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The UN secretary general said on Tuesday that developed economies should impose an extra tax on the profits of fossil fuel companies, with the funds diverted to countries affected by climate change and families grappling with the cost of living crisis.
In an extensive speech to the United Nations General Assembly in New York, Antonio Guterres described the fossil fuel industry as “feasting on hundreds of billions of dollars in subsidies and unexpected profits as household budgets shrink and our planet burns “.
Fossil fuel companies and their “enablers” had to be held accountable, he continued. “This includes banks, private equity, wealth managers and other financial institutions that continue to invest and underwrite carbon pollution.”
It also included what he called “the huge public relations machine that raises billions to protect the fossil fuel industry from scrutiny.”
Despite the remarks, Guterres seemed to recognize the reality of the current situation, in which coal, oil and gas continue to play a crucial role in the modern world, in both developed and emerging economies.
“Of course, fossil fuels cannot be shut down overnight,” he said. “A just transition means leaving no person or country behind. But the time has come to warn fossil fuel producers, investors and enablers.”
“The polluter has to pay. And today I ask all developed economies to tax the unexpected profits of fossil fuel companies.”
Guterres said these funds should be redirected to “countries suffering losses and damage caused by the climate crisis; and to people struggling with rising food and energy prices.”
Guterres’ speech on Tuesday reinforced comments made in August, when he said it was “immoral for oil and gas companies to make record profits from this energy crisis on the shoulders of the poorest people and communities and at a huge cost to the climate.”
“The combined profits of the largest energy companies in the first quarter of this year are close to US $ 100 billion,” he added. “I urge all governments to tax these excessive profits and use the funds to support the most vulnerable in these difficult times.”
The idea of imposing an unexpected, or one-time, tax on energy companies has caught on in a few quarters in recent months, with the industry making huge profits amid rising commodity prices, while many homes and businesses they struggle with rising energy bills and a wider cost of living crisis.
In May, for example, former UK finance minister Rishi Sunak announced details of what he called a “temporary and targeted tax on energy profits” on oil and gas companies.
Last week, European Commission President Ursula von der Leyen said she wanted to propose “a ceiling on the revenues of companies that produce low-cost electricity”. These businesses, she said, “generated revenue that they had never accounted for, that they would never have dreamed of.”
“And don’t get me wrong: in our social market economy, the profits are OK, they are good,” added von der Leyen. “But in these times it is wrong to receive record and extraordinary revenues and profits by benefiting from the war and on the shoulders of our consumers.”
“In these times, profits must be shared and channeled to those who need them most. And therefore our proposal also includes the producers of electricity from fossil fuels, who must make a contribution to the crisis”.
Overall, von der Leyen said the proposal would raise more than 140 billion euros, or around 140.1 billion dollars.
While such actions and initiatives have supporters, there is also opposition. After Sunak announced its plans, for example, Offshore Energies UK said the tax “would discourage offshore energy investment in the UK, which means a decline in oil and gas exploration and production, and therefore would force an increase in imports “.
The debate and discussion on the role of fossil fuels in the planet’s energy mix is alive and looks set to continue in the coming years.
Earlier this year, Standard Chartered CEO Bill Winters acknowledged that most people would sign up for what he called a “just transition.”
“Those are two really important words… it just means fair, it also means implementable,” said Winters, who was speaking to CNBC’s Geoff Cutmore at the City Week forum in London. “And transition means transition, it means it takes time.”
“The idea that we can turn off the taps and put an end to fossil fuels tomorrow is obviously ridiculous and naive,” Winters said. “Well, first of all, it won’t happen, and secondly, it would be very disruptive.”
It would be good for climate change, Winters continued, but “bad for wars, revolutions and human life because you would have … chaos.” “The last divestment option” had to be taken off the table, she said.