Oxfam and ally organisations are calling for a permanent tax on the profits of fossil fuel firms. Such a tax, says Ashfaq Khalfan, could raise $400bn in its first year, vital funds that could not only support those suffering climate loss and damage but also accelerate the switch to a green global economy.
Mega-rich oil, gas and coal companies are driving humanity to the edge of destruction and earning billions as they do so.
The emissions of just 340 fossil fuel companies accounted for over half of global emissions in 2023. Their emissions in that year alone are enough to cause 2.7 million heat-related deaths over the next century. For decades, these companies also spread lies and disinformation about the climate crisis and lobbied to create fossil-fuel driven economies.
That’s why Oxfam is calling for governments around the world to urgently impose a “polluter profit tax” on these corporations to pay for climate damage and fund a just transition to renewable energy. The principle is simple: given the damage that they have already wreaked upon our climate, we should look to them first to pick up the bill.
Climate chaos for us, huge profits for them
Fossil fuel firms, the “godfathers of climate chaos”, have received billions in government subsidies as energy prices soared. And, instead of investing in renewable energy, they have enriched their shareholders to the tune of $403 billion in 2024 alone.
So far in 2025, major oil and gas companies BP, Shell, and Equinor have cut their targets for future low carbon investments by 73%, 37% and 41% respectively. Oxfam’s research also finds that 585 of the world’s largest and most polluting fossil fuel companies made $583 billion in profits in 2024, a 68% increase since 2019.
Replacing oil, gas and coal infrastructure, and helping communities protect themselves from climate change and recover from harm caused by extreme weather will cost the world trillions each year. At COP28, countries agreed to accelerate efforts to find new sources of finance, including via taxation. A polluter tax could be a huge source of such climate finance.
The tax will also accelerate the transition to a green economy. Most people use fossil fuels because they lack affordable alternatives. Fossil fuel companies should have shifted meaningfully to renewable energy – but they have simply refused to do so. They remain motivated by profits and they will continue to keep investing in oil, coal and gas unless these are made consistently less profitable than renewable resources.
How a new polluter tax could work
Oxfam has modelled what such a ‘rich polluter profit tax’ could look like. Looking at the return on their assets for the mega-rich fossil fuel corporates, the first 3% would be taxed at a rate of 20%. Any profits above this would be deemed excessive and taxed at a rate of 50%. These taxes would only be charged on the fossil fuel segments of their businesses and on top of existing corporate taxation.
Such a tax could raise up to $400 billion globally in its first year based on 2024 figures, comparable to the estimated $290-$1045 billion needed annually by 2030 to pay for the loss and damage caused by climate change in the Global South. This type of tax would apply permanently, unlike ‘windfall profit taxes’ that some countries impose when a company’s profits in a sector rise significantly above normal levels.
The tax should make fossil fuels less profitable than renewable energy, creating a clear incentive to shift investment flows and stop the advertising and promotion of fossil fuels. As companies shift to renewables, polluter profit tax proceeds would decline, but would be critical during the transition.
It’s important that the tax targets mega-rich corporations and investors, not regular people. It should be designed so that companies can continue to provide some fossil fuels during the transition to renewable energy to reduce the impact on consumers and earn a decent and smaller profit. Governments should protect consumers from higher prices through adequate social protection schemes. They must simultaneously reduce demand for fossil fuels, providing rapid support for renewable energy to increase its supply and reduce consumer prices. Governments must invest in renewable energy infrastructure, including subsidies to consumers to be able to afford the necessary infrastructure to use renewable energy at the household level.
It’s also time to talk about broader taxes on excess profits
Polluter and excess profit taxes can only be part of the solution. They won’t fully cover the funds required for the climate transition, estimated at US$ 2.7 trillion per year between now and 2030 just for the Global South. Additional higher taxes are required, for example, on super-rich individuals and on other polluting investors and companies.
That’s why beyond fossil fuel corporations, all excess profits should be taxed, to fight inequality and build a fairer economy. The main beneficiaries of high corporate profits are the richest people who own the majority of financial assets, so excess profits mean ever higher extreme wealth inequality.
Oxfam has modelled an excess profits tax that would apply when the return on a corporate’s assets is above 10% a year; any profits above this level would be taxed at a rate of 50%. This could generate up to $681 billion globally per year. This model is intended to show the potential of such an excess profits tax rather than to prescribe a specific rates and design.
Revenues from these taxes should be used to fund climate action such as emissions reduction, adaptation costs and recovery from loss and damage, along with universal public services to reduce inequality. Global North countries should dedicate a significant portion of these revenues to help fund such spending in the Global South, for the same purposes.
Global polluter and excess profit taxes should eventually be negotiated, agreed and formalized at the United Nations, which is currently negotiating a transformative international tax treaty.
We also need systemic global reform to prevent tax evasion and aggressive tax avoidance and to ensure the Global South gets a fair share of tax revenues from multinationals. UN negotiations for a global tax convention must achieve this to fight inequality both between and within countries.
We need a coalition of the willing behind this tax
We are facing a climate emergency, so governments need to impose this tax swiftly. Countries across continents should form a ‘coalition of the willing’ to coordinate and speed up their efforts and counter fossil fuel company lobbying and tax avoidance.
This is a big political challenge, but we have no choice in the face of catastrophic climate harms. And we have the public on our side: Surveys commissioned by Oxfam, Greenpeace and others show strong public support for taxes on fossil fuel companies and the super-rich. We must bridge the gap between what the people want and what their leaders are doing. Let’s get to work!
Author
More on rich polluters and public support for a polluter tax on Oxfam’s Equals blog here. A version of this blog has also been posted on the Oxfam International website.
Sign the petition to #MakeRichPollutersPay here.
Thanks to Martin Brehm Christensen for his contribution to the design of the proposed taxes, and to Anders Sypniewski Dahlbeck, Adam Musgrave, Didier Jacobs, Cass Hebron, Max Lawson, Astrid Nillson Lewis, Sandar Hla, Nafkote Dabi and Matt Grainger for review and inputs on this blog.