Climate Damages Tax

Watch the Climate Damages Tax launch here!

The Climate Damages Tax campaign launch was held in London on April 16th, with Caroline Lucas MP (Green Party Co-Leader), Barry Gardiner MP (Shadow Minister for International Climate Change), Foreign Minister for Vanuatu Ralph Regenvanu MP, Avinash Persaud (Head of Economic Reconstruction of Dominica post-Hurricane Maria) and Emele Duituturaga of the Pacific Islands Associations of NGOs.


© photograph by David Sandison

L-R: Ralph Regenvanu MP (Minister of Foreign Affairs, Vanuatu), Emele Duituturaga (Executive Director, Pacific Island Association of NGOs), Avinash Persaud (Head of Economic Reconstruction of Dominica, post Hurricane Maria), Barry Gardiner MP (Shadow Minister for International Climate Change), Caroline Lucas MP (Green Party Co-Leader)


© photograph by David Sandison

Caroline Lucas MP pledges the Green Party’s support for a Climate Damages Tax


© photograph by David Sandison

“Fossil fuel companies must become part of the solution they have created. We need to ask how much, and who pays?” – Barry Gardiner at the Climate Damages Tax launch


© photograph by David Sandison

“Hurricane damages can be measured in dollars and cents but also in broken lives. The climate wars have started. This is the front line” – Avinash Persaud at the Climate Damages Tax launch


© photograph by David Sandison

“Last week Vanuatu declared a state of emergency yet again. We do not have the resources to respond. We need commitment from our more developed partners, those who caused climate change” Ralph Regenvanu MP at the launch of the Climate Damages Tax


© photograph by David Sandison

“Vanuatu produces 0.0016% of world climate emissions and yet is disproportionately feeling the negative effects. We just can’t afford what’s happening in our country” – Ralph Regenvanu MP at the Climate Damages Tax launch


© photograph by David Sandison

“Where is the justice that those of us who are the least responsible for climate change loss and damage bear the greatest burden? Enough is enough” – Emele Duituturaga at the Climate Damages Tax launch

What is the Climate Damages Tax?

The Climate Damages Tax addresses the injustice of big coal, oil and gas making trillions in profits and outsourcing the true cost of their product onto poor people facing the worst impacts of climate change.

It will tax the fossil fuel industry using the revenue to pay:

  1. for the costs of ‘loss and damage’ faced by people on the frontline of climate change and
  2. for ‘just transition’ programmes to help communities move to a fossil free economy.

Just Transition: the transition towards a low‐carbon and climate‐resilient economy that maximises the benefits of climate action while minimising hardships for workers and their communities.

Big Profits for Fossil Fuels

Fossil fuels are responsible for 70% of greenhouse gas emissions with oil, coal and gas companies reaping massive rewards from the materials they extract. In 2014, five corporations – Chevron, ExxonMobil, BP, Shell, BHP Billiton – made more than $80bn between them. Yet through a combination of tax avoidance and subsidies many of these companies pay little or no tax. For decades these companies have run a misinformation campaign calling into question the science to delay action from governments, so they can continue to make vast profits. Rather than dodging their responsibilities, it is time the industry paid for the consequences of their activities.

Climate Change is Destroying Lives, Today

Climate change was in the future, it is now in the present. Loss and damage caused by climate change is accelerating, hitting communities in a number of ways: climate-charged storms, such as the 2017 hurricane season; increasingly frequent and extreme droughts, which recently devastated East Africa; killer heat waves; sea-level rise stealing land and homes; melting glaciers; land degradation; and desertification.  The Paris Agreement recognises ‘Loss and Damage’ as a third pillar, alongside ‘Mitigation’ and ‘Adaptation’.

Mitigation: reducing emissions in order to lessen our carbon footprint to limit global temperature rise.

Adaptation: measures to adapt to the impacts of climate change, which include responses to rising temperatures.

Loss and Damage: when the impacts of climate change go beyond what it is possible to adapt to – this includes for example climate-charged super storms devastating whole regions; rising sea levels forcing people from their homes; extreme droughts destroying crops and livelihoods; arable land turning to desert.

Who Pays for Loss and Damage?

Loss and damage for developing countries is estimated to cost $428 billion per year by 2030 and $1.67 trillion per year by 2050 at 3oC of warming – our current trajectory of temperature rise unless we dramatically reduce our carbon footprint.

Rich countries have focused on insurance as the way to ‘finance’ loss and damage costs. This is unfair, as it pushes the responsibility for paying premiums onto the vulnerable, who played no role in creating the climate risk. Often these countries and communities can’t afford to pay insurance premiums. Even in the best case insurance typically pays out 1-2% of emergency costs of a big storm. Hurricane Maria caused $1.3 billion in damage to Dominica. They received just $19 million from the Caribbean Catastrophe Risk Insurance Facility. Insurance is also unsuitable for slow onset events like sea level rises, and will become less viable as extreme events become more common. In contrast, the Climate Damages Tax (CDT) will provide an additional, substantial, new revenue stream at the scale required.

How much would the Tax raise?

At a low level of US$6 per ton of CO2e, the CDT would raise approximately US$75 billion per year for international loss and damage finance and a similar amount for domestic just transition. At US$40 per ton of CO2e, the CDT would raise roughly US$500 billion per year for international loss and damage and a similar amount for just transition within countries.

The CDT would also contribute to the phasing out of fossil fuels due to the co-benefit of placing a global price on carbon. The CDT will impact on the industry’s profitability, incentivising it to diversify its activities. The CDT should increase each year both to contribute to the shift to renewables and to maintain the income stream for loss and damage spending as fossil fuels are increasingly phased out.

The Climate Damages Tax will:

  • Establish an international fossil fuel extraction tax paid to an international fund for Loss and Damage to help vulnerable communities suffering the worst impacts of climate change
  • Generate revenue to help communities transition to a fossil free economy
  • Contribute to phasing out fossil fuels by adding costs to the industry’s bottom line
  • Publically link the fossil fuel industry to the damage it causes – pressuring it to change its business model or risk its reputation with consumers and its influence over governments
  • Address factors of injustice and inequality by applying the CDT with a sliding scale. Countries at a low level of development would keep 100% of revenues from domestic extraction, with rich countries directing 50% of revenues to the international fund and spending 50% domestically on just transition policies.

Find out more about the Climate Damages Tax

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