‘Grotesque greed’: UN Secretary-General urges governments to tax fossil fuel firms’ ‘excessive’ profits

The UN Secretary-General yesterday urged governments to tax the “excessive profits” of oil and gas firms and use the funds to support vulnerable households struggling with soaring energy and food costs.

In the launch of a UN-backed crisis group response focused on tackling sharpening notes food, energy, and financial security risks, Antonio Guterres urged governments, financiers, and citizens to work together to call out the fossil fuel industry for amassing bumper profits on the back of an energy supply crunch that is hurting everyday citizens.

“I urge all governments to tax these excessive profits and use the funds to support the most vulnerable people through these difficult times,” he said. “And I urge people everywhere to send a clear message to the fossil fuel industry and their financiers: this grotesque greed is punishing the poorest and most vulnerable people, while destroying our only home.”

Guterres also urged all countries, and richer nations in particular, to introduce energy efficiency measures that would ensure fuel is consumed prudently at a time when energy costs globally are soaring. “All countries – and especially developed countries – must manage energy demand,” he said. “Conserving energy, promoting public transport and nature-based solutions are essential.”

He echoed his previous calls for governments, financiers, and businesses to work together to accelerate the transition to renewables, which he argued were cheaper than fossil fuels in most cases.

He argued that transport should take steps to make storage technologies “public goods”, scale up and diversify supply chains for raw materials and renewable energy technologies, eliminate “red tape” that is hampering the clean energy, and shift fossil fuel subsidies to support vulnerable households and “alternative jobs and livelihoods”.

“Every country is part of this energy crisis, and all countries are paying attention to what others are doing,” he said. “There is no place for hypocrisy.”

The UN chief’s remarks come as the latest in string of financial results from fossil fuel majors have revealed companies have amassed record profits as oil and gas prices have soared in the wake of Russia’s invasion of Ukraine.

ExxonMobil, Chevron, Shell, BP, and TotalEnergies have announced a combined profit of more than $58bn in second-quarter net profit, with Exxon leading the pack at $18bn.

As many as one in four households in the UK expected to slip into fuel poverty this winter as food and fuel prices soar. Analysis published earlier this week by consultancy Cornwall Insight warns that energy bills in the UK are set to rise to £3,359 a year this October and then again to £3,720 next April. Last summer the annual energy price cap stood at £1,138.

The influential analyst firm also highlighted how businesses are also facing soaring costs, with some firms set to see their energy bills increase five-fold this autumn.

After significant pressure from campaigners, the UK government introduced a 25 per cent Energy Profits Levy on oil and gas producers’ profits in May, arguing the emergency measure would raise £5bn over the next 12 months and be phased out when oil and gas prices returned to normal.

However, then-Chancellor Rishi Sunak built an allowance investment into the tax that incentivises companies to reinvest their profits into more oil and gas exploration activity. For every £1 a company invests in fresh oil and gas exploration it will get back £0.91 in tax relief.

The move was heavily criticized by campaigners, who warned it would reduce the amount of funds that could be raised to help low-income households and a major opportunity to catalyse oil and gas majors investment in clean energy that could reduce energy consumers’ reliance on votalile, polluting, and expensive oil and gas markets.

Writing for BusinessGreen This week, Harriet Lamb, CEO of climate solutions group Ashden, urged the government to strengthen the existing windfall tax on oil and gas firms in light of firms’ record profits.

“The government needs to revamp its half-hearted windfall tax and toughen up the provisions,” she wrote. “All the loopholes – as many as in a Swiss cheese – need closing off, in particular the exemptions allowed if companies invest in fossil fuel exploration.”

Meanwhile, the government continues to face daily calls to do more to help households and businesses cope with soaring energy bills, with campaigners arguing more direct financial support is required massively expanded energy efficiency programs and a national communications campaign to encourage people to save energy.

In response to the call for Ministers to increase taxes on oil and gas firms in the wake of their bumper profits, a spokesperson from the Treasury said: “We expect the Energy Profits Levy to raise around £5bn in its first year from the extraordinary profits oil and gas companies are seen to help pay for our £37bn support package, which includes direct payments worth at least £1,200 each to the 8 million most vulnerable families, a record fuel duty cut, and a National Insurance cut worth up to £330 a year for the typical employee.”

.

Leave a Comment