{"id":30226,"date":"2026-11-05T09:00:55","date_gmt":"2026-11-05T08:00:55","guid":{"rendered":"https:\/\/voelkerrechtsblog.org\/de\/?p=30226"},"modified":"2026-11-04T15:28:10","modified_gmt":"2026-11-04T14:28:10","slug":"polluter-pays-taxes","status":"publish","type":"post","link":"https:\/\/voelkerrechtsblog.org\/de\/polluter-pays-taxes\/","title":{"rendered":"Polluter Pays Taxes"},"content":{"rendered":"

In June, I delivered an oral statement<\/u><\/a> at the United Nations Human Rights Council\u2019s Panel on the Adverse Impacts of Climate Change on behalf of Just Atonement Inc<\/u><\/a>. The panel\u2019s concept note<\/u><\/a> named progressive taxation measures as \u201cone of the most effective ways to mobilize resources.\u201d Yet\u00a0the United Nations Framework Convention on International Tax Cooperation (\u201cthe Convention\u201d) remains an underexplored mechanism for aligning global tax policy with climate action.<\/p>\n

This article argues that\u00a0climate policymakers must recognize the Convention\u2019s potential to facilitate a meaningful increase in climate finance. Tax practitioners should likewise consider changes to the tax treatment of the fossil fuel industry as a mechanism for advancing tax policy objectives, such as the promotion of\u00a0sustainable development. As the costs of climate change continue to rise, the two fields must closely collaborate to expand available climate finance, advance tax policy goals, and facilitate a just transition.<\/p>\n

Background: A Brief History of the Convention <\/strong><\/p>\n

In 2022, the African Group at the United Nations\u00a0proposed a draft resolution<\/u><\/a> for a new United Nations convention on tax, which was scheduled for discussion under\u00a0an agenda item titled \u201cPromotion of inclusive and effective international tax cooperation at the United Nations.\u201d The United Nations General Assembly (\u201cUNGA\u201d) subsequently established an Intergovernmental Negotiating Committee<\/u><\/a> to develop the United Nations Framework Convention on International Tax Cooperation, with negotiations running from 2025 to 2027.<\/p>\n

On 24 December 2024, UNGA adopted\u00a0the t<\/u>erms of <\/u>r<\/u>eference<\/u><\/a> for the Convention, which outline its structure and objectives. Along with calling for a more inclusive international tax regime, the terms of reference include a commitment \u201cto the achievement of sustainable development in its three dimensions, economic, social, and environmental, in a balanced and integrated manner.\u201d<\/p>\n

Since negotiations for the Convention began, at least seventeen countries have called for <\/u>greater detail<\/u><\/a> on the issue of sustainable development. In the aftermath of Hurricane Melissa,\u00a0the main delegate for Jamaica argued<\/u><\/a> that \u201cit is time that the draft template text on sustainable development gets fleshed out.\u201d Specifically, she called for \u201ca much clearer link\u2026 to be made to environmental taxation and climate change, with clearer agreements on actions that must be taken\u2026\u201d During the third session of negotiations<\/u><\/a>, the United Kingdom, the Bahamas, the European Youth Forum, and others proposed referencing the \u201cpolluter pays<\/u><\/a>\u201d principle; the Alternative Information and Development Centre argued that applying the principle to Article 8 of the Convention, which addresses harmful tax practices, could better align<\/u> Article 8<\/u>\u00a0<\/u>with<\/u>\u00a0<\/u>the goals of<\/u> international climate commitments<\/u><\/a>.<\/p>\n

Despite these efforts, the drafting language has remained largely \u201cnon-committal<\/u><\/a>\u201d regarding the addition of detail on the issue of sustainable development. Neither of the publicly released Co-Leads\u2019\u00a0Draft Framework Convention Templates\u00a0from October 2025<\/u><\/a> and January 2026<\/u><\/a> contains the phrases \u201cfossil fuels\u201d or \u201cclimate change.\u201d An explicit reference to these concepts could facilitate the international coordination necessary to address\u00a0harmful tax practices in the fossil fuel industry and help increase the amount of climate finance available globally.<\/p>\n

Looking to Tax to Raise Climate Finance <\/strong><\/p>\n

Elisa Morgera, the United Nations Special Rapporteur on the promotion and protection of human rights in the context of climate change, has emphasized the direct implications of tax avoidance for climate action. In her June 2025 report to the U<\/u>nited <\/u>N<\/u>ations<\/u> Human Rights Council<\/u><\/a>, Morgera noted that fossil fuel companies have profited by engaging in tax avoidance and receiving sizable subsidies. She specifically called upon States<\/u><\/a> involved in the Convention negotiations to agree to \u201cprevent and combat illicit financial flows, corruption, money-laundering, tax evasion and tax avoidance that benefit fossil fuel companies.\u201d Underlying these tax losses is base erosion and profit shifting<\/u><\/a> (\u201cBEPS\u201d), which describes the practice of shifting profits away from the jurisdictions where a corporation\u2019s economic activity actually takes place and into low- or no-tax jurisdictions. The OECD estimates that governments worldwide lose USD 100 billion to USD 240 billion<\/u><\/a> in corporate income tax revenue each year due to BEPS by multinational enterprises; these actors include\u00a0enterprises operating in the fossil fuel industry<\/u><\/a>. Even a portion of this revenue could meaningfully expand available climate finance, especially in less wealthy countries<\/u><\/a>.<\/p>\n

Revenue raised as a result of international tax cooperation could advance crucial mitigation and adaptation efforts in the face of climate change by strengthening the Fund for Responding to Loss and Damage<\/u><\/a> and contributing to a variety of multilateral funds<\/u><\/a>\u00a0associated with the United Nations Framework Convention on Climate Change (UNFCCC). The United Nations Development Programme emphasizes<\/u><\/a> that adaptation efforts are particularly underfunded, with ninety percent of climate finance directed toward mitigation.<\/p>\n

International climate negotiations are also beginning to acknowledge the Convention\u2019s potential. The New Collective Quantified Goal that emerged from COP29 in 2024<\/u><\/a> called on actors to \u201cwork together to enable the scaling up of financing to developing country Parties for climate action from all public and private sources to at least USD 1.3 trillion per year<\/u><\/a> by 2035.\u201d In November 2025, the Baku to Bel\u00e9m Roadmap to 1.3T<\/u><\/a> was released, setting out a \u201ccoherent reference framework\u201d for expanding climate finance in line with the New Collective Quantified Goal. That document\u00a0names the Convention as an example of potential \u201cinnovative sources of concessional finance.\u201d The Global Mutir\u00e3o<\/u><\/a> decision at COP30 subsequently took note of the Baku to Bel\u00e9m Roadmap to 1.3T.<\/p>\n

Citing discussions at Bel\u00e9m as highlighting \u201cthe need for a complementary process<\/u><\/a> to advance action among countries and stakeholders,\u201d Colombia and the Netherlands organized the first Conference on Transitioning Away from Fossil Fuels in Santa Marta, Colombia, in April 2026. In contrast to the COP documents, the Santa Marta report<\/u><\/a> mentions tax cooperation multiple times, explicitly emphasizes the importance of addressing tax abuse and evasion, and names the Convention as a mechanism for \u201cstrengthening international tax cooperation<\/u><\/a>.\u201d The Santa Marta conference indicates that policymakers are beginning to recognize the relevance of tax cooperation for raising climate finance.<\/p>\n

Looking to Climate to Improve Tax Policy <\/strong><\/p>\n

Coordinated international taxation efforts on fossil fuel companies have the potential to substantially increase the availability of public finance in the international community. Eurodad and the Global Alliance for Tax Justice<\/u><\/a> calculate that, since the adoption of the Paris Agreement, a 20 percent surtax on the global profits of the world\u2019s one hundred largest oil and gas companies could have raised USD 1.08 trillion of additional tax revenue between 2016 and 2024. Similar efforts could help fulfill the Convention\u2019s commitment to engage in approaches that will \u201ccontribute to the achievement of sustainable development<\/u><\/a>\u2026\u00a0in a balanced and integrated manner.\u201d The Convention presents\u00a0an opportunity to facilitate\u00a0the taxation of fossil fuel companies, thereby contributing to raising funds at the scale envisioned by these projections.<\/p>\n

The international tax regime has already taken industry-specific approaches to policymaking\u00a0\u2014\u00a0its response to the digitization of the global economy is particularly illustrative. At its 2021 session, the Committee of Experts on International Cooperation in Tax Matters added Article 12B of the U<\/u>nited <\/u>N<\/u>ations<\/u> Model Tax Convention<\/u><\/a> in response to \u201cnew business models based on digital technologies.\u201d Moreover, the Convention\u2019s Intergovernmental Negotiating Committee itself has responded to \u201can increasingly digitalized and globalized economy\u201d by developing the\u00a0First Protocol<\/u> on the Taxation of Income from Cross-Border Services<\/u><\/a>\u00a0under Workstream II<\/u><\/a> of the Convention. Just as the expansion of the digital economy has prompted novel tax rules, the energy transition warrants industry-specific attention. The analogy is particularly apt in that there is a mismatch<\/u><\/a> between where digital services occur and where the resulting profits are taxed, just as there is often a disparity<\/u><\/a> between where fossil fuels are extracted and where profits are ultimately taxed. Although the United Nations Tax Committee has previously addressed questions<\/u><\/a> arising from the extractive industry, the Convention\u2019s publicly released drafts have not included an industry-specific approach addressing these issues.<\/p>\n

Looking Beyond Climate Finance: Can Tax Policy Help Facilitate the Just Transition? <\/strong><\/p>\n

Raising climate finance is just one component of a larger and more daunting project: transitioning the economy away from a reliance on fossil fuels without undermining human rights. Key to achieving a just transition is reducing the market distortions created by fossil fuel subsidies, which lead to prices that \u201cfail to adequately charge<\/u><\/a> for both the supply and environmental costs of fuel use.\u201d Artificially low prices reduce economic incentives<\/u><\/a> for the energy transition. Additionally, since wealthier households consume more energy, they generally benefit more from subsidized energy prices<\/u><\/a>. By facilitating cooperation and reforming the preferential tax treatment of fossil fuels, the Convention could help States set prices that better reflect the social and environmental costs of fossil fuel extraction.<\/p>\n

Another concern is that an energy transition may have unjust effects on vulnerable communities. Economic modeling of stranded fossil fuel assets<\/u><\/a> in Europe and the United States suggests that financial losses from the energy transition would fall largely on the top ten percent of wealth holders, with roughly half of that share borne by the top one percent. These losses would make up less than one percent of net wealth<\/u><\/a> for the top one percent under the paper\u2019s benchmark scenario. Low-income households would face losses that represent a larger share of their much smaller net worth, but those losses would be small in absolute terms. The study argues that those smaller losses could be compensated using money raised from carbon taxes and wealth taxes<\/u><\/a>.<\/p>\n

This article\u00a0has identified\u00a0several ways in which tax policy objectives and climate change goals are mutually reinforcing. However, the dynamic between the two fields is not without its tensions. The \u201cglobal corporate tax competition\u201d from 2005 to 2016, in which countries raced to decrease their corporate tax rates,\u00a0provides one example.\u00a0A\u00a02024 policy brief<\/u><\/a>\u00a0finds that this strategy for attracting international capital \u201cleads to a shift of more emissions towards developing economies\u2026\u201d A different tension arises with regard to the design of climate-fiscal policy. A\u00a02024 International Monetary Fund working paper<\/u><\/a> warns that, while mitigation through carbon pricing would lead to an increase in fiscal revenues, base erosion of existing fuel taxes may lead to significant revenue loss \u201cfor almost all countries\u201d\u00a0under an approach that relies on non-pricing instruments. The OECD emphasizes<\/u><\/a> that carbon pricing policies must be designed pragmatically to avoid compromising energy affordability or disproportionately\u00a0burdening\u00a0low-income households.<\/p>\n

Despite these challenges, the two fields have many shared objectives. The Framework Convention on International Tax Cooperation offers a promising forum for international policymakers to cautiously bridge the gap between tax and climate policy. International tax lawyers should direct efforts toward addressing novel challenges raised by the climate crisis, while climate practitioners should look beyond traditional climate institutions and more intentionally engage with the international tax regime. A failure to seize the opportunity posed by the Convention risks missing a chance to raise substantial\u00a0climate finance and advance a just transition away from fossil fuels.<\/p>\n","protected":false},"excerpt":{"rendered":"

In June, I delivered an oral statement at the United Nations Human Rights Council\u2019s Panel on the Adverse Impacts of Climate Change on behalf of Just Atonement Inc. The panel\u2019s concept note named progressive taxation measures as \u201cone of the most effective ways to mobilize resources.\u201d Yet\u00a0the United Nations Framework Convention on International Tax Cooperation […]<\/p>\n","protected":false},"author":35,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[6639],"tags":[3792,5353,3680],"article-categories":[6000],"authors":[8149],"doi":[],"class_list":["post-30226","post","type-post","status-publish","format-standard","hentry","category-uncategorized","tag-climate-change","tag-tax","tag-united-nations","article-categories-article","authors-julia-colen"],"acf":{"subline":"Why the United Nations Tax Negotiations Matter for Climate Change"},"meta_box":{"doi":""},"_links":{"self":[{"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/posts\/30226","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/users\/35"}],"replies":[{"embeddable":true,"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/comments?post=30226"}],"version-history":[{"count":4,"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/posts\/30226\/revisions"}],"predecessor-version":[{"id":30233,"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/posts\/30226\/revisions\/30233"}],"wp:attachment":[{"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/media?parent=30226"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/categories?post=30226"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/tags?post=30226"},{"taxonomy":"article-categories","embeddable":true,"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/article-categories?post=30226"},{"taxonomy":"authors","embeddable":true,"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/authors?post=30226"},{"taxonomy":"doi","embeddable":true,"href":"https:\/\/voelkerrechtsblog.org\/de\/wp-json\/wp\/v2\/doi?post=30226"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}