‘Polluters Must Pay’: UN Chief Calls for Windfall Tax on Fossil Fuel Profits to Address Climate and Cost-of-Living Crises
UN Secretary-General António Guterres issued a bold proposal during his opening remarks to the UN General Assembly on Tuesday: tax fossil fuel companies to help those suffering from the climate and cost-of-living crises.
Guterres’ proposal, also known as a windfall tax, comes at the close of a summer that saw extreme weather events worldwide and record fossil-fuel profits following Russia’s invasion of Ukraine.
“[T]he fossil fuel industry is feasting on hundreds of billions of dollars in subsidies and windfall profits while household budgets shrink and our planet burns,” Guterres said, according to a UN transcript of his speech.
Guterres specifically called on developed nations to tax fossil fuel companies’ windfall profits. While ordinary people have dealt with rising prices at the gas pump and escalating heating bills, major energy companies have enjoyed record profits since Russia’s invasion of Ukraine prompted an energy shortage, as AP News noted. ExxonMobil announced a record quarterly profit of $17.8 billion in July and Chevron a record three-month profit of $11.6 billion, according to The Guardian.
Guterres was also clear on how the tax should be used.
“Those funds should be re-directed in two ways: to countries suffering loss and damage caused by the climate crisis; and to people struggling with rising food and energy prices,” he said.
“Loss and damage” has been a sticking point at international climate negotiations. It refers to the idea that wealthier nations that have done more to contribute to the climate crisis historically should pay for the harm caused to developing nations that have not emitted nearly as many greenhouse gases. The issue is expected to be a major talking point at the upcoming COP27 climate conference in Sharm El-Sheikh, Egypt, but richer countries have already been accused of scuppering the discussion at preliminary talks in Bonn, Germany this June.
The issue is ever more relevant following devastating flooding in Pakistan that left a third of the country underwater and was most likely worsened by human-caused climate change.
“If we in Pakistan are responsible for less than 1% of (carbon) emissions, why must we carry the costs of this devastation?” Pakistani climate scientist Fahad Saeed asked in an email to AP News.
Asking developed countries to finance loss and damage by taxing the fossil fuel industry might be a way to rally richer and poorer nations around a common enemy. However, it may not be as politically feasible in every wealthy nation. The UK has already approved a 25 percent windfall tax on North Sea oil-and-gas production, Reuters reported. Further, the EU plans to tax oil companies and electricity generators to the tune of more than 140 billion euros directed towards struggling consumers. But in the U.S., the idea would have a hard time passing in both the House and the Senate. Outside experts noted that Guterres has moral authority but no power to shape the decisions of UN member countries.
“Fiscal policy for major economies is generally not made at the United Nations,” longtime international climate negotiator Nigel Purvis of Climate Advisers told AP News.
Still, Guterres made a strong statement just a week after internal documents revealed that oil and gas companies are still lying about their commitment to reducing emissions.
“[I]t is high time to put fossil fuel producers, investors and enablers on notice,” Guterres said. “Polluters must pay.”
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