Dear World Leaders,
The climate crisis is a defining challenge of our time. Around the world, communities are experiencing the devastating impacts of extreme weather, biodiversity loss, and shifting economic realities. Millions of people, particularly those already facing poverty and exclusion most, are losing their homes, their livelihoods, and their lives. Outdoor air pollution caused by burning fossil fuels is estimated to cause 4.2 million premature deaths worldwide per year. The UN’s Intergovernmental Panel on Climate Change has repeatedly warned that there is a rapidly closing window of opportunity to secure a liveable and sustainable future for all, requiring rapid and far-reaching transitions across all sectors to achieve deep emissions reductions. The International Court of Justice confirmed that States must use all means at their disposal to prevent activities carried out within their jurisdiction or control from causing significant harm to the climate system.
Addressing this crisis requires solutions that are ambitious, equitable, and grounded in international cooperation. Governments, the private sector, and civil society all have essential roles to play. We have a crucial responsibility to align financial flows with climate goals, accelerate investment in renewable energy, and ensure that resources are mobilised fairly and effectively to meet the needs of all communities.
“For too long, some of the greatest profits in the global economy have come from high emissions and environmental harm, with costs borne by the many, not the few. It is time to put in place permanent taxes on polluter profits so that industries whose emissions threaten all of us pay their fair share to fund the transition, protecting all people and particularly those already facing the most poverty and exclusion, and restoring trust in our shared future.” – SG Ban Ki-moon
It is time to consider innovative solutions that can simultaneously establish a clear incentive for companies to shift investment to renewable energy as quickly as possible, while mobilising significant funds to address climate damages and advance both equality and equity. Today, we call on you to consider permanent polluter profit taxes applied to high-emitting industries, designed to ensure contributions come from those with the greatest capacity to pay rather than from ordinary consumers of fossil fuels. With wealthier countries leading by example, these taxes should place the primary responsibility on those with the greatest capacity, not on middle- and low-income communities.
The world invested more than $1.1 trillion in fossil fuels last year, much more than what is needed to meet climate goals. Meanwhile, the oil and gas sector spent only about 2.5% of capital on clean energy technologies, a 25% reduction from 2023 figures.
“When those who profit from pollution contribute their fair share through efficient and clear taxation, we will unlock the resources for innovation, for sustainable growth, and for rebuilding public trust. Wealthier countries must lead on fair taxation, building trust with the Global South and accelerating a just global transition. International discussions, such as at COP 30 in Belem, should support efforts to build coalitions of willing countries making progress on fossil fuel levies.” – Prime Minister Mari Kiviniemi
To reduce and repair harm from climate change, and to ensure a fast and just transition, governments will need to regulate effectively and to mobilise extensive resources, estimated at US$6.5-6.7 trillion per year by 2030. Yet governments everywhere are facing fiscal pressures, and communities are experiencing a cost-of-living crisis, which makes raising general taxation politically and socially difficult. At the same time, the cost of inaction is far greater than the cost of transition.
During the oil and gas price crisis in 2022, many governments implemented windfall taxes. We must consider making such approaches permanent. A polluter profits tax modestly applied to normal returns and significantly higher on windfall gains could, if applied just to oil, coal and gas companies, generate up to $400 billion in its first year. Such measures would establish a clear incentive for companies to shift investment to renewable resources, while raising significant funds to address climate damages. Governments should also phase out fossil fuel subsidies provided to corporations, and re-direct consumer fossil fuel subsidies towards alternative supports and public services that do not incentivise fossil fuel use. These measures should also be complemented by fair taxation on the wealthiest individuals.
Taxing fossil fuel company profits would effectively respond to international commitments, such as those made at COP 28, which include a pledge to transition “ away from fossil fuels” and to accelerate the creation of “ new and innovative sources of finance, including taxation, for implementing climate action and thus enabling the scaling down of harmful incentives”. Public support for such steps is strong: a global survey of 13 countries comprising more than half of the world’s population found that eight in ten people back taxing oil, gas and coal companies to fund climate damages.
“Climate justice demands courage: Taxing fossil fuel profits is an essential step to finance the transition fairly and effectively. A permanent polluter profit tax will not only to reduce emissions, but is also critical to promote equality and protect those facing climate and social harms. Progress should happen at the national level – with countries setting examples for others – and at international settings such as COP 30 and the UN Tax Convention.” – President Carlos Alvarado
On the international stage, Barbados, France, and Kenya, joined by fourteen other countries, are working to build coalitions of the willing to apply levies—including on luxury aviation and fossil fuels —to mobilise new climate and development finance.
Local innovation is also already underway. In the U.S., the states of Vermont and New York have enacted legislation requiring fossil fuel companies to financially contribute to the costs of adaptation. New York state requires companies to contribute $75 billion over 25 years, of which 35% must benefit disadvantaged communities. Many other US states are considering such legislation.
We urge you to place the question of fair taxation of fossil fuel company profits firmly on national and international agendas, in upcoming G20 discussions in South Africa, at COP30 in Belém, and in negotiations toward a new UN Framework Convention on International Tax Cooperation, including supporting efforts to build coalitions of willing countries making progress on fossil fuel levies. With wealthier countries leading by example, such measures could be transformative, enabling a faster and fairer global transition and strengthening public trust that climate action can deliver tangible benefits for all.
The world has the tools, the knowledge, and the resources to act. What is needed now is the political courage to ensure that those with the greatest capacity contribute their fair share. This will not only advance climate justice but also strengthen the foundations of a more stable, resilient, and prosperous global economy.
Sincerely,
Club de Madrid Members.
- Carlos Alvarado, President of Costa Rica (2018-2022)
- Ban Ki-moon, Eighth Secretary General of the United Nations
- Valdis Birkavs, Prime Minister of Latvia (1993-1994)
- Kjell Magne Bondevik, Prime Minister of Norway (1997-2000; 2001-2005)
- Felipe Calderón, President of Mexico (2006-2012)
- Kim Campbell, Prime Minister of Canada (1993)
- Laura Chinchilla, President of Costa Rica (2010-2014)
- Joaquim Chissano, President of Mozambique (1986-2005)
- Cellou Dalein Diallo, Prime Minister of Guinea (2004-2006)
- Vicente Fox, President of Mexico (2000-2006)
- Dalia Grybauskaitė, President of Lithuania (2009-2019)
- Ángel Gurría, Secretary General of the OECD (2006-2021)
- Alfred Gusenbauer, Chancellor of Austria (2007-2008)
- Han Seung-soo, Prime Minister of the Republic of Korea (2008-2009) and Vice President of Club de Madrid
- Mehdi Jomaa, Prime Minister of Tunisia (2014-2015)
- Ivo Josipović, President of Croatia (2010-2015)
- Mari Kiviniemi, Prime Minister of Finland (2010-2011)
- Milan Kučan, President of Slovenia (1991-2002)
- Chandrika Kumaratunga, President of Sri Lanka (1994-2005)
- Aleksander Kwasniewski, President of Poland (1995-2005)
- Zlatko Lagumdžija, Prime Minister of Bosnia and Herzegovina (2001-2002)
- Yves Leterme, Prime Minister of Belgium (2008, 2009-2011)
- Stefan Löfven, Prime Minister of Sweden (2014-2021)
- Rexhep Meidani, President of Albania (1997-2002)
- James Michel, President of Seychelles (2004-2016)
- George Papandreou, Prime Minister of Greece (2009 – 2011)
- Andrés Pastrana, President of Colombia (1998-2002)
- Mary Robinson, President of Ireland (1990-1997)
- José Luis Rodríguez Zapatero, President of the Government of Spain (2004-2011)
- Francisco Sagasti, President of Peru (2020-2021)
- Juan Somavía, Ninth Director of the International Labour Organization (1999-2012)
- Hannah Suchocka, Prime Minister of Poland (1992-1993)
- Petre Roman, Prime Minister of Romania (1989-1991)
- Jigmi Thinley, Prime Minister of Bhutan (2008-2013)
- Martín Torrijos, President of Panama (2004-2009)
- Cassam Uteem, President of Mauritius (1992-2002)
- Leo Varadkar, Prime Minister of Ireland (2017-2020; 2022-2024)
- Valdis Zatlers, President of Latvia (2007-2011)
