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Petrostate windfall tax would help poor countries in climate crisis, says Brown

An important intervention by Gordon Brown, from The Guardian

Former British PM calls for 3% levy on oil and gas export revenues of biggest producers to generate $25bn a year for global south

 Environment editor

Petrostates should pay a small percentage of their soaring oil and gas revenues to help poor countries cope with the climate crisis, the former UK prime minister Gordon Brown has urged.

Countries with large oil and gas deposits have enjoyed a record bonanza in the last two years, amounting to about $4tn (£3.3tn) last year for the industry globally. Levying a 3% windfall tax on the oil and gas export revenues of the biggest-producing countries would yield about $25bn a year.

Previous calls for windfall taxes on oil revenues have focused on large private-sector companies such as Shell, BP, Total and ExxonMobil. However, private-sector companies account for only about 15% of oil and gas production worldwide. Most production comes from nationally owned oil companies, known as NOCs, in countries such as Saudi Arabia, the United Arab Emirates and Norway.

Brown said the money could be used to help countries in the global south raise people out of poverty, cut greenhouse gas emissions and cope with the effects of the climate crisis.

“These are shocking levels of windfall profits we are seeing, and they are coming at the expense of countries in the global south. These petrostates could make a contribution to the solutions of the climate crisis,” he said.

He argued that the petrostates – the countries that produce the most oil and gas around the world – have the means and the responsibility to break the global impasse over helping poor countries cope with the impacts of the climate crisis.

“Petrostates have a duty to provide the first finance for the climate needs of the global south,” he told the Guardian in an interview. “If a small part of these revenues were properly redistributed, just think what we could achieve.”

The sums involved were trivial to the economies involved, he added. “What has been particularly galling is the money being spent on things like sportswashing that has been raised by people fuelling poverty in the global south. Instead of paying footballers $100m they could give that to a country that is desperate.”

Saudi Arabia would be asked to pay about $10bn under the proposal, which is less than the country is spending on football, boxing and golf. If just a few of the highest-earning petrostates contributed – including Saudi Arabia, the United Arab Emirates, Qatar and Norway – a total of $25bn would be quickly reached.

Brown noted that the UAE, which will host this year’s Cop28 UN climate summit, had seen its export earnings from oil and gas rise from $76bn to $119bn.

“It can afford to contribute $3bn without any impact on the energy prices paid by its domestic consumers,” he said. Making such a commitment would galvanise the stalling Cop28 negotiations, he said, in which developing countries are increasingly worried that rich countries will try to delay the implementation of a global fund for the countries most afflicted by the “loss and damage” caused by the climate crisis.

NOCs provide the backbone of many countries’ economies, particularly in the Middle East. Brown said his proposal would not affect the domestic economy of these states, as only export revenue would be subject to the levy.

Meanwhile, he said, people in the global south had borne the brunt of recent high oil and gas prices, having been forced deeper into poverty by their reliance on fossil fuels.

Fossil fuel prices are expected to stay high, Brown noted, meaning this source of revenue would continue for years to come. “These are not temporary windfalls,” he said.

Other rich countries must also contribute, he added, for instance by delivering on the climate finance promises they have already made; and by contributing relatively small sums in the form of loan guarantees, through a reformed World Bank, they could help to mobilise the $1tn needed to shift the global economy to a low-carbon footing.

Brown, who since leaving British politics has campaigned on global development and inequality, has also written for today’s Guardian to set out his argument in detail. He has approached the UAE president of Cop28, Sultan Al Jaber, with his proposals, and visited the UN general assembly in New York last week to discuss it with experts and statespeople from around the world. He has been invited to Cop28 but has not yet confirmed whether he will attend.

Climate experts welcomed Brown’s proposals. “Imposing a windfall tax on oil and gas export revenues is crucial for financing climate action and enabling a fair and just transition in the global south,” said Harjeet Singh, of the Climate Action Network. “It is vital to consistently subject the fossil fuel industry to substantial taxation to address the enduring environmental ramifications of its operations.”

He added that other countries that are less reliant on oil and gas exports must also contribute financially to climate action in developing countries. “Implementing such a tax does not absolve wealthier nations of their historical responsibilities,” he said. “These nations, having benefited from indiscriminate industrialisation predominantly reliant on and promoting fossil fuel consumption, bear a unique responsibility to redress the adverse impacts of climate change and to provide financial and technological support for sustainable and greener developmental models worldwide.”

One expert said that the idea was complex and difficult to put into practice, and advised asking countries’ sovereign wealth funds to contribute to climate finance instead.

But Tom Burke, a co-founder of the green thinktank E3G, said: “There is a huge iniquity in seeing these massive profits and at the same time seeing countries suffering disasters, from heavy storms and extreme weather on their crumbling infrastructure. This is something we can’t just ignore.”

And David Hillman, from the Make Polluters Pay coalition, added: “We welcome this proposal. For far too long the fossil fuel industry has got away with not paying for the calamitous damage its products have caused. Given their excessive profits, this should be more than a windfall tax, it should be paid every year because climate action demands predictable revenue going forward, not just a one-off flash in the pan.”

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