A new Climate Damages Tax report has been published by Stamp out Poverty. The first was published in 2018 before the Loss and Damage Fund was agreed at COP28 which was kick-started by the UAE’s $100 million pledge. By 2 December 2023, a cumulative total of $655.9 million had been pledged to the Loss and Damage fund, some of the monies pledged, such as the UK’s £60 million, were not however new funds and the fund is deemed to be inadequate to address the need of developing countries worse hit by the growing climate crisis.

The Climate Damages Tax report suggests that an additional tax on OECD fossil fuel companies could raise $900 billion by 2030 if the tax were introduced 2024 at an initial rate of $5 a tonne of CO2 equivalent, increasing by $5 a tonne each year. 80% (£750 bn) would be earmarked for the Loss and Damages Fund and the other $180 bn could be a domestic dividend to support the just transition away from fossil fuels in the contributing OECD countries. Even if limited to the G7 countries, the report argues that it could still raise $540bn for the loss and damage fund by the end of the decade, with a $135bn domestic dividend.

There is a need for a realistic level of funds to be raised for climate mitigation and adaptation. This approach has merits, we shall see how it is received. The reimbursement will not be aimed at individuals as with Climate Income so there are the issues of fairness as people perceive that they are paying the cost through rising prices. It also doesn’t seem to offer any financial disincentive for developing fossil fuel resources in the global south.

There have been a couple of reports in the last five years which have demonstrated how the Climate Income, if applied globally ((imposing a gradually rising price on all fossil fuel production, including that of the global south) would obviate the need for special funding schemes. This approach would feel far less unequal removing the feeling of dependency on the largesse of richer nations.

Protecting the poor with a carbon tax and equal per capita dividend (Nature Climate Change 2021), stated that…We find that if all countries adopt the necessary uniform global carbon tax and then return the revenues to their citizens on an equal per capita basis, it will be possible to meet a 2 °C target while also increasing wellbeing, reducing inequality and alleviating poverty. These results indicate that it is possible for a society to implement strong climate action without compromising goals for equity and development..

  • The revenues from a carbon tax capable of achieving a 2 °C target will be large enough to fund substantial policies that can promote equity and protect vulnerable populations.
  • An equal per capita redistribution of carbon tax revenues within countries — a relatively straightforward policy to implement — can increase wellbeing, reduce inequality and alleviate poverty.
  • These benefits occur in countries at all levels of development, primarily accrue to individuals at the bottom of the income distribution, and are even greater with global equal per capita redistribution.
  • Large benefits will occur even if some revenues are lost to administrative costs or are saved to fund other programs, and they can make the poorest citizens net beneficiaries this decade.
  • Given an equal per capita refund, the optimal timing of global greenhouse gas mitigation is characterized by rapid initial reductions, followed by a slower climb towards net zero emissions.

The Autonomy 2022 report TOLL GATES AND MONEY PUMPS: Why carbon taxation could be a simple, fair and transformative policy instrument stated that ….

  • A global carbon tax dividend would disproportionately benefit countries in Latin America, South Asia, SubSaharan Africa and many other countries in the Global South.
  • A global scheme, if tuned properly, would effectively end extreme poverty globally and would also serve to lift more than a billion people above more ambitious poverty lines of $3.2 and $5.5 a day. 
  • 3.8bn people would see their income increase by at least 10% with a global carbon dividend scheme.
  • The global scheme would see individuals in the group of heavily indebted poor countries (HIPCs) receive a total of $438bn in dividends annually, outperforming today’s schemes for development assistance and debt relief combined.
  • Emerging economies such as Brazil and India would also profit substantially from such a global carbon dividend, receiving a net gain of more than $37bn (1.9% of GDP) and $696bn (24% of GDP) respectively for Brazil and India.