BAKU (Reuters) – 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 extracts from its latest report on the options being discussed 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 favour 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.
AVIATION
Aviation accounts for 2% of global emissions yet is usually free of value-added tax (VAT) or sales taxes. Levies being discussed by the GSLT include kerosene fuel, private jet fuel, luxury tickets and frequent flyers, which together could generate $19 billion to $164 billion a year, it estimates.
Around 29 countries already tax aviation fuel through excise duties, carbon levies or emission permits. The average price among G20 countries in 2021 was 9 euros ($9.50) per ton.
Hurdles to a broader tax include ensuring a level playing field for industry players and overcoming legal barriers.
At least 21 countries also already have some form of levy on airline tickets, at rates ranging from 2 euros in Portugal to almost 500 euros on some flights out of Britain, the GSLT said.
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.