A proposal is circulating in the halls of the United Nations that is bound to cause discussion: introducing an international tax mechanism that directly links the profits of large fossil fuel companies to the damage caused by climate change. The legal reference is to the“polluter pays” principle, which is already present in many national environmental regulations but poorly applied on a global scale.
The idea is simple in theory and very complicated in practice: oil, gas, and coal have generated enormous wealth, but also a significant portion of the emissions responsible for rising temperatures, extreme events, and economic losses suffered especially by the most vulnerable countries. Hence the proposal for an additional contribution, linked to profits or historical emissions, to be allocated to repair climate damage.
Why is it being talked about now
The issue does not come out of nowhere. The economic cost of the climate crisis has exploded in recent years: floods, heat waves, cyclones, and droughts are eroding GDP, infrastructure, and food security, particularly in the global South. At the same time, many large fossil fuel companies have posted record profits, driven in part by geopolitical tensions and rising energy prices.
Meanwhile, the International Fund for “loss and damage,” acknowledged in recent climate conferences, remains vastly undersized compared to real needs. Hence the proposal aimed at rebalancing the overall picture by finding new sources of structural funding, based not only on the goodwill of governments, but on stricter fiscal rules.
The political game between the UN and rich countries
The proposal is part of a broader negotiation on international tax cooperation under the auspices of the UN. And that is precisely the political crux. Many developing countries see the United Nations as the only space in which they can have an equal voice with large economies. Several industrialized nations would prefer to keep control of these decisions in narrower circles, such as the OECD. Still others (see under Trump) aim to blow up the table to manage disputes through bilateral agreements that put the logic of muscle-testing at the center.
The result is a bitter clash. On the one hand, states hit very hard by climate impacts are demanding binding and redistributive damage compensation instruments. On the other, some governments fear that a global fossil fuel tax will open a precedent that is difficult to control, affecting their own energy industries and markets.
How much a climate tax could be worth
According to several independent analyses, even a small levy on the profits of the largest fossil producers could generate revenues of hundreds of billions of dollars by 2030. Resources that could be used to strengthen resilient infrastructure, support climate adaptation, compensate affected communities, and reduce debt burdens in the most fragile countries.
It would involve internalizing into the production system the costs caused by the use of fossil fuels. Costs that today produce private profits and public losses. In other words, shifting part of the climate bill from the global public budget to those who have benefited for decades from a carbon-intensive energy system.
A long path full of obstacles
No one is under any illusion that agreement is just around the corner. Fossil lobby resistance is strong, governments are divided, and there is still a lack of shared criteria for assigning historical responsibility and quantifying climate damage in an unambiguous way. Moreover, without a robust and transparent international tax system, the risk of avoidance remains high.
Yet the mere fact that a global climate tax has entered the official lexicon of UN negotiations signals a change of pace. It is not certain that the idea will get there as it is. But by now the climate crisis is no longer just an environmental issue; it is an economic justice issue. And, sooner or later, someone will have to foot the bill.
