'Tax the bad' to boost climate finance, says COP28 advisory panel

Increasing taxes on polluting activities and cutting fossil fuel subsidies could generate trillions of dollars to tackle climate change, an advisory panel to the COP28 talks in Dubai said.
 

Summit host the United Arab Emirates, a major oil producer, has said the two-week meeting starting on Thursday must deliver “tangible action” on climate funding, which has been squeezed by rising debt burdens, faltering political will and patchy efforts by private finance.
 

Higher carbon taxes — including levies on emissions from the maritime and aviation sectors — should be among options COP28 studies, the panel recommended. “We see a big potential, particularly from taxing the bad internationally and using that money to generate predictable resources,” panel member Amar Bhattacharya of the Brookings’ Center for Sustainable Development told a briefing.
 

 

In economics, taxing the bad refers to levies that target harm to the public good — for example, greenhouse gases — as a way to raise revenues and discourage the activity.
 

While citing an urgent need for new funding sources, the report by a group of independent economists said existing streams of revenue could also be reallocated.

Investments in the fossil-fuel economy continued to outstrip those made in the clean economy, it said. Subsidies for fossil fuels totalled $1.3 trillion, and substantially more if counting the societal cost of dealing with emissions and pollution. Report co-chair Vera Songwe, an ex-World Bank economist, said the report’s focus was on how to advance the investments needed for the world to catch up on Paris Agreement targets to cap global warming well under 2 degrees Celsius (3.6F) “That is why we are emphasising speed and scale – the more we wait, the more expensive it comes,’ she said.
 

The report’s authors said taxes on the record profits made by oil and gas companies, from higher energy prices that followed the Ukraine war, were unlikely to get political traction, in part because many, such as the UAE’s ADNOC, are state-owned.

Co-chair Nicholas Stern, professor at LSE/Grantham Research Institute, said there was a compelling case for energy companies to make voluntary contributions.
 

“I think that moral obligation is something that will be emphasised at COP28, and indeed before and after,” 

he said.
 

There are growing calls for a carbon levy on shipping, which transports around 90 per cent of world trade and accounts for nearly 3 per cent of the world’s carbon dioxide emissions.
 

Aviation, which accounts for some 2-3 per cent of emissions, is not directly covered by the Paris Agreement but the air transport sector has pledged to align itself with its goals.
 

UAE’s Jaber rejects report on seeking hydrocarbon deals Sultan Al Jaber, the incoming president of the United Arab Emirates-hosted COP28 climate summit, on Wednesday rejected accusations the host country planned to discuss natural gas and other commercial deals in meetings linked to the UN talks.
 

The BBC and the Centre for Climate Reporting (CCR) on Monday said leaked briefing documents prepared for Jaber showed plans to discuss fossil fuel deals with 15 countries. "These allegations are false, not true, incorrect, are not accurate. And it's an attempt to undermine the work of the COP28 presidency," Jaber told a news conference, his first public remarks following the BBC report.

US, China to work together at COP28 summit, says Kerry 

The United States will work with China to make the United Nations climate negotiations that begin in the United Arab Emirates this week a success, Washington’s climate envoy John Kerry said on Wednesday.
 

Cooperation between the US and China, the world’s two biggest emitters of greenhouse gases, is seen as crucial to securing consensus at the November 30 - December 12 summit, known as COP28. “We have decided to actually work together to get a successful COP, to get a successful global stocktake,” Kerry said of his meeting with his Chinese counterpart this month. Kerry, in a call with reporters, urged major producers of fossil fuels to support language that would commit them to phasing out the use of “unabated” fossil fuels - a reference to fuels burned without emissions-capturing technology.”Without China and the United States aggressively moving forward to reduce emissions, we don't win this battle,” he added.