Researchers propose unprecedented tax on one industry to solve glaring issue: 'The governments have the ability'

A study of Big Oil's windfall profits in 2022 showed that those monies alone could have paid to protect poor countries from the effects of the changing climate and help them adapt for almost five years.

What's happening?

The paper, written by international researchers, including from the Technical University of Munich, was published days before the recently held COP29 climate action conference, according to a TUM news release.

"These additional profits from just one year are close to the total amount promised to the poorer countries for a five-year period," study leader Florian Egli said, referring to the original outlay. The researchers proposed enacting a windfall tax to finance global climate action, which would take advantage of special circumstances like Russia's invasion of Ukraine, an event that created an energy crisis and resulted in excess profits for the 93 oil and gas companies that were documented in the study and others.

Behemoths from Russia, Iran, South Africa, and Venezuela — some of the biggest oil producers in the world — were not included because they "do not publish their figures," the release stated.

Weeks after the paper was published, officials at COP29 in Azerbaijan agreed to up its earmark by wealthy nations from $100 billion each year from 2020 to 2025 to $300 billion.

The $300 billion figure, as high as it sounds, was still criticized by many developing nations and climate advocates as falling short of what's really needed to make a true impact, since the impact of the problems created by the oil and gas industry's pollution is so serious to begin with.

Watch now: This 'win-win-win' app offers up to 50% savings on food

"I regret to say that this document is nothing more than an optical illusion," Indian delegation representative Chandni Raina said in the summit's closing session. "This, in our opinion, will not address the enormity of the challenge we all face."

Why is this important?

The question is why Big Oil would agree to this. But 42% of the windfall profits came from state-run companies, and 95% of the private companies studied were located in countries that have committed to climate protection financing.

So, even without industry cooperation, a levy could be hugely successful. The researchers recommended creating a fund. They noted the profits earned by U.S. companies totaled $143 billion — nearly half of all the windfall profits. Another 37% came from companies in the United Kingdom, France, and Canada.

🗣️ Should governments be investing money into new, futuristic cities?

🔘 Definitely 👍

🔘 No way 👎

🔘 Not sure ❓

🔘 Depends on the country 🤷

🗳️ Click your choice to see results and speak your mind

"The governments have the ability to take direct action to skim off the profits earned due to a crisis and use them to fight the climate crisis," second study leader Anna Stünzi said.

What's being done about reining in Big Oil?

This approach is just the kind of action that's needed to push unwilling companies — especially those primarily responsible for the rapidly rising global temperature, which is causing human health to suffer, a sixth mass extinction event, and increasingly frequent and severe extreme weather events — toward a cleaner, sustainable, and safer future.

"Taxing superprofits could tamper and phase down investment in oil and gas, building a stable and efficient clean energy market and helping to align financial flows with the goals of the Paris Agreement," study author Michael Grubb said. "The reorientation of fossil fuel revenues for consistency with climate goals should be next on the global agenda."

If the oil and gas industry were to invest more in transitioning their business models to greener energy options, it would do wonders for our health and that of the planet. Those companies may be wise to diversify either way to protect against the possibility of losses as the world's energy demands change in the coming decades — something traditional energy companies such as Entergy and NextEra have done — as there is nothing stopping a major oil or gas company from transforming from a dirty energy monster to a clean energy giant.