Crunching the numbers
A quick look at the effects of Global Climate Compensation
This post is inspired by an article in the Guardian about the profits from the oil industry: Revealed: oil sector’s ‘staggering’ $3bn-a-day profits for last 50 years. Since I had been looking for these numbers for quite some time, I was not particularly shocked, but it is still very helpful to have a summary.
According to the study by Prof Aviel Verbruggen, the oil and gas industry has made an annual profit of roughly $1tn since 1970. Note that this is only the direct profit. A lot of oil and gas is bought by companies that use it for profit-making. We have shipping companies, airlines, plastic manufacturers, etc., meaning that the total profit is much higher. As long as it is possible to make that much money from the use of fossil fuels, any voluntary agreement to decarbonize will be completely meaningless.
The idea behind Global Carbon Compensation is to invalidate any business model that depends on fossil fuels. It does not ban the extraction of oil, gas, and coal, but it forces the producers to pay a fee to a global fund. With $100 per ton of CO2, the fund would receive $3.6tn per year. The oil, gas, and coal companies would pass on parts of the higher costs to their customers, meaning that all businesses that are heavily dependent on fossil fuels would see their profits suffer.
The money would be paid out to governments that could use the money to invest in new infrastructure and protect the poor. If we divide $3.6tn by the world population, every county receives roughly $460 per capita and year. The table below shows the payout to various countries:
The third column (GCC) shows the annual payments to nations from the global climate fund in billion USD, the second their GDP in billion USD, the fourth column shows the GDP per capita in USD, and the last column is the payout from the fund as a percentage of GDP. The payout would have an enormous impact on poor and populous countries but would be insignificant to rich countries. In total, the plan would redistribute 3.7% of global GDP from the fossil-fuel-driven sector of the economy to governments.
It is not rocket science: the decarbonization of the economy will require a lot of resources (labor and materials), and this has to be paid for by the people who got rich from using fossil fuels. Firstly, because they have a moral obligation to do so, and secondly, because they have all the money. As long as they (or we, if you live in a rich country) refuse to pay up, the climate crisis will never be resolved.
Global Climate Compensation offers a direct way of taking the profits out of fossil fuels while implementing Climate Justice. It is effective, fair, and risk-free, and could be implemented immediately. More details can be found in the post below.
Hi Henrik. I completely agrre with the GCC initiative. I suggest the reamplacement of the word "compensation" by the term *"justice", because it connects better with the activists movements in the south and the north. Question: Do you have a plan, how the GCC or GCJ could be popularized in all poorer countries and in the UN-organisations?
Henrik, as you present GCC here, I understand the logic but question the effectiveness given the short time we have to insure the planet remains habitable.