Tax fossil fuel companies to raise billions and fix damage caused by climate change, experts say

'Climate Damages Tax is a practical way to address the injustice at the heart of climate change,' activists say

When Cyclone Pam struck Vanuatu in 2015 it wiped out much of the island nation's GDP (AFP/Getty Images)

A tax on the fossil fuel industry could be used to protect the world’s most vulnerable people from climate change, according to a coalition of environmental groups.

As global temperatures soar, devastating events like hurricanes and floods are becoming more frequent and destructive, but many affected are those least responsible for these phenomena.

For years debate has gone back and forth about how best to reimburse those hit by these disasters, but there is still a need for a pot of money that can be accessed rapidly to aid their recovery.

In a new report released at a major UN climate summit in Poland, a “climate damages tax” that could generate up to $300bn (£237bn) each year is suggested as a possible solution.

Based on the “polluter pays” principle, fossil fuel corporations would be taxed for every tonne of coal, oil and gas they extract from the ground.

This would make those spewing out climate-damaging emissions responsible for recovery costs until these dirty fuels are phased out altogether.

“The Climate Damages Tax is a practical way to address the injustice at the heart of climate change – that the fossil fuel industry make hundreds of billions in profits whilst the true costs of their product are paid by the rest of society, particularly the poorest and most vulnerable,” said Julie-Anne Richards from the Climate Damages Tax Coalition.

Ms Richards compared the proposed tax to similar charges applied to tackle the damage caused by oil spills and tobacco use.

Ralph Regenvanu, foreign minister for the island nation of Vanuatu, said his nation was “on the front lines of climate change and yet we have done little to cause it".

He cited the cased of Cyclone Pam, which struck in 2015 and cost Vanuatu over 60 per cent of its GDP.

Though they applied to the existing Green Climate Fund for compensation, the grants awarded have been insufficient, suggesting a need for new sources of money to support climate reparations.

Finance – and specifically the amount of money given by richer nations to poorer ones to tackle climate change – is an important topic at this year’s COP24 meeting in Poland.

However, the groups behind the report said discussion of the matter was progressing at a rate out of step with the urgency of climate change.

In their report, the Climate Damages Tax Coalition lay out a system in which companies pay for every tonne of CO2 they emit, and this continues until fossil fuels are phased out entirely by 2050.