanuatu’s foreign affairs minister, said in a statement. 

His Pacific island nation lost 64% of its GDP - about $450 million - during Cyclone Pam in 2015, and has struggled to recover financially, he noted. 

“New sources of finance are needed to help address this,” he said, adding there was “strong justification” to tax the fossil fuel industry to pay for the climate damage it is causing. 

From 2021, the proposed tax would levy $5 on each ton of heat-trapping emissions expected to be produced by oil, coal and gas deposits that are extracted from the ground. 

The money would flow through existing national systems for royalty payments where fossil fuel companies operate, with a share going to the international Green Climate Fund or similar bodies to help pay for losses around the world, the report said. 

Part of the levy would stay in nations with fossil fuel industries, to help their workers find new jobs and pay for cleaner infrastructure for low-income communities, it said. 

Poorer fossil fuel-producing states, such as Indonesia and Nigeria, would keep all the funds raised, with middle-income nations such as China and Colombia retaining a larger share of income than richer countries. 

The tax would rise by $ 5 a year until 2030, rising to a $ 10 annual increase after that through 2050, when fossil fuels must be largely phased out of global energy systems to meet government commitments made under the 2015 Paris climate accord. 

“The world must wean itself off fossil fuels if we are to protect the planet - and we must do so quickly,” Manuel Pulgar-Vidal, WWF’s climate and energy head and former Peruvian environment minister, said in a statement supporting the tax. 

Julie-Anne Richards, one of the report’s authors, said the tax was “a practical way to address the injustice at the heart of climate change.” 

The fossil fuel industry makes “hundreds of billions in profits while the true costs of their products are paid by the rest of society,” she added. 

There are precedents for such taxes on tobacco, oil spills and the nuclear industry, she noted. 

And as losses mount from wilder weather, a fossil fuel levy could become more politically palatable, she added. 

Storm damage in the United States and the Caribbean alone last year amounted to more than $ 220 billion, representing nearly two-thirds of global losses caused by natural disasters in 2017, the United Nations said last week.