Last week, it was announced that the top five Western oil companies made profits of $196.3 billion, following a year of record energy prices after Russia’s invasion of Ukraine in February 2022.

UN General Secretary, António Guterres, has said that “polluters must pay” for the escalating damage caused by heatwaves, floods, drought and other climate impacts, and demanded that it was “high time to put fossil fuel producers, investors and enablers on notice”.

The idea that polluters should be held responsible for the harm caused by climate change is now a key element of environmental justice.

Of course, climate impacts can not be viewed just in financial terms alone but, in reality, dealing with the impacts and effects of climate change comes at a high cost.

So why do we want to make “polluters pay” 

The case for a polluters tax centres on the argument that financial support for countries suffering from the sharpest end of the climate crisis is a vital part of delivering restorative environmental justice.  

As we know, oil companies are responsible for a mammoth share of the emissions that are contributing to climate change. In 2022, campaign group Global Justice Now released their report Making Polluters Pay, where their research found that the Big 5 oil companies (Chevron, ExxonMobil, BP, Shell, and TotalEnergies), who reported over $170 billion in profit in 2022 alone, are collectively responsible for 11.38% of global historic CO2 emissions, or 11.19% of historic CO2e emissions.

So how would governments begin to hold these oil companies responsible for their obvious role in the climate crisis? Campaigners have argued that a ‘polluter tax’ could go some way in doing so.

The question of who pays for climate change is fundamental to climate justice. Within the United Nations Framework Convention on Climate Change (UNFCCC), it has long been recognised and agreed that rich and lower-income countries have “common but differentiated responsibilities” for climate change (meaning that all should take action but some bear a greater responsibility than others), and that wealthy countries should transfer finance as an obligation to the global south.

“Today, I am calling on all developed economies to tax the windfall profits of fossil fuel companies. Those funds should be redirected in two ways – to countries suffering loss and damage caused by the climate crisis and to people struggling with rising food and energy prices.” — Guterres to UN general assembly.

Guterres refers to the United Nations Loss and Damage Fund, which is a financial mechanism established by UNFCCC to support developing countries in addressing the impacts of loss and damage associated with climate change. 

Many feel that due to their ongoing polluting, fossil fuel companies should be mandated to start paying into the Loss and Damage fund in recognition of their historic role in the climate crisis. 

The science behind who owes what

Global Justice Now reports in Making Polluters Pay that, collectively, the Big 5 oil companies could be responsible for $32.5-$64.9 billion a year of loss and damage to the global south by 2030, and $1.7-$3.1 trillion in total between 2020 and 2050. Therefore many have argued that the companies should be paying the same amounts, if not higher, into the Loss and Damage fund as a way to compensate the most vulnerable communities on the frontline of the climate crisis, which arguably the Big 5 have played a key role in exacerbating. 

Some of these communities are taking matters into their own hands, like one group of 11,000 residents of Nigeria’s oil-producing Niger Delta who have filed a claim for compensation against Shell at the High Court, London, in a long-running case set to test multinational companies’ responsibility for environmental damage overseas.

The two communities claim that oil spills resulting from Shell’s operations in the region have contaminated drinking water, harmed air quality, and destroyed farmland and fishing stocks.

Demanding restorative justice from big fossil fuel companies as a political ask, as well as a moral one, is on the rise, making once radical propositions like a polluters tax seem far more palatable than previously thought.

To put a polluters tax into practice, governments have to mandate that the huge profits made from destroying our planet are put back into the loss and damage fund, and other climate financings previously promised.

There cannot be a price put on stopping polluting altogether, which should be the end goal if we want to really stop climate change.

But a polluters tax goes a long way to bringing about truly restorative environmental justice for those on the frontline of the climate crisis, who are paying the real-life price for the riches made by fossil fuel companies throughout history.

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