Former World Leaders Call for $25bn Levy on Oil States’ Revenues for Climate Damage
Former world leaders and economists are urging for a $25bn levy on oil-producing states to help finance the impact of climate disasters on vulnerable populations.
Call for Levy to Support Climate Damage Fund
Seventy international figures, including former UK Prime Minister Gordon Brown, have signed a letter calling for a $25bn levy on oil-producing states to help fund the costs of climate disasters on the world’s poorest populations. The letter was signed ahead of the UN climate summit, Cop28, which is set to begin in Dubai. Among the signatories are 25 former prime ministers or presidents.
The proposed $25bn levy would only constitute a small fraction of the revenue earned by oil-producing countries in recent years. The fund would be used to support the 'loss and damage' experienced by developing countries as a result of the climate crisis.
Gordon Brown emphasized the need for finance for mitigation and adaptation efforts in the global south, stating that all major emitters should contribute to raising the $1tn annually required for development and climate funding. The letter is being sent to Sultan Al Jaber, the Cop28 president-designate, and President Luiz Inácio Lula da Silva of Brazil, the current G20 president.
Record Revenue Highlights Urgency for Levy
The letter highlights that petroleum revenues were $1.5tn annually before the Covid-19 pandemic, but skyrocketed to $4tn in 2022. This amount is 20 times the global aid budget, over 30 times the budgets of all multilateral development banks combined, and 40 times the $100bn annual commitment made in 2009 to support developing nations' efforts to reduce emissions and adapt to climate change impacts.
The former world leaders and economists argue that over $2.5tn of windfall profits were gained by oil-producing countries and their companies in just one year without any advancement or effort by them.
The call to fill the 'loss and damage' fund is considered a crucial task at Cop28, as few countries have made commitments. Hundreds of billions of dollars will be needed, which is likely beyond the reach of governments alone. Other revenue sources being explored include potential levies on frequent flyers and international shipping.
Funding from Levy Could Kickstart Greater Investments
The proposed levy on fossil fuel-producing countries, as mentioned in Gordon Brown's letter, would represent approximately 3% of the oil and gas revenues of the world's largest petrostates. The signatories highlight that the 'loss and damage' fund should not be the sole beneficiary, as other programs could also benefit from the levy.
The letter explains that while some private companies in the sector have already paid additional taxes on their windfall profits, they only represent 15% of the revenues. The major petrostates have been the biggest beneficiaries, earning $973bn in export earnings alone, a $381bn increase from the previous year.
By implementing a $25bn levy, which accounts for just over 1% of last year's windfall revenues and approximately 3% of major exporters' earnings, it is believed that a program of investment in the global south can be jumpstarted.
