BAKU (Reuters) – COP29 Climate Talks

The COP29 climate talks in Azerbaijan aim to agree on an annual finance target of $1 trillion or more to assist poorer nations in combating global warming. Potential new taxes could help reach this goal.

Global Solidarity Levies Task Force (GSLT)

Led by France, Barbados, and Kenya, the GSLT is exploring various taxation options. Below are key extracts from their latest report.

SHIPPING

A proposed shipping levy, which is close to agreement, targets the 3% of global emissions from this sector. At an April meeting of the International Maritime Organization, governments will debate measures.

Proposals for the levy include:
– A flat rate of $150/ton of CO2e, increasing every five years (Pacific Islands and Caribbean proposal).
– The European Union and Japan favor $100/ton starting in 2027.
– The Bahamas and Liberia propose an initial flat rate of $18.75/ton.

The GSLT estimates a $150-300/ton levy could generate $127 billion per year (2027-2030), decreasing to $103 billion (2031-2040) and $36 billion (2041-2050) as ships reduce emissions.

AVIATION

Aviation makes up 2% of global emissions and typically lacks VAT or sales taxes. GSLT projects taxes on kerosene fuel, private jets, luxury tickets, and frequent flyers could raise $19 billion to $164 billion annually.

29 countries already tax aviation fuel, with an average cost of €9 ($9.50) per ton among G20 nations in 2021. Challenges include ensuring fair competition and addressing legal issues.

FOSSIL FUELS

Various levies on fossil fuels already exist, including VAT and emissions trading. Future revenue could come from extraction levies or windfall taxes on energy profits.

A proposed Climate Damages Tax of $5/ton sourced in 2024 could yield $216 billion according to Greenpeace. ActionAid estimates a 50% tax on windfall profits of top fossil fuel companies could generate around $173 billion.

FINANCIAL TRANSACTIONS

More than 30 countries impose financial transaction levies. A global 0.1% tax on stocks and bonds and 0.01% on derivatives could raise between $238 billion and $419 billion annually, as per the Austrian Institute of Economic Research.

CARBON

The GSLT notes 75 carbon pricing mechanisms across 83 jurisdictions, covering 24% of global emissions. Most prices fall below the necessary $40-$80/ton to decrease global warming. Proposed solutions include establishing a minimum price of $50/ton and linking existing trading schemes.

WEALTH

The G20 has discussed raising taxes on the super-rich, with a Brazilian report proposing a 2% global minimum tax on wealth for around 3,000 billionaires to generate approximately $250 billion yearly.

CRYPTO

Cryptocurrency mining incurs emissions due to energy use. Kazakhstan has implemented a minor charge on miners. A global $0.045 per kWh electric tax could raise $5.2 billion. Furthermore, a 0.1% crypto trading tax might yield $15.8 billion, and a 20% capital gains tax could net up to $323 billion.

PLASTICS

Countries will convene in South Korea to address plastics pollution, with Ghana proposing a levy on virgin plastic producers. A $60-90 per tonne fee could generate $25-35 billion annually per GSLT insights.