A Global Climate Tax Plan: Targeting Big Oil
The battle against climate change has a new front: a proposed global tax on the oil and gas industry. The United Nations is considering a bold move to address the industry's role in climate change, but this plan is not without its challenges and controversies.
The idea, part of the Framework Convention on International Tax Cooperation, aims to improve global tax collection and shift the tax burden towards the ultra-wealthy. While many UN member countries support holding Big Oil accountable for natural disasters, others are hesitant, questioning the fairness and clarity of such a tax.
But here's where it gets controversial... Recent discussions have proposed linking oil industry profits to climate change compensation payments. However, not everyone is convinced, arguing that these proposals lack the necessary strength and clarity. This is a setback for advocates who believe Big Oil should pay for the estimated $1 trillion in additional taxes since the Paris Agreement in 2015.
An agreement to tax Big Oil for its alleged role in human-made climate change would likely face strong opposition and legal battles. Anti-oil groups have had mixed success in courts, but this hasn't deterred climate activists from pursuing legal avenues to hold the industry accountable.
Take, for instance, California's lawsuit against Big Oil. In 2024, the state filed a lawsuit accusing Exxon, Chevron, BP, and ConocoPhillips of downplaying the risks of oil and gas use and climate change. Attorney General Rob Bonta added a clause requiring those who profit from illegal or wrongful acts to forfeit those profits. The case aims to prevent unjust enrichment and make illegal conduct unprofitable.
The outcome of this lawsuit remains uncertain, but California's political leadership has recently softened its stance towards Big Oil to keep refineries operating and avoid fuel price surges, even as it pushes for an all-electric transport system.
Maine is also taking legal action against Big Oil for 'climate lies.' A federal judge granted the case last year, with plaintiffs accusing major oil companies and the American Petroleum Institute of concealing the devastating consequences of increased fossil fuel use on Maine's people, economy, and environment.
Climate lawfare has become a popular strategy for climate activists to hold the oil industry accountable for global weather pattern changes. However, due to the uncertainty of legal success, taxation has emerged as an alternative solution to the growing financing problem for the energy transition.
The transition is proving to be more costly than initially hoped, and the money needed is substantial. Big Oil, with its vast profits from vital energy commodities blamed for climate change, is an obvious target. It's reasonable to expect some of those profits to go towards those fighting against the use of these commodities, despite their essential nature.
And this is the part most people miss... It's unclear whether the UN discussions will result in a tax on Big Oil, and even if they do, countries anticipating this revenue should prepare for a long battle. Big Oil is not going down without a fight this time, and the road to a successful global climate tax plan is likely to be a challenging and controversial one.
