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Promising Solution: New Climate Damages Tax

According to a new report, introducing a fossil fuel tax on companies in the richest countries in the world could generate hundreds of billions to aid the most vulnerable nations in coping with the climate crisis and motivate polluters to more rapidly cease exacerbating the problem.

Oil well
Time for a new extraction tax?

Sadly, the impacts of climate change disproportionately affect poorer nations that have contributed to it the least.

The preface to the Climate Damages Tax report says: “Climate change is not a freak of nature. It is human-made, as human-made as power and greed. If the consequences of climate change were felt disproportionately by those who have contributed to it, it would have stopped long ago.”

The report calculated that a new extraction tax on the biggest fossil fuel companies - those based in countries belonging to the Organisation for Economic Co-operation and Development (OECD) - could create $720 billion for vulnerable countries’ loss and damage fund by 2030, reported The Guardian.

Co-author David Hillman, said the report “demonstrates that the richest, most economically powerful countries, with the greatest historical responsibility for climate change, need look no further than their fossil fuel industries to collect tens of billions a year in extra income by taxing them far more rigorously. This is surely the fairest way to boost revenues for the loss and damage fund to ensure that it is sufficiently financed as to be fit for purpose.”

The authors of the report said the levy could be imposed using existing tax systems. They added that introducing the tax in OECD countries this year at a starting rate of $5 per metric ton of carbon dioxide equivalent and increasing it by $5 per tonne annually would generate $900 billion by the end of the decade.

The report concludes: “We will only stop climate change by making those who contribute to it, pay for it. More talk, more conferences, more insurance where the victims are asked to pay by instalment, will not do the job. We need to end the mismatch between those who gain and those who lose. This is what an international community serious about halting climate change must do.”

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