[1/3]A general view shows Marathon Petroleum’s refinery following Russia’s invasion of Ukraine in Anacortes, Washington, U.S., March 9, 2022. Portal/David Ryder//File Photo Acquires LICENSE
- Climate finance is stalling as national debt rises
- Policy options include air and sea levies
- Moral argument for oil companies to contribute, panel says
Nov 29 (Portal) – Raising taxes on polluting activities and cutting fossil fuel subsidies could raise trillions of dollars to combat climate change, an advisory panel to COP28 talks in Dubai said.
The summit’s host, the United Arab Emirates, a major oil producer, said the two-week meeting starting Thursday must deliver “tangible action” on climate finance, which is under pressure from rising debt burdens, weakening political will and patchy efforts by private lenders be .
Higher carbon taxes – including levies on emissions from the maritime and aviation sectors – should be among the options examined by COP28 studies, the panel recommended.
“We see great potential, particularly in taxing the bad internationally and using that money to generate predictable resources,” panel member Amar Bhattacharya of Brookings’ Center for Sustainable Development said at a briefing.
In economics, taxing evil refers to taxes designed to harm the common good—for example, greenhouse gases—in order to raise revenue and discourage activity.
While the report by a group of independent economists noted an urgent need for new sources of funding, it also said existing sources of revenue could be redistributed.
Investment in the fossil fuel economy continued to outpace investment in the clean economy, it said. Fossil fuel subsidies totaled $1.3 trillion, significantly more when the societal costs of dealing with emissions and pollution are taken into account.
The report’s co-chair, Vera Songwe, a former World Bank economist, said the report’s focus was on how to advance the investments needed for the world to catch up with the goals of the Paris Agreement and the global can limit warming to well below 2 degrees Celsius (3.6 °F).
“That’s why we value speed and scale – the longer we wait, the more expensive it becomes,” she said.
RECORD PROFITS FROM OIL AND GAS
The report’s authors said taxes on the record profits that oil and gas companies made from higher energy prices resulting from the Ukraine war were unlikely to have a political impact, in part because many of them, such as ADNOC in the United Arab Emirates, are state-owned are.
Co-chair Nicholas Stern, a professor at the LSE/Grantham Research Institute, said there was a compelling case for energy companies to make voluntary contributions.
“I think moral obligation is something that will be emphasized at COP28 and also before and after,” he said.
There are growing calls for a carbon levy on shipping, which carries around 90% of global trade and produces almost 3% of global carbon dioxide emissions.
Aviation, which accounts for around 2-3% of emissions, is not directly covered by the Paris Agreement, but the aviation sector is committed to aligning with its targets.
The panel estimated that emerging and developing economies, excluding China, will need a total of $2.4 trillion in investments per year by 2030 – four times current levels – to complete energy transitions, adapt their economies and Dealing with climate damage.
While most of it can be raised domestically, it called on rich countries to triple the volume of concessional loans offered by 2030 – already at least two years late in pledging $100 billion to help poorer countries to help deal with climate change.
The report described private financing in emerging and developed markets as “staggeringly low”, while development banks were criticized for their poor collaboration with the private sector, often competing with it on projects deemed easiest to launch.
Writing and reporting by Mark John; Edited by Barbara Lewis
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