Shipping, Energy Tax Could Help Foot $1T to Combat Climate Change - COP29
November 19, 2024
The COP29 climate talks in Azerbaijan aim to agree an annual finance target of $1 trillion or more a year to help poorer countries respond to global warming. Some see new taxes as one way to get there. The Global Solidarity Levies Task Force (GSLT), led by France, Barbados and Kenya, is exploring the issue. Below are excerpts from its latest report on the options being discussed -- as it pertains to shipping and fossil fuels -- and estimates about how much could be raised.
SHIPPING
The levy that could be closest to being agreed is for shipping, responsible for around 3% of global emissions, with governments set to debate a series of measures at a meeting of the International Maritime Organization in April. Models for a levy include a Pacific islands and Caribbean proposal for a flat rate of $150/ton of carbon dioxide equivalent (CO2e), rising every five years, the GSLT said. The European Union and Japan favor a levy of $100/ton in 2027, while countries including Bahamas and Liberia have proposed an initial flat rate of about $18.75/ton. A levy of $150-300/ton could generate $127 billion a year in 2027-2030, the GSLT said, citing a study by U.N. Trade and Development. Revenue would fall to $103 billion in 2031-2040 and $36 billion in 2041-2050 as ships became less polluting.
FOSSIL FUELS
Countries already impose levies on fossil fuels, including indirectly when gasoline is bought at the pump, through VAT, carbon taxes or emissions-trading schemes, or via royalties or taxes on oil companies. GSLT said revenues could be generated in future through a levy on extraction or "windfall" taxes on energy company profits. A "Climate Damages Tax" of $5/ton extracted in 2024 would generate an estimated $216 billion, a Greenpeace report this year said. An ActionAid report said a 50% tax on the windfall profits of the biggest 14 fossil fuel companies by market value in the two years to July 2023 would have generated around $173 billion.
(Reuters)
