COP27 has shown we need a new taxation order in the world

For three decades, world leaders at the UN Climate Change Conference (COP) have pledged to cut greenhouse gas emissions and greener energy sources.

This year, COP27 finished with an agreement for an historic “Loss and Damage Fund”. In negotiations that went down to the wire over the weekend, countries reached a decision to establish and operate a loss and damage fund, particularly for nations most vulnerable to the adverse effects of climate change.

Copying and pasting the Glasgow COP26 agreements on climate mitigation is equivalent to standing still on a treadmill. We lose ground for every year that slips by without meaningful action because the climate crisis finish line moves further into the distance, requiring ever greater efforts to reach. The fact that delegations had to fight tooth and nail to even keep the climate mitigation commitments agreed in Glasgow in effect is extremely disappointing. The final text undoubtedly contains historic firsts, most notably the creation of a “loss and damage mechanism” to compensate developing nations, particularly affected by climate change.

Relatedly, right after COP27, the important step is implementation. The “Loss and Damage Fund” must be funded by a global taxation system. Strategic direction of the tax system will accelerate early climate action and help households and businesses to adapt. It will also stimulate productivity, by enhancing private investment in the research and skills needed for the future. The main lesson we should learn from the catastrophes like in Pakistan is a strong tax roadmap to regulate carbon emissions and support less fortunate areas in the world. The net zero transition requires significant investment to switch high carbon technologies and business models to clean alternatives. For example, the Climate Change Committee (CCC) estimates the up-front cost of decarbonising UK homes will be £250 billion.

Ahead of COP27, according to a survey conducted by IPSOS, British people want subsidies on environmentally friendly technology, while a few want higher taxes on non-renewable energy sources. Through this survey, IPSOS covered 34 markets looking at citizen support for policies to help tackle climate change. As a result of that study, British citizens are most likely to say they would support policies that apply incentivisation, discounting and other inducements rather than those which use taxation or reduced choice. The report says almost two-thirds (sixty-five per cent) of citizens in Britain are willing to support government funding for new policies that will subsidise to make environmentally friendly technologies cheaper (e.g. solar panels, electric vehicles).

To sum up, a landmark agreement has been made to compensate countries that have suffered at the forefront of the climate crisis at COP27. On one hand, it is also recognition of the damage that has been done by countries like the UK or US. So, the earth is still ‘on the brink of climate catastrophe’ after the COP27 deal – and the biggest economies must pledge to cut more CO2 emissions with new taxation order. Next year, the UAE is going to host COP28.Rather than lobbying fossil fuel companies, there must be strong commitment to further fossil fuel reduction.

READ: UN, EU express ‘disappointment’ over outcomes of COP27

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