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As dramatic as it might seem, the case for a windfall income tax almost makes sense.
However, BP’s chief executive Bernard Looney, who in November excitedly described his company as a “cash machine” as energy prices soared, offered some interesting counter arguments.
He stated that a windfall income tax would discourage investors at a point when BP plans on increasing its spending on renewable energy to 40% of its total expenditure in 2025, cutting oil and gas production by 40% in 2030, and producing an additional 50 gigawatts.
Although the UK government has not yet responded to calls for a windfall income tax, it seems that Looney takes the threat of one seriously and enters into what appears to be a negotiation.
The cost of living crisis is so severe that it is imperative to act quickly. It is also clear that there is moral justification to take a piece of skyrocketing profits to help people who are forced to choose between heating their homes or eating.
However, the windfall taxes could be kept as low as possible. The government could pay the cost with funds from elsewhere. This is based on the fact that fossil fuel companies have made significant progress in the transition toward renewables. BP and other private businesses are likely to make more efficient uses of their funds than government.
If they develop more sources of renewable energy in this country, that would insulate British consumers from oil and gas price hikes on the global market, improve the UK’s fuel security and, most importantly of all, cut greenhouse gas emissions.
The stakes of the fight against climate change are too high. Humanity needs everyone to work together, even the fossil fuel industry. We really are all in it together when the ‘it’ is planet Earth.
If the threat or a windfall tax helps someone to see that, it should be a policy that one can return to in case the profits keep rolling in.
