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Previous global leaders are proposing a $25 billion charge on oil-producing countries’ earnings to cover the costs of climate-related harm.

A group of former global leaders and prominent economists have suggested that oil-producing countries with high profits should be required to pay a $25 billion fee to assist with the financial burden of climate-related disasters on the most impoverished and at-risk populations across the globe.

A letter was signed by seventy prominent individuals, including former UK prime minister Gordon Brown, urging for action before the upcoming UN climate summit, Cop28, starting on Thursday in Dubai. Among the signatories are 25 former heads of state or government.

A tax of this nature would only take a small portion of the profits that oil-producing nations have earned in recent times. This tax would contribute to a fund for providing aid to impoverished nations affected by the consequences of the climate crisis.

The Guardian quoted Brown as saying that in order for Cop28 to be successful, there needs to be a resolution to the issue of climate finance. Despite numerous assurances over the past ten years, a potential solution proposed by the UAE as the chair of Cop is a $25 billion levy on oil and gas paid by countries with significant petrol industries. This would provide much-needed funding for efforts to reduce greenhouse gas emissions and adapt to climate change in developing countries.

“All of the primary historical and present polluters must participate in discussions that include assurances and funding in order to raise the necessary $1 trillion per year for development and climate support in developing countries.”

The correspondence is being sent to Sultan Al Jaber, the president-designate of Cop28 and chief executive of Adnoc, the national oil company of the United Arab Emirates. It is also being sent to President Luiz Inácio Lula da Silva of Brazil, the current president of the G20.

The individuals who have signed this include Ban Ki-moon, who was previously the secretary-general of the UN; Helen Clark, who was previously the prime minister of New Zealand; Joyce Banda, who was previously the president of Malawi; and Michelle Bachelet, who was previously the president of Chile, along with many prominent economists.

According to the International Energy Agency, the letter highlights that before the Covid pandemic, petroleum revenues reached $1.5 trillion annually. However, in 2022, they skyrocketed to a record-breaking $4 trillion. This amount is 20 times larger than the total global aid budget, more than 30 times larger than the combined budgets of all multilateral development banks, and 40 times larger than the promised $100 billion per year in 2009 to assist poorer countries in reducing their greenhouse gas emissions and adapting to the effects of the climate crisis.

The writers state that within one year, oil-producing nations and their respective private companies have acquired a whopping $2.5 trillion in unexpected profits, without putting in any effort to earn them.

At Cop28, a crucial responsibility is to raise funds for the loss and damage fund, as only a small number of countries have contributed so far. The required amount is expected to be in the hundreds of billions, which many developing countries recognize as unattainable through government funding alone. Therefore, potential sources of revenue such as taxes on frequent flyers and international shipping are being considered.

The Guardian has knowledge that the UAE is contemplating donating to the loss and damage fund, but this is not a direct response to requests for a levy.

Brown’s letter suggests implementing a levy on countries that produce fossil fuels, which would make up approximately 3% of the global oil and gas revenue earned by the largest petrostates. The signatories also stated that the loss and damage fund should not be the sole recipient, as other initiatives could also receive funding.

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The individuals who signed the document stated: “A few of the privately owned companies in this industry have already paid additional taxes on their unexpected profits, however these companies only make up 15% of the overall revenue. The largest recipients of these profits are the major petroleum-producing countries, who have collectively earned $973 billion just from exports, an increase of $381 billion from the previous year.”

In the UAE, export earnings have increased from $63 billion to $98 billion. In Qatar, export earnings have risen from $53 billion to $86 billion, while Kuwait has seen an increase from $63 billion to $88 billion. Norway’s export earnings have more than doubled, rising from $87 billion to $174 billion. Saudi Arabia’s export earnings have also seen significant growth, increasing from $190 billion to $311 billion.

A tax amounting to $25 billion, equivalent to approximately 1% of the previous year’s profits from oil and gas, and only 3% of the income of major exporting countries, could initiate a plan for investing in developing nations.

King Charles III, UK Prime Minister Rishi Sunak, UN Secretary-General António Guterres, and Pope Francis will all be in attendance at Cop28 this week. The leaders will participate in the initial days of the summit, followed by ministers and high-level officials from 198 countries who will continue negotiations for two weeks.

Source: theguardian.com