The Climate Damages Tax, an idea whose time has come!

April 12th, 2018

Pollution must be brought under control and mankind’s population and consumption of resources must be steered towards a permanent and sustainable equilibrium. E.F Schumacher, Small is Beautiful: Economics as if people mattered.

According to the last global review[1] Natural Hazards resulted in 9,503 deaths, 96 million people being affected, and economic costs in excess of US$314 billion. Weather-related events were responsible for the majority of both human and economic losses. Almost 90% of the deaths in 2017 were due to climatological, hydrological or meteorological disasters. Nearly 60% of people affected by disasters were affected by floods, while 85% of economic losses were due to storms, mainly from the three hurricanes Harvey, Irma and Maria that struck the Caribbean.

94% of farming in sub Saharan Africa is rain fed and highly susceptible to drought

Climate change is fuelling many of these catastrophic weather events[2]. Unfortunately vulnerable countries, communities and ecosystems are on the frontline of this catastrophe. Poor people now face, due to lack of meaningful progress to reduce carbon emissions, changes in climate beyond the ability of people and local ecosystems to adapt to – a phenomenon described as ‘Loss and Damage’. However, Loss and Damage remains a political concept, mandated during the UNFCCC negotiations as a separate article in the Paris Agreement, but it is hamstrung with its roots mistakenly seen as in technical climate adaptation and disaster risk reduction.

This confusion is not helping anyone. It generates a sense that no one cares about the poorest and the most vulnerable. So it was great to see some progress at the recent meeting of the Executive Committee for the Warsaw International Mechanism (WIM), held in Bonn two weeks ago. They recognised that a definition for Loss and Damage is necessary, if we are to start to do anything to respond to the threat. But a definition will not be enough, the Paris Agreement will also needs to mobilise money to pay for the consequences of climate change. For the WIM its core mission remains delivering finance for addressing Loss and Damage. The WIM must engage constructively to understand what finance and support vulnerable countries need, and identify sources and how it will be channelled.

There are solutions such as deploying simple Early Warning Systems technologies such as these being piloted in Peru but they need financing

But we all know the global aid budget is failing to keep pace with the growing global demands[3]. Climate change is exacerbating existing global problems, drought leading to failed harvests, flood removing homes and livelihoods and acidification of oceans depleting fish stocks to name but a few. These local catastrophes drive climate migration, populations are on the move and social and political tensions are rising. One way this could be defused would be to make some real progress on addressing Loss and Damage. It would make long term economic sense to reverse these trends but to do this we need money for action. Why not put the polluter’s pays principle into practice? We should ensure that the polluting companies pay for the damage they have caused. One way would be to equitably implement a “Climate Damages Tax” on fossil fuel extraction, which could raise billions of dollars a year, funded by the industry that is responsible for approximately 70% of the world’s greenhouse gas emissions[4].

So Practical Action are proud to be part of a movement proposing that the ‘polluter pays’ principle is put into action. It is now time for the industry most responsible to pay for the damages it has caused, and for vulnerable countries worst affected to receive the financial assistance they so urgently need. This requires the introduction of an equitable fossil fuel extraction charge – or Climate Damages Tax – levied on producers of oil, gas and coal to pay for the damage and costs caused by climate change when these products are burnt. The substantial revenues raised could be allocated through the UN Green Climate Fund or similar financial mechanism, for the alleviation and avoidance of the suffering caused by severe impacts of climate change in developing countries, including those communities forced from their homes. Finally, despite additional financial resources, it is recognised that we still need to push for the urgent replacement of fossil fuels, with renewable sources of energy assisted by the economic incentive of increasing the rate of the Climate Damages Tax over time.

If you want to learn more then please come along on Monday;

If you agree the Climate Damages Tax is an idea whose time has come, join us by signing the declaration here:





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