Institute of the Weltethos Foundation
at the University of Tübingen

First slide

A global source tax as a contribution to climate justice

How do we get out of the impasse? A global source tax on oil as a contribution to climate justice – A blog post by Prof. Dr. Dr. Dr. h.c. Ulrich Hemel, former Director, Global Ethic Institute

Following the debacle of the COP29 climate conference in Baku at the end of 2024 and the withdrawal of the USA from the 2015 Paris Climate Agreement, we need a fresh start for the cause of the climate crisis.

It has become evident that while the game of naming and blaming is fueling the dispute over who is causing the man-made crisis, it is not driven by objective interests but by power politics. The polluter pays principle is interpreted differently: industrialized countries do not want to pay for the past, countries such as China, Australia or South Africa do not want to pay for the present. At a national level, state authorities can hold individual polluters accountable, for example in industry. Internationally, however, there is no enforceable executive.

The principle that the polluter should pay is also reaching its objective limits. Are we talking about last year’s CO² emissions or are we going back in history to the 19th century? Today, at any rate, three countries account for more than 50% of global emissions: USA, China and India. However, this is precisely what fuels the controversy all the more: at 8.9 tons per capita, China is lower than the USA with 14.4 tons, but significantly higher than India with 1.9 tons per person per year. For India in particular, the high absolute level of emissions therefore correlates strongly with the population. Conversely, Luxembourg does not play a role in global emissions, but is not exactly in a good position with rather poor per capita values of 12.2 tons per person per year.

We therefore need new approaches. An eco-social fund has been repeatedly discussed at the United Nations. It should be financed from contractually agreed payments by states, i.e. national budgets, and from a financial market transaction tax, the Tobin Tax. However, this financing is still up in the air and depends too much on the contingencies of ruling parties with budgetary sovereignty.

However, a UN SDG fund was set up. It had USD 210 million at the end of 2024. In relation to the task of tackling the global consequences of the climate crisis, this is a drop in the ocean.

If we summarize the challenges facing the financing of a global eco-social fund, we come to the following key points:

  • We need a stable source of funding
  • We need clear principles for allocating funds
  • We need good and corruption-free governance
  • We need a significant volume of funding.

However, a UN SDG fund was set up. It had USD 210 million at the end of 2024. In relation to the task of tackling the global consequences of the climate crisis, this is a drop in the ocean.

If we summarize the challenges facing the financing of a global eco-social fund, we come to the following key points:

To date, no common mechanism for the international community has been found. Voluntary contributions from states, foundations or wealthy private individuals have so far been far from sufficient. There is not even agreement on the global initiative for minimum taxation of corporate profits. And the financial market transaction tax has not yet progressed beyond modest practical beginnings.

This could be a cause for intense frustration or resignation. However, it is better to look for pragmatic ideas for the time when the world returns to multilateral cooperation. After all, we cannot be satisfied with the parallel egoism of individual states.

The starting point for the following considerations in this context is a thought experiment, particularly with regard to the COP20 conference in Baku. The main question was under what conditions oil-producing countries, and thus OPEC, would give up their resistance to a global eco-social fund.

I then tried to take the perspective of the oil minister of an OPEC state such as Saudi Arabia, who represents its national interests. The underlying assumption related to an attitude that would not spoil business for OPEC states and would allow them to agree to climate-friendly solutions if they had to pay nothing or close to nothing for them.

As we need around 100 million barrels of crude oil worldwide every day at a current price of around USD 80, oil costs around USD 8 billion worldwide. We are therefore talking about USD 2,900 billion per year. This figure is based on a global gross national product of around 110 trillion and corresponds to two to three percent of this.

If we draw up a correlation curve between gross national product and CO² emissions, the result is an expected value for a certain level of prosperity. This consideration alone makes it clear how closely ecological and social issues are linked. The rule of thumb is: the greater the poverty, the higher the CO² consumption due to an improved level of prosperity. To put it bluntly: if we want to live in a world in which no one has less than USD 250 per month at their disposal, then, as things stand today, we need additional CO² emissions equivalent to those of the USA and Japan combined!

What is interesting about the correlation curve between the level of prosperity in USD annual income and CO² emissions are the deviations. Some countries, such as Sweden or Costa Rica, are significantly better than expected. Sweden, for example, consumes around 4 tons of CO² per year and, with the same or better prosperity, only half per capita of what Germany consumes with around 8 tons of CO² per year. What is the background?

In fact, Sweden introduced a carbon tax early on and raised it in a planned but regular manner up to the current level of 119 euros per tonne. Germany has been at 55 euros per tonne since January 1, 2025. In the spirit of our thought experiment, it makes sense to ask whether such a mechanism could also work for fossil products such as crude oil. The litmus test would be to ask whether I would be in favor of the solution if I were in the shoes of the oil minister of an OPEC country.

Let us now consider the following case. We add a fossil fuel withholding tax of USD 5 to a barrel of crude oil with a current price of USD 80. Since we need 1.3 liters of crude oil for one liter of gasoline, we can obtain exactly 122 liters of gasoline from a barrel of 159 liters. The additional USD 5 per barrel would then have an effect of around 4 cents. This price increase is perfectly acceptable for consumers, even if the exact amount of additional taxation varies from country to country.

Such a levy would not be an obstacle for the oil-exporting countries, because ultimately it is not them who pay the bill, but the consumers. With appropriate agreements, the levy could also be collected by crude oil buyers or companies such as Shell and BP. However, it would have to be reliably passed on to the UN’s eco-social fund. Even if we price in compensation for the collection of the fossil fuel withholding tax, the effect would be gigantic. After all, USD 5 per 100 million barrels per day equates to USD 500 million per day and USD 180 billion per year.

As with any initiative, we must of course be aware of resistance, objections and practical effectiveness pitfalls. What happens, for example, if countries such as Russia or the USA do not participate? It seems to me that their non-participation is by no means certain, simply because we should not underestimate the attractiveness of fair solutions. However, if individual states opt out, they would of course have a price advantage: their barrel of crude oil would cost USD 80 instead of USD 85.

Individual states or alliances of states such as the EU would then be in demand. Democratic states in particular would be interested in a balance and would levy “climate compensation tariffs”. This means that oil can only be imported into these countries if the fossil fuel withholding tax is paid or, alternatively, the climate tariff is paid. The responsible countries, on the other hand, would not oppose this, as the effect for them would be that the money would flow into their coffers instead of the coffers of the UN Eco-Social Fund.

A second objection would be the non-application of the levy domestically, especially in countries with abundant oil reserves such as Venezuela, Mexico and Saudi Arabia. The local population would then have an “unfair” price advantage compared to other countries. As the OPEC countries do not reflect the majority of the world’s population, this could be accepted. But even then, there would be no reason for an oil minister to oppose this regulation.

Of course, it is also true that oil reserves are not infinite. If we think about the time of the highest global production volume, i.e. “peak oil”, then we end up in the late 2020s or early 2030s. And since prices have an impact on demand, a fossil fuel withholding tax also gives a certain advantage to renewable energies. Corresponding investments therefore become more attractive. Consequently, a fossil fuel withholding tax promotes the necessary ecological transformation of the global economy.

Even if this fossil fuel withholding tax were effective, we would still have to ask ourselves how funds should be distributed.

If it is not simply a matter of the rights of the strongest, the composition of the bodies that decide on the use of funds should be very carefully considered, with sufficient participation from all regions of the world and with strict precautions against corruption. In the long term, a UN global anti-corruption agency should be called for.

The fossil fuel withholding tax will only become credible with a good governance structure. One of the guiding principles could be to focus on countries with less than 3 tons of CO² emissions per capita and per year. A second principle can be the determination of particular urgency and the consideration of a particularly good effectiveness of measures. Finally, a score for the assessment of governance in a country should also be included. After all, if good governance paves the way for a higher allocation of funds, this is a strong incentive for politicians to actually invest in building social trust and fighting corruption.

Analog zur Praxis in großen Unternehmen bräuchte der UN Öko-Sozial-Fonds ein ständiges Audit Committee zur regelhaften Überprüfung der Fairness der Mittelvergabe gemäß den aufgestellten Regeln. Idealerweise ginge ein solches Revisionskomitee sogar mit dem Recht einher, effektive Sanktionen bei Verstößen zu verhängen.

Damit gelangen wir zu folgenden Kriterien für ein Scoring Modell der Mittelvergabe aus dem UN Öko-Sozial-Fonds:

  • Dringlichkeit
  • Effizienz und Effektivität der Maßnahme
  • Niedriger CO²-Ausstoß pro Kopf (unter 3t pro Jahr)
  • Gute Regierungsführung (Good Governance)
  • Wirksame Maßnahmen der Mittelverwendungskontrolle.

Wenn es der internationalen Gemeinschaft gelingt, einen solchen Fonds einzuführen, dann wäre dies ein Meilenstein der Klimagerechtigkeit.

Dies ist deshalb besonders wichtig, weil ja die Verursachung, der aktuelle Verbrauch und die Schädigung durch die Klimakrise nicht unmittelbar miteinander korreliert sind. Gerade deshalb müssen ja ökologische Fragen und Fragen der sozialen und politischen Gerechtigkeit gemeinsam betrachtet werden. Anders lassen sich Klimakonflikte letztlich nicht vermeiden.

Der UN Öko-Sozial-Fonds solle aber die Möglichkeit haben, bestimmte Kriterien in begründeten Fällen zu überspielen, wenn es um das Wohlergehen bestimmter Bevölkerungsgruppen geht. So sind die Einwohner der Südseeinsel Tuvalu genau so wenig unmittelbar für die Qualität ihrer Regierung verantwortlich wie die Bewohner von Städten auf Permafrostboden, der gerade aufzutauen beginnt.

Die Umsetzung einer fossilen Quellensteuer muss dann auch nicht auf Erdöl begrenzt werden. Sie kann auf Gas ausgedehnt werden. Eine fossile Quellensteuer ist letztlich eine marktwirtschaftliche und eine kooperative Lösung. Sie könnte die Überlegenheit von internationaler Kooperation entgegen einer rein nationalistischen Agenda in manchen Staaten aufzeigen.

Letztlich haben wir nur einen Planeten. Und es lohnt sich, zu einer Welt beizutragen, die deutlich weniger als heute durch den Albtraum einer immer stärker und schlimmer werdenden Klimakrise bedroht wird.

Anders gesagt: Die menschliche Spezies ist zur Kooperation fähig. Aber von dieser Kooperationsfähigkeit hängt auch ihr Überleben ab.