Developing nations are seeking $1 trillion a year in public funds to help combat climate change, but research suggests that rich countries could raise up to $5 trillion annually through various means such as windfall taxes on fossil fuels, ending harmful subsidies, and implementing a wealth tax on billionaires. While conventional climate finance options like low-interest loans are being considered, new forms of finance like levies on shipping and frequent flyers are also on the table.
Brazil, as the current G20 president, is advocating for a 2% wealth tax on billionaires to contribute to climate finance. Research by Oil Change International reveals that a combination of wealth and corporate taxes, along with a crackdown on fossil fuels, could generate significant revenue for climate action. For example, a wealth tax on billionaires globally could yield $483 billion, while stopping subsidies to fossil fuels could free up $270 billion in public money in rich countries.
Laurie van der Burg of Oil Change International emphasizes the need for rich countries to fulfill their commitments to phase out fossil fuels by contributing to climate finance. Alejandra López Carbajal of Transforma Climate Diplomacy points out that there are ample resources available to address the climate crisis, despite attempts by developed countries to frame the new climate finance negotiations as constrained by public finance scarcity.
At the upcoming UN climate summit, Cop29 in Azerbaijan, finance will be a key issue of discussion. Governments are expected to set a new collective quantified goal under the Paris agreement, with a focus on carbon targets and transitioning away from fossil fuels. Sub-national governments, including cities and regions, are urged to take more action towards achieving net zero emissions targets.
The Net Zero Tracker report highlights the increase in companies, cities, and regions setting net zero targets, but there is still progress to be made, especially in areas like energy efficiency and transportation. While some entities like Tesla are working towards net zero emissions, others, including Baku, the host city of Cop29, still lack emissions reduction targets. Azerbaijan, along with approximately 50 other countries, also does not have a national net zero target, though efforts are reportedly underway to develop a new climate plan before Cop29.
As the global community continues to address climate change, the need for financial commitments from wealthy nations becomes increasingly urgent. By leveraging various mechanisms like wealth taxes, corporate taxes, and ending fossil fuel subsidies, rich countries have the potential to mobilize significant resources to support climate action both domestically and internationally. It is essential for all stakeholders to work together towards a sustainable and equitable future for all.