Imagine you go online to book a flight. When you check out, you’ll notice one additional line item next to the standard taxes and fees: Something called a “global solidarity charge” added an extra $10 to your $200 flight. That half percent will go to Somalia, where it will help pay farmers who lost their goat herds in a severe drought — fueled by global warming that is accelerating your flight — and are now without access to food or water.
That’s the vision of a new effort underway at the United Nations climate talks in Baku, Azerbaijan. This year’s conference, known as COP29, is all about money: which countries will pay to help fight climate change, how much money they will send and what that money will achieve. Previous attempts to fund decarbonisation and climate resilience in the developing world has virtually failed. Rich nations delivered money in a piecemeal, opaque manner and left billions of dollars in unmet needs in the world’s poorest nations.
There are hints of a new system emerging on the sidelines of the COP29 conference. A small group of nations is proposing a set of global taxes on high-polluting industries that could raise billions of dollars in hard cash for recovery efforts in disaster-stricken countries. The governments of France, Kenya and Barbados are using COP29 as a springboard to develop what they call a “global solidarity levy”, which would impose half a percent tax on sectors such as aviation and shipping.
The idea got a big boost on Tuesday from UN Secretary-General António Guterres. In his address to the negotiators meeting at COP, Guterres urged them to consider “exploiting innovative resources, especially levies on shipping, aviation and fossil fuel extraction.”
There is an urgent need for funding to address”loss and damage,” or the disaster-related destruction fueled by carbon pollution. Rich countries have recognized their responsibility to provide this funding—since they emit orders of magnitude more carbon than most of the world—but they have yet to follow through: Last year, about a dozen countries committed a combined $700 million to a new loss and damage fund administered by the World Bank, and more pledges may follow at COP29 this year.
There is broad agreement that this piecemeal approach is unsustainable – not least because of domestic political volatility, including the likelihood that the US will cut off new deliveries of climate aid when Donald Trump assumes the presidency next year. Then there is the fact that a country that has just been destroyed by a typhoon cannot afford to wait 10 years for a recovery grant to wind its way into its treasury. Finally, there are relatively few incentives for rich countries to pay for disaster relief abroad, relative to other climate-related ventures: A loan to build a solar farm can pay for itself when the project starts generating power revenue, and ‘ An adaptation grant can later lead to economic benefits if it protects a supply chain or makes a farm more resilient. Disaster recovery assistance, on the other hand, does not pay for itself.
The proposed global solidarity levy takes a different approach: Rather than encouraging major economies to contribute one lump sum at a time, the proposal would use taxes to generate consistent revenue for an aid fund. The France-Barbados-Kenya task force is studying which industries should be taxed, and expects to present a final proposal early next year.
Sectors such as aviation and shipping, which cross national borders, are obvious candidates, but the task force also looked at taxing plastics and cryptocurrencies, given their large pollution and energy footprints, respectively. The task force is likely to start by targeting a single industry, such as aviation, and encourage climate-ambitious governments to pass a tax on transactions in that industry, which could then be used as models for more and more governments to follow .
“The ‘polluter pays’ principle has guided us so far,” said Barbados Prime Minister Mia Mottley, an influential leader in climate finance debate, in a speech touting the upcoming proposal at COP29. “If you contributed to the problem, you must contribute to the solution.”
The levy proposals could raise as much as $350 billion if adopted worldwide, Mottley added. Even if only a few dozen governments implemented a tax on one of these industries, they could collect more money per year than all rich countries’ combined donations for the loss and damage so far. The task force currently has 13 members, including France, Spain and the Marshall Islands.
Many countries already collect industry-specific taxes. For example, more than 30 countries tax at least some financial transactions at around 0.5 percent. In the United Kingdom, a “stamp duty” on stock transactions brings in about $5 billion a year, and France and Switzerland raise about $1 billion a year each by taxing their own financial sectors. Several European countries have also introduced airline ticket taxes of around $2 to $7 over the past two decades, with Portugal funneling revenue to projects that reduce emissions.
But financing global climate aid in this way brings a number of new challenges. Existing transaction taxes usually raise money to benefit the taxpayers in a given country, but “solidarity levies” that send money to faraway places can cause domestic backlash. Countries may also be wary of deterring private investment and stifling economic growth, especially since the tax is unique in that it provides no material benefit to the country that collects it (other than possibly helping to reduce global emissions).
Other international entities are following similar but less radical measures. The International Maritime Organization, the UN body that regulates the shipping industry, is working on its own carbon tax to levy on the carbon-intensive tanker fleet that carries 80 percent of the world’s cargo. That tax will be finalized by next year and could end up anywhere between $50 and $300 per tonne of carbon dioxide. But the Maritime Organization’s secretary-general told Grist that he would use the money to degas the shipping industry, rather than help developing countries.
“The loss and damage conversation, it’s more of a historical conversation, and we don’t have that conversation,” Arsenio Dominguez, the secretary general of the International Maritime Organization, said in an interview at COP29. “Our goal is to raise the necessary funds to support shipping decarbonization and the shipping transition.”
Dominguez added that he doesn’t oppose countries’ efforts to get more money for loss and damage funding, but he sees his organization’s effort as ambitious in its own right.
Given that a shipping carbon tax is already in the works, it is likely that the France-Barbados task force will endorse a levy on another industry where regulators have been less ambitious on climate, such as aviation, or where there is no global regulatory body not, like finance.
Imposing such a fee might be controversial in the United States, but for other countries it could be a savvy political move, according to Rachel Cleetus, a financial expert at the Union of Concerned Scientists, a climate advocacy organization. Rich governments must scrape through their budgets to find billions of dollars in overseas aid donations, but a new levy on an industry like aviation could fund those efforts continuously. Moreover, a country can set it up without going through the consensus-driven UN process.
“In the short term, the main role it can play is to create a coalition of the willing, a set of countries that will do this together,” she said. “It’s a different kind of negotiation.”
Cleetus warned that even these levies are unlikely to be a full substitute for direct government funding from developed countries. If these countries do not pay their fair share, she said, there will continue to be huge unmet needs in the global south.
“When you hear this conversation about finance, you’ll very quickly hear conversations about reforming the multilateral system and adding innovative sources,” she said. “But people see it as a substitute — and it’s not, it’s a supplement.”
