Tax Big Oil’s ‘excessive’ profits to fund just global energy transition: UN chief

Governments must move to heavily tax oil companies’ profit windfalls during the emerging energy crisis and channel these funds into stepping up the pace of investment in renewable power plant globally, if there is to be a just transition away from a fossil fuel economy and Paris climate goals met, United Nations (UN) secretary-general António Guterres has said.

Guterres, speaking yesterday (Wednesday) at the launch of the UK’s Global Crisis Response Group (GCRG), set up to find “coordinated global solutions to the triple crisis” of food, energy and finance now threatening the world, said: “It is immoral for oil & gas companies to be making record profits from this energy crisis on the backs of the poorest people and communities, at a massive cost to the climate.

“I urge all governments to tax these excessive profits and use the funds to support the most vulnerable people through these difficult times,” he said, highlighting that the combined take-home at the “largest energy companies in the first quarter of this year was close to $100bn.”

The GCRG aims to create “the energy equivalent of the Black Sea Grain Initiative” – the UN’s scheme set up to ensure high-volume commercial food exports from three key Ukrainian ports on the Black Sea – to manage the energy crisis “while safeguarding the Paris Agreement and our climate goals”.

Guterres admonished governments in the developed world to speed up the “elimination of red tape [imposed on wind and solar projects and]… shift fossil fuel subsides to boost renewable energy investments”, particularly in the world’s developing developing.

In a five-point plan outlined earlier this year, the UN called for a paradigmatic up-scaling of private and multilateral finance to accelerate the energy transition globally, with a emphasis on investment in emerging and particular developing, which it said needs to increase “by more than seven times to over $1trn by 2030 to put the world on track to reach net-zero emissions by 2050”.

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Other elements of the UN plan include that energy storage technologies including batteries should become “public goods”, as well as a recommendation that governments “scale up and diversify supply chains for raw materials and renewable energy technologies”.

“Multilateral development banks need to take more risks, help countries set up the right regulatory frameworks and modernise their power grids, and mobilise private finance at scale,” Guterres said. “I urge shareholders in these banks to exercise their rights and make sure they are fit for purpose.”

“Developing countries don’t lack reasons to invest in renewables. What they lack are concrete, workable options,” he said. “Meanwhile, developed countries are urging them to invest in renewables, without providing enough social, technical or financial support.”

Guterres went on to make a populist call to “people everywhere” that “a clear message [be sent] to the fossil fuel industry and their financiers: this grotesque greed is punishing the poorest and most vulnerable people, while destroying our only home.”

“Every country is part of this energy crisis, and all countries are paying attention to what others are doing. There is no place for hypocrisy.”

Despite the recent inflow of capital into renewables in years, a recent Bloomberg NEF report found spending would still need to triple to $2.1trn a year through to 2025 and double again to over $2.1trn between 2026-2030, to underpin net-zero being reached globally by 2050, in line with a temperature rise of 1.75℃ above pre-industrial levels, as scoped-out in the 2015 Paris climate agreement.

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