Antonio Guterres photographed in New York last September. On Tuesday, he said fossil fuel companies and their “enablers” should be held accountable.
John Minchillo | Swimming pool | Getty Images News | Getty Images
The UN Secretary-General said on Tuesday that developed economies should impose an additional tax on the profits of fossil fuel companies, diverting funds to countries affected by climate change and households struggling with the cost of living crisis.
Speaking at length to the UN General Assembly in New York, Antonio Guterres described the fossil fuel industry as “enjoying hundreds of billions of dollars in subsidies and windfall profits, while household budgets shrink and our planet burns.”
Fossil fuel companies and their “enablers” had to be held accountable, he continued. “That includes the banks, private equity, asset managers and other financial institutions that continue to invest and guarantee carbon pollution.”
It also included what he called “the massive public relations machine raking in billions to protect the fossil fuel industry from scrutiny.”
Despite the comments, Guterres seemed to recognize the reality of the current situation, in which coal, oil and gas continue to play a vital role in the modern world, both in developed and emerging economies.
“Of course, fossil fuels cannot be stopped overnight,” he said. “A just transition means you don’t leave a person or country behind. But it’s high time to let fossil fuel producers, investors and enablers know.”
“Polluters have to pay. And today I call on all developed economies to tax the windfall profits of fossil fuel companies.”
Guterres said these funds should be channeled to “countries suffering loss and damage from the climate crisis, and to people struggling with rising food and energy prices.”
Guterres’ speech on Tuesday reinforced comments he made in August when he said it was “immoral for oil and gas companies to make record profits from this energy crisis on the backs of the poorest people and communities and at a huge cost to the climate.” .”
“The combined profit of the largest energy companies in the first quarter of this year is close to $100 billion,” he added. “I urge all governments to tax these excessive profits and use the funds to help the most vulnerable people through these difficult times.”
The idea of imposing a windfall or one-time tax on energy companies has gained traction in some quarters in recent months, with the sector posting huge gains amid a spike in commodity prices, as many homes and businesses struggle with rising prices. energy bills and a wider cost of living crisis.
For example, former British Chancellor of the Exchequer Rishi Sunak released details of what he called a “temporary, targeted tax on energy profits” on oil and gas companies in May.
Last week, European Commission President Ursula von der Leyen said it is proposing “limits to the revenues of companies that produce electricity at low costs”. These companies, she argued, were “creating revenues that they never anticipated, never even dreamed of.”
“And don’t get me wrong: in our social market economy, the profits are OK, they are good,” von der Leyen added. “But in these times it is wrong to receive extraordinary, record revenues and profits that benefit from war and on the backs of our consumers.”
“In these times, the profits must be shared and channeled to those who need it most. And that is why our proposal also includes the producers of fossil fuels, who must make a crisis contribution.”
All in all, von der Leyen said the proposal would bring in more than 140 billion euros, or about 140.1 billion dollars.
While such actions and initiatives have support, there is also opposition. For example, after Sunak announced its plans, Offshore Energies UK said the levy “would discourage UK offshore energy investment, meaning oil and gas exploration and production will decline, thus forcing an increase in imports.”
The debate and discussion about the role fossil fuels play in the planet’s energy mix is lively and expected to continue for years to come.
Earlier this year, Standard Chartered CEO Bill Winters acknowledged that most people would agree to what he called a “just transition.”
“Those are two really important words…just means fair, it also means doable,” said Winters, who spoke with CNBC’s Geoff Cutmore at the City Week forum in London. “And transition means transition — it means it takes some time.”
“The idea that tomorrow we can turn off the tap and end fossil fuels is, of course, ridiculous and naive,” Winters said. “Well, firstly, it’s not going to happen and secondly, it would be very disruptive.”
It would be good for climate change, Winters continued, but “bad for wars, revolutions and human lives because you would have… destruction.” The “ultimate divestment option” should be shelved, he argued.