We Need Climate Reparations, Not Carbon Credits

How a Global Climate Compensation Fund could galvanize international politics

My guest this week was physicist and engineer, Henrik Nordborg, whose joined me to discuss his plan for Global Climate Compensation, a first-step solution to the climate crisis. His plan involves levying a carbon tax on fossil fuel production, paid by the 300 or so fossil fuel companies which exist, and then redistributing that wealth to the world's most vulnerable. 

The redistribution part is key because climate action is not just about making it less attractive for fossil fuel companies to pull oil, gas, and coal out of the Earth's crust. It’s also vital that we provide money to vulnerable nations so that they may develop their own economies or decarbonize their own economies without having to go through the same industrial process that the West went through. 

We've seen from Cop discussions that these negotiations come to a grinding halt because of the question of fairness, whether or not it’s right that wealthy nations in the West, who benefited from exploitative and extractive industries for centuries, demand that nations like India and China to put the brakes on their own development. Therefore, reframing the problem to tax the hugely profitable private companies who have equally benefited from those industries is a fascinating idea. Tax the polluting capitalists and hand the money in the fund over to those nations who would otherwise be dependent on those very same industries to develop. 

An initial critique of such a plan is—well, what if those governments don't redistribute that money fairly? What if they don't invest it in renewables, or in something that would help the planet? Henrik is firm that the choice lies with them, but to do so would be committing suicide in the longterm. The more tactical approach would be using this very first instance in history of the global North supporting the global South to invest in new industries, or in their people, in a way that will be necessary to maintain their development—and perhaps even provide them with a market edge.

Henrik’s proposal is gripping. Allow me to repeat that there are only 300 or so fossil fuel companies in the world, making tracking and taxing their production possible and plausible. Taxing the production rather than their emissions is key because it involves no extra accounting, and no opportunities for fudging the data or offsetting their emissions. We simply levy a tax on numbers which already exist. 

Of course, these companies would then offset that tax onto consumers, and the end consumers—your average citizens—would be hit hardest. We’re already seeing that play out with Russia’s invasion of Ukraine and the speculative markets driving up prices. This is having a devastating effect around the world, even in wealthy nations. 

Henrik’s plan, therefore, almost forces degrowth into existence. That vulnerable people will suffer initially, as they are now, is a tragedy. But we are getting to the stage of the climate crisis where it is extremely unlikely that we will be able to implement a plan that doesn't hurt someone somewhere. Prices will go up for everyone, of course, but, as ever, the rich can afford to pay. Henrik proposes $100 per barrel of oil—that’s like adding $200 to a round airline trip from London to New York. 

What’s particularly exciting about this idea of getting degrowth into the conversation through this policy is the fact that as long as there is no international mandate on how the money in the fund is redistributed to a nation’s people—which is a gamble, yes—we would perhaps see more willingness from governments to agree to it. This then attacks the systemic roots of the climate crisis by levying the reductionist perspective that carbon is the main problem. Of course, our carbon dioxide emissions are causing global heating, but that demand for carbon and fossil fuels is driven by our economic system, global inequality, socioeconomic precarity. 

This is where the lack of mandate can be leveraged: One nation, for example, could redistribute what they'd get paid out from this global climate compensation into a Universal Basic Income, which directly impacts the climate crisis by addressing economic inequality and production. Another could choose to invest in their renewable energy sector, another nation could pour all of their money into solving ocean acidification. Henrik’s idea allows for a level of national autonomy to deal with the most national pressing issues—which could lead to a diversification of solutions-based thinking. 

It draws awareness to the fact that we're not just battling one monster. We are battling the interconnection and the interrelation of many, many different problems, which is what created such a complex crisis. Our solutions need to be flexible enough that they can address any part of that crisis. Creating a global carbon tax with redistribution built in to then potentially invest that money into anything which could help in the fight against the climate crisis is phenomenally interesting.

Another crucial point is how exciting this could be politically for a disempowered, disenfranchised and disillusioned global population. Yes, we’re seeing very interesting leftist upswings in south America and central America, but the West is flirting with fascism and authoritarianism; corruption is on the rise around the world; people are increasingly aware that national politics cannot solve these global problems.

Implementing a global policy which attacks both energy use and wealth inequality could give opposition parties around the world a universal manifesto to get behind, or at the very least a manifesto point to rally around. This could then galvanise populations which are typically feeling dispirited and aware of the fact that their governments are ill-equipped to handle the future. We need to start seeing international cooperation politically in order to get people excited again about politics. We need to break through the glass ceiling of national politics, without introducing a world government. 

A policy like Global Climate Compensation could give opposition and leftist parties a framework to build relationships and their own reputation within their borders—to combat a global elite we need cooperation on all sides. Political relationships tend to be made between people, but what if we could engender that cooperation on the basis of policy? A policy that on the very basis of committing to opens political figures around the world to an international network and resources? Political allegiance would not then be built around typically fragile relationships between culturally disparate people, but a concrete plan and idea to which people can attach their names.

This has a huge amount of potential, especially as we look to systemise our response to the polycrisis and galvanise international cooperation. Could this be the rallying cry the world needs?

© Rachel Donald