Should We Impose A Global Petro-Tax

00:00:00: We have Sandalwood and Sage, AI-generated characters who love to use debate... ...to work out what we think & why we think it.

00:00:08: And help you do the same!

00:00:10: So What are we arguing about this week Sandalward?

00:00:13: This year's record heat & raging wildfires across Europe & North America Collapsing glaciers in Tibet & a powerful El Nino on the way Have surely been enough to shake our species into action to address the clear and present climate crisis.

00:00:32: But Sandalwood, it's one thing to acknowledge the seriousness of the crisis... ...and quite another to agree what to do about it.

00:00:39: It took the global community over a quarter-of-a century….

00:00:43: …to get close to fragile consensus on limiting emissions.

00:00:46: If anything – The Consensus & Will To Act Together has weakened in past few years.

00:00:52: In reality A Global Petrotax is non-starter.

00:01:06: All the evidence is that it's too late for emission controls themselves to be the answer to climate crisis.

00:01:13: We need take stronger globally coordinated action as we did to avert worst of the two-thousand day financial crisis In particular, scale up by orders magnitude the collective global financial resources available.

00:01:33: I'm going to argue that a global tax on petrochemical companies would be a practical, effective way to do this and it's time for the global community.

00:01:52: In this case, I'll be arguing that the international community is very far from agreeing on the merits of such a tax.

00:02:07: The practicality of imposing any global tax regime at all and even what such attacks would mean in practice – it's a non-starter!

00:02:16: First let's agree on the scale of money needed.

00:02:20: It's vast Whether you use two thousand five or twenty twenty dollars.

00:02:26: economic loss and damage in developing nations runs between two hundred fifty billion dollars, and five hundred billion dollars a year.

00:02:37: That doesn't even touch basic defensive measures!

00:02:41: We have enough international consensus to create an UN loss-and-damage fund but developed nations have pledged far less than one percent of what is required.

00:02:53: goodwill and voluntary tin rattling aren't cutting it.

00:02:58: We need a mandatory

00:02:59: tax.".

00:03:01: What kind?

00:03:03: A global tax on the petro industry to pay for a global crisis!

00:03:08: The polluter pays, much like the tobacco industry was forced.

00:03:19: but targeting the carbon majors is surprisingly practical because we only need to pin down about a hundred corporate groups.

00:03:29: Dr Richard Headey at The Climate Accountability Institute has shown that top twenty producers account for a third of modern emissions and just one-hundred entities generated two thirds all industrial emissions since the Industrial Revolution.

00:03:48: We literally have their names and addresses.

00:03:53: Detractors worry this tax will choke off green investment or be passed down to poor consumers.

00:04:00: These fears are dramatically overblown.

00:04:04: According the IEA, The industry pocketed over four trillion dollars in net income In twenty-twenty two while total fossil fuel subsidies hit seven trillion dollars, according to the IMF.

00:04:21: A three percent extraction tax yielding one hundred and fifty billion dollars won't drive the carbon majors to bankruptcy.

00:04:31: Let's not mistake first-order survival issues for second order inconveniences.

00:04:39: Skeptics will call this a fool's earned pointing out we haven't even agreed to eliminate fossil fuels.

00:04:47: But if an agreement takes twenty years, all the more reason to start today!

00:04:53: The OECD took a decade to pass a fifteen percent global minimum corporate tax but they did it.

00:05:02: why not do again for far more existential crisis?

00:05:08: Besides... We aren't starting from scratch.

00:05:12: The US, UK and EU have all run windfall taxes recently.

00:05:24: has already built a comprehensive framework for global financial reform, including levies on fossil fuel profits and shipping.

00:05:53: Even detailed tax designs all ready exist like the joint five dollars per tonne levy proposed by Stampout Poverty & Greenpeace.

00:06:05: The diplomacy is backed.

00:06:07: public opinion A thirteen-country dinata survey for Oxfam and Greenpeace found eighty one percent support taxing fossil fuel firms for climate damages, with eighty six per cent wanting funds sent directly to affected communities.

00:06:28: Even in the US Yale's Climate Change In The American Minds Survey found sixty three percent of registered voters back fossil fuel accountability including nearly a third of conservative Republicans.

00:06:45: The crisis is here, current efforts are feeble.

00:06:49: the tools exist and the global public is ready.

00:06:54: time to act.

00:06:56: Before we even debate the merits of attack Sandalwood We must confront two massive elephants sitting squarely on our path.

00:07:05: Talking about what lies beyond them is just wasted breath until they move.

00:07:10: The first elephant, national sovereignty.

00:07:13: Taxation and economic policy decide the fate of governments.

00:07:17: States guard them fiercely With no trusted body to enforce a global levy Compounded by deep skepticism toward UN agencies And persistent US hostility.

00:07:28: The second elephant is scope.

00:07:38: Do we tax only carbon majors in the OECD or include state-owned giants in Brazil, Venezuela and the Middle East?

00:07:45: Are we taxing net income or just windfall profits?

00:07:49: Does some proceeds stay local or go entirely abroad?

00:07:52: until there's basic consensus on what we're actually discussing it's just hot air.

00:07:59: even setting those blockers aside the tax itself carries severe flaws.

00:08:03: first its stifles energy investment.

00:08:06: The US Chamber of Commerce, the American Enterprise Institute ,the National Taxpayers Union and the UK's NIESR all agree.

00:08:14: Taxing profits lowers expected returns shrinking future capital spending across all energy provision including renewables.

00:08:23: Regulatory uncertainty makes it worse.

00:08:26: Without a supranational authority to compel compliance many major petro states will simply favor domestic state-owned firms sparking widespread avoidance and collusion.

00:08:38: Second, extra costs cascade downward.

00:08:41: Higher taxes will be passed on at the pump and grid hitting developing nations hardest.

00:08:47: The very populations rely in oil gas for transport heating And the very people this policy claims to rescue Finally prepare an avalanche of litigation.

00:08:59: Thousands bilateral investment treaties and the Energy Charter Treaty, ECT allow corporations to bypass national courts.

00:09:09: And sue governments via Investor State Dispute Settlement ISDS for retroactively altering tax regimes.

00:09:18: Rockhopper successfully sued Italy over an offshore drilling ban and TC Energy sued the US for fifteen billion dollars over Keystone XL.

00:09:28: a global tax would trigger years of costly arbitration.

00:09:32: In short, Sandlewood.

00:09:34: Zero agreement on scope Insurmountable sovereignty hurdles Guaranteed avoidance and evasion Higher costs for the poor And endless lawsuits.

00:09:44: It's time to look For a far better way forward.

00:09:47: You know Sage Your two elephants are A nice image But The truth is They're paper tigers!

00:09:53: But Sandle would That OECD deal Took decade Target profit shifting Rather than Direct revenue collection and lets domestic treasuries keep the cash.

00:10:03: It's hardly handing tax sovereignty to a UN

00:10:05: committee.".

00:10:06: We don't need a supranational tax collector, host nations can collect the levy domestically under binding treaty framework exactly like OECD model.

00:10:18: The enforcement mechanism could be simple trade sanctions on non-compliant jurisdictions.

00:10:24: Oh, simple!

00:10:25: Just trade sanctions against OPEC, host nations and state-owned majors like Petrobras or Aramco.

00:10:31: That won't trigger a global supply shock – energy trade war at all will it?

00:10:35: The alternative is watching developing nations collapse under debt while Shell & Exxon register four trillion dollars in net income.

00:10:46: If we can police international banking regulations We can surely track a barrel of crude

00:10:52: Tracking.

00:10:53: oil isn't the issue, it's tax impact.

00:10:56: You conveniently ignored that extraction taxes get passed down the supply chain.

00:11:01: you're effectively taxing a commuter in Manila to fund disaster relief in Malay.

00:11:06: That's textbook corporate propaganda.

00:11:09: In twenty-twenty two prices were set by global supply shocks not domestic extraction levies.

00:11:17: Oil majors pocketed pure unearned windfall rents, then poured billions into stock buybacks instead of green R&D.

00:11:27: But if you drain their capital with a mandatory global levy where does green transition funding come from?

00:11:34: Oil majors spend billions on offshore wind hydrogen and carbon capture staff there balance sheets And you choke the transition.

00:11:41: less than five percent of their capital expenditure actually goes to renewables.

00:11:48: Expecting oil companies to self-fund their own demise out of goodwill is pure delusion, Sage!

00:11:55: It's not about good will.

00:11:56: it's about return on capital?

00:11:59: and what about your legal flank?

00:12:01: Under bilateral investment treaties an ISDS companies will sue host states for trillions over retroactive clawbacks.

00:12:09: European nations are already mass exiting the energy charter treaty precisely to neutralise those bad faith ISDS lawsuits.

00:12:20: The legal tide is turning, whether Chevron likes it or not.

00:12:24: Exiting a treaty takes years because they have twenty-year sunset clauses.

00:12:30: Meanwhile vulnerable nations need liquidity today Not after two decades of legal trench warfare.

00:12:36: in Geneva

00:12:37: Voluntary pledges to the loss and damage fund Have delivered less than one percent Of what's needed.

00:12:44: Relying on charity while islands sink isn't a policy sage.

00:12:50: It's a deliberate choice to do nothing.

00:12:53: I want action Sandalwood but through realistic tools IMF special drawing rights, pause clauses on sovereign debt and multilateral development bank leverage which are included in Mia Motley proposed lending reforms not unworkable global tax fantasies.

00:13:12: explicitly calls for a global fossil fuel levy.

00:13:16: You can't quote her framework, but strip out the one mechanism that makes polluters

00:13:21: pay.".

00:13:21: I

00:13:22: pick up parts which actually pass a G-seven summit without paralyzing global energy markets.

00:13:28: Pragmatism isn't betrayal Sandalwood – it's how good things get built!

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00:13:55: Thanks for watching, see ya next time!