Australians are suffering from climate disasters that are accelerating as climate change worsens. The extraction and use of fossil fuels such as coal, oil and gas is a key factor driving climate change and the resulting increasing costs of natural disasters. 

Australia’s current taxation system fails to raise significant revenue from the fossil fuel industry while also failing to make the industry pay compensation for the damage it has caused through accelerating climate change. This paper proposes a levy on fossil fuel exports could make the fossil fuel industry pay for the harms it has caused and raise up to $100 billion every year.

One option to help ensure the fossil fuel industry would contribute to the costs of accelerating disasters would be through a ‘climate disaster levy’. A climate disaster levy would be applied per tonne of carbon dioxide equivalent (CO2- e) potential from fossil fuels exported from Australia. As this levy would only apply to exports, it would not increase Australian energy bills. As an effective export tax, it may discourage some exports, which could increase domestic supply and put downward pressure on Australian energy prices.