Billionaires are amassing yet more wealth and fossil fuel producers are reaping billions in profits.
Fair taxes on the UK’s biggest polluters - namely fossil fuel companies and the extremely rich – could have raised up to £23bn last year, according to a report published by Oxfam today.
This finance could be used for much needed climate action such as expanding renewable energy and increasing the energy efficiency of people’s homes – as well as supporting communities on the frontline of the climate crisis.
The money raised would have been enough to cover the cost of insulating seven million UK homes as well as fitting them with low-carbon heating and still have nearly £11bn remaining.
Hunger
The report, Payment Overdue, Fair ways to make polluters across the UK pay for climate justice, shows that by targeting those who are most responsible for emissions, the government can quickly and fairly secure much-needed funds to help tackle the climate crisis while ensuring the burden does not fall on ordinary UK households.
The government urgently needs to raise large sums of money to finance the UK’s transition away from fossil fuels and to meet its international commitments. Vital funds are needed to support people in low-income countries already facing the devastating consequences of the climate crisis, such as droughts, floods and heat waves.
Revenue raising measures outlined in the report include: a redesigned excess profits tax on fossil fuel companies; redirecting fossil fuel subsidies; a frequent flyer levy; new taxes on the use of private jets and superyachts, as well as ringfencing 20 per cent of wealth tax proceeds.
Lyndsay Walsh, the climate change policy advisor at Oxfam, said: “While the world struggles to meet the rising costs of climate change and the UK increasingly looks to a dwindling aid budget to finance escalating global needs, billionaires are amassing yet more wealth and fossil fuel producers are reaping billions in profits.
Billionaires are amassing yet more wealth and fossil fuel producers are reaping billions in profits.
“It is people who are least responsible for the crisis who are currently bearing the brunt of climate change - facing poverty, hunger, and ever more scarce resources.
Producers
“At this week’s UN Climate Ambition Summit in New York world leaders urgently need to step up with tangible and credible solutions to tackle the climate crisis. The options outlined in this report offer the type of bold solutions that are needed to raise finance fairly and reduce emissions, by targeting the richest polluters.
“Fossil fuel companies and the richest people who have done most to cause – and continue to cause – irreversible damage to our planet could and should be the ones footing the bill. It is crucial that any measures to raise new finance shield lower-income households from the costs.
“There is money available to address one of humanity's biggest challenges – why on earth is the government not mobilising it? What we need from political leaders is the courage to ensure the biggest and richest polluters are the ones that pay.”
Amid a cost-of-living crisis - with surging energy bills and high inflation putting particular pressure on lower-income households - oil and energy companies raked in record profits in 2022. Despite seeing a drop in earnings in the most recent quarterly announcements – profits were still in the billions.
The paper calls for the government to stop using public finance to support fossil fuel producers operating in the North Sea, and instead redirect this finance, estimated to be around £3.35bn in 2022, towards a fossil fuel free future.
Finance
Real reductions in fossil fuel production are needed to quickly steer the world towards the target of limiting global warming to 1.5C above pre-industrial levels. However, Shell has announced it intends to grow its natural gas business, while BP has weakened commitments to reduce oil and gas output.
The paper calls for the government to scrap the climate-wrecking investment incentive linked to the current Energy Profits levy, which means producers can offset the tax they pay against investment in new oil and gas projects.
The report calculates that a permanent excess profits tax on fossil fuel companies last year could have raised an additional revenue of between £2.2bn and £4.4bn. It highlights that placing taxes on the largest polluters would not only generate additional finance, but it should also create incentives for them to reduce their emissions.
Excluding the wealth tax proceeds, if all four options detailed in the paper had been in place in 2022, they could have raised between £10.25bn and £12.62bn additional finance in just one year. That is more than double the amount the UK delivered in climate finance to developing countries in the six years leading up to 2021.
Overdue
Walsh said: “From devastating floods in Pakistan to wildfires in Greece and rising sea levels in the Pacific, it is now clear that some damage from climate change is unavoidable.
Despite the historic decision at COP27 last year to establish a Loss and Damage fund, the UK government currently still does not give any dedicated finance to address this. Instead, it continues to encourage new fossil fuel projects.
“More money is also urgently needed in the UK to reduce emissions in a fair way and move to a more sustainable economy which will simultaneously improve people’s lives and reduce poverty and inequality. But funding is falling far behind the levels required for this to happen.
“Faster and fairer action to tackle the climate crisis, and to support those already hit hard in the UK and globally, can no longer be delayed. This payment is already long overdue.”
This Author
Brendan Montague is editor of The Ecologist. This article is based on a press release from Oxfam UK.
