Climate Polluters Should Pay a Tax for Damages, U.N. Chief Says

Climate Polluters Should Pay a Tax for Damages, U.N. Chief Says

The companies that are most responsible for global warming should pay taxes to cover the damages they have done to the planet. This was stated Tuesday by U.N. Secretary General Antonio Guterres during the opening session at the U.N. General Assembly.

In a sharp speech to world leaders the U.N. chief criticized the fossil fuel industry and stressed the need for payments to compensate for irreparable climate damage.

” The climate crisis is a case of moral and economic injustice,” Guterres stated. He noted that the world’s 20 largest economies account for 80 percent of global greenhouse gas emissions. Those countries that contribute little to climate change often face the most severe consequences.

” While the fossil fuel industry enjoys hundreds of billions in subsidies and windfall profits, household budgets shrink, and our planet burns,” Guterres said.

Fossil-fuel companies weren’t Guterres’ only target. Guterres also criticized the financial institutions and banks that support the industry, as well as the “massive PR machine” that makes money protecting fossil fuel producers.

This is not the first time Guterres has targeted the fossil fuel industry or called attention to the need for equitable climate finance. The criticism comes at a time when vulnerable countries are becoming more vocal in their calls to climate damage compensation.

” “It certainly reflects that urgency around the issue,” stated Taylor Dimsdale at E3G, program director for resilience and risk.

He said that

Guterres’ tax proposal is not new. “But what you did not have in the past was the political attention and the urgency

Part of this urgency has been driven in part by Russia’s invasion of Ukraine this year. This conflict has driven up energy prices around the world and helped fossil fuel producers make higher profits. Climate scientists continue to produce research about the dangers of a warmer globe.

Guterres responded by urging rich countries to “tax the windfall profits fossil fuel companies .”

He said that the money should be directed to countries affected by climate impacts they are unable to adapt to. This is what U.N. linguists call loss and damage. He also suggested that some of the proceeds could be used to help people struggling to pay their rising energy and food bills, which is something the European Union is currently considering.

Developed countries have resisted the idea of a separate fund to cover loss and damage, fearing that they would be liable for continued payments. The issue is certain to factor into upcoming climate talks in Egypt in November (Climatewire, June 21).

” Everyone is aware that this is going to become a major negotiation item, so you’re seeing more calls for solutions,” Dimsdale said.

An end to ‘endless discussions’

Philip Davis is the prime minister of the Bahamas. He said that the message about why the developing world’s emissions have to be supported might need to be reframed in order to get the money flowing.

“I call that enlightened selfinterest,” he said in a discussion held on the sidelines U.N. gatherings, pointing out the knock-on effects of climate change such as displacement and migration. “Climate justice, fairness and justice seem to be missing from the industrialized world due to their own definitions .”

Countries such as the Bahamas lose large chunks of their gross national product every time a major hurricane strikes. Access to financing through institutions such as the World Bank or International Monetary Fund is also needed to reduce that impact.

” They say I’m wealthy country,” Davis stated. “But having had five hurricanes in the past four or five years, that ratchets my debt up to a sustainable level .”

And the servicing of those debts prohibits his country investing in things like renewable energy or adaptation to address future dangers.

“Mitigation aims to reduce carbon emissions. Davis asked, “Adaptation is about building resilience. But what about loss or damage?” “When something happens, how would countries such as my country respond and who will help us in the event of our loss or damages? That is something that must be considered in .”

Negotiators in last year’s climate talks, held in Glasgow, Scotland, decided to open a new dialogue about finance options for loss or damage, much to the dismay of many countries that are climate-vulnerable. Leaders and activists from those countries say they don’t have the time to wait for rising seas or severe weather to destroy their fragile economies.

Guterres indicated that he felt the exact same way, calling Tuesday for an end of “endless conversations” and urging countries to take meaningful action.

Some countries are beginning to realize the need.

Denmark said Tuesday that it would provide an additional $13.4 million to address climate-induced damages in places like the Sahel, a semi-arid region in Africa.

David Malpass, the head of the World Bank, said that it offers loans and catastrophe bonds that countries can access right away after a natural disaster. He also spoke in the same conversation as Davis.

But those are still debts Davis pointed out.

The IMF has a disaster trust that is funded by donors. This allows it to provide debt relief grants to poor and vulnerable countries in times of disasters.

Kristalina Georgiaieva, IMF’s managing Director, stated that it was worrying to see the global climate negotiations only two months away and the discussion about loss and damage still not moving forward.

” “It is a fair ask from countries which are already hit,” she stated.

Climate-vulnerable countries are also calling for reforms that include debt relief and debt-for-nature swaps, where part of a nation’s debt is forgiven in exchange for investments in conservation.

Guterres proposed modifications to borrowing conditions to allow countries deemed high risk by financial institutions to borrow more money. This would allow them to access more money or base access to finance on their vulnerability to disaster, rather than gross domestic products. This proposal is similar to one made by Mia Mottley (Prime Minister of Barbados), who has called for reform to the global finance system.

The Alliance of Small Island States is a group of low-lying islands countries that has created an index to measure countries’ vulnerability.

Guterres urged governments to invest money in facilities such as Green Climate Fund, which helps countries finance adaptation and clean energy. This effort has not been able to receive funding through the United States appropriations process.

Fossil fuel companies weren’t the only ones who received harsh treatment from Guterres. He stated that the international community is “gridlocked” in a global dysfunction .”

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Reprinted from E&E News with permission from

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