Billionaires, Fossil Fuels, and the Future of Climate Funding By Felicity Bradstock - Oct 06, 2024, 2:00 PM CDT
FELICITY BRADSTOCK
Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.
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Billionaires, Fossil Fuels, and the Future of Climate Funding
By Felicity Bradstock - Oct 06, 2024, 2:00 PM CDT
A new study reveals that rich countries could raise $5 trillion annually for climate finance through measures like windfall taxes on fossil fuels, ending harmful subsidies, and implementing a wealth tax on billionaires.
Developing nations have requested at least $1 trillion per year in climate finance, but high-income countries have fallen short of this goal, primarily offering loans instead of the necessary grants and investments.
The research highlights the urgent need for increased climate finance ahead of COP29 and emphasizes the potential for significant progress if rich countries take bolder action.
A recent study suggests that some of the world’s richest countries could raise around $5 trillion in climate finance each year through windfall taxes on fossil fuels, stopping harmful subsidies, and a wealth tax on billionaires. New research, published by the organisation Oil Change International in September, shows that rich countries around the globe have the potential to raise around five times more money than low-income countries are requesting for climate finance. Developing nations have asked for at least $1 trillion a year of public funds to support them in decarbonisation efforts and respond to extreme weather events. However, to date, high-income countries have offered nowhere near this level of funding to support a global green transition. Most financing comes in the form of low-interest loans from the World Bank and other financial institutions, rather than the form of investment that is direly needed to tackle climate change.
As the current G20 leader, Brazil is encouraging member states to introduce a 2 percent wealth tax on billionaires to help fund the global green transition. This type of wealth tax could help raise $483 billion globally, and a financial transaction tax could generate a further $327 billion. Additional taxes could help raise even greater funds, such as on the sale of big technology, arms and luxury fashion, which would amount to approximately $112 billion. The redistribution of 20 percent of public military spending worldwide could add a further $454 billion.
While taxing the rich could help raise funds, simply bringing an end to subsidies on some of the most polluting forms of energy could help provide a further $270 billion from rich countries and $846 billion if applied worldwide. In total, Oil Change estimates that rich countries could raise around $5.3 trillion in climate finance. This amount could be even higher if high-income countries took more extreme fiscal measures, which have been seen during times of emergency before. For example, during the Covid-19 pandemic, countries mobilised $16 trillion as a public COVID stimulus in 2020.
Laurie van der Burg, the public finance lead at Oil Change International, stated, “Last year, countries agreed to phase out fossil fuels. Now it’s time for rich countries to pay up to turn that promise into action. There is no shortage of public money available for rich countries to pay their fair share for climate action, at home and abroad. They can unlock trillions in grants and grant-equivalent climate finance by ending fossil fuel handouts, making polluters pay, and changing unfair financial rules.”
While there is significant potential for raising high levels of climate finance, Oil Change highlights that the pace and ambition of policy reform under consideration are not yet
ambitious enough to unlock the scale of public funds presented in the report. The organisation says there needs to be deeper multilateral cooperation among governments championing these asks and linking the fair finance and climate action agendas at the global level to help unlock funding.
The research was published ahead of the COP29 climate summit, to be held in Azerbaijan this November. During previous COP summits, many developing countries have voiced the need for greater financing from high-income countries to reduce their reliance on fossil fuels, increase their renewable energy capacity, and mitigate the risk of climate disasters. In mid-September, the Azerbaijani leadership laid out its plans for the climate summit. One of the main aims is to establish a new annual financing target that wealthy countries will contribute to help poorer states deal with climate change.
However, countries have not so far been able to agree on the amount of funding they will be offering to low-income countries to tackle climate change. In July, Azerbaijan announced plans to establish a $1 billion fund to support some of the countries most affected by climate change to tackle the effects, as well as develop their green energy capacity. The biggest obstacle to raising funds is that contributions will be voluntary, with no plan to introduce a mechanism to force fossil fuel producers to contribute, despite rising pressure from environmentalists for such a move.
Many developing countries say they cannot establish more ambitious climate targetswithout greater financial support from rich countries. During COP28, in Dubai last year, more than 120 countries pledged to triple renewable energy capacity by 2030. However, this will be a drop in the water unless greater support is given to developing countries to do the same.
Many low-income countries are undergoing industrialisation, which is increasing their greenhouse gas emissions. This is particularly evident in countries such as Guyana and Namibia, which are seeing the rapid development of their oil and gas sectors. With research from Oil Change providing a clear pathway for raising climate funding, the organisation hopes that it will help encourage rich countries to do more to support the global green transition going into COP29.
By Felicity Bradstock for Oilprice.com
Western countries have spent trillions on wind and solar to replace reliable electricity generation. Electricity prices have skyrocketed, pushing up the cost of living for everyone, and moving industrial production and jobs overseas, mostly to China.
Now you want us to shell out more money to do the same for poor countries, preventing them from having cheap, reliable electricity and keeping them poor.
Madness.