The Next Economy
Should the Fossil Fuel Industry Be Taxed to Pay for Climate Damage?

More than 60 environmental leaders and organizations have signed The Carbon Levy Project declaration, calling for a tax on fossil fuel extraction that would help pay for damages caused by climate change. The declaration states that fossil fuel companies are accountable for around 70 percent of present day global warming and should be held accountable for the resulting costs to the countries most affected. Signatories include author Naomi Klein, 350.org’s Bill McKibben, and Greenpeace’s Kumi Naidoo.

Large oil, coal and gas producers receive generous subsidies despite their profitability and their knowledge that their products and practices are heavily contributing to global warming. The top 5 oil and gas companies alone - ExxonMobil, Shell, Chevron, BP, and ConocoPhillips – made over $1 trillion in profits from 2002 to 2012, according to Taxpayers for Common Sense. Yet, post-tax energy subsidies for oil, coal and gas producers amounted to $4.9 trillion in 2013 and are projected to reach $5.3 trillion in 2015, according to an IMF study. The Carbon Levy Project argues that the subsidies are “obscene” and that fossil fuel companies can afford to pay into a fund to aid countries facing extreme weather events and slow-onset events (such as sea-level rise and desertification) caused by climate change.

The Project’s webpage states: “We propose that a global fossil fuel extraction levy be established and paid into to the international Loss and Damage Mechanism. This funding would be used to assist the poorest and most vulnerable communities suffering the worst impacts of climate change. This fossil fuel extraction levy needs to be part of a general phase out of fossil fuels.

“Climate finance is already inadequate – with a huge gap between what is needed and what is being offered. A new source of finance from a levy on Big Oil, Coal and Gas Producers could unlock some of the objections by rich countries to including loss and damage in a new Paris agreement.”

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The Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts was established at COP19 in November 2013. Contributions to the fund from the private sector will become more desperately needed in the coming years as climate impacts worsen. The United Nations Environment Programme (UNEP) has predicted that climate adaptation costs in across all developing countries could rise to $250-500 billion per year by 2050 – and to US$50 billion per year by 2050 in African countries alone – even if global warming is limited to 2 degrees Celsius this century. International anti-poverty agency ActionAid suggested that, “Even in the best mitigation and adaptation scenarios, the global costs of residual damage – the loss and damage – of climate change is expected to be high. The best available models to date predict an average of US$1.2 trillion (US$2,000) per year by 2060, with a range of $0.3 to $2.8 trillion, and with costs increasing every following year.”

This call for a carbon levy follows the global commitments made at COP21 to limit global warming to 1.5 degrees Celsius, and previous pleas for action from these and other environmental activists. Klein and McKibben were among the 100 signatories of the Freeze Fossil Fuel Extraction/Stop Climate Crimes Manifesto, alongside Noam Chomsky, archbishop Desmond Tutu, designer Vivienne Westwood, activists Vandana Shiva and Nnimmo Bassey, and many others.

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