Combined profits of the world's largest energy companies skyrocketed to nearly $100 billion in the first quarter of 2022, which means governments should explore windfall taxes, according to a report released Wednesday by the U.N.'s global crisis response group on food, energy and finance. The Organization for Economic Cooperation and Development backed a similar approach in March.
During the event held Wednesday to release the U.N. group's report on the energy sector — the most recent report it has issued on the Ukraine war's global impact — U.N. Secretary General Antonio Guterres called the energy companies' profits "immoral," "scandalous" and "excessive."
"I urge all governments to tax these excessive profits and use the funds to support the most vulnerable people through these difficult times," Guterres said during the news conference, which was recorded on YouTube.
Officials pointed out that large countries' actions have an impact beyond their borders. Russia's invasion of Ukraine has enabled speculators in the energy sector to profit from the instability that came afterward, Guterres said.
Rebeca Grynspan Mayufis, secretary general of the U.N. Conference on Trade and Development, said decisions by countries that consume the most energy "have global implications for the rest of the world, and especially for the smallest and poorest countries that have little influence in this body."
The World Food Program's latest estimates covering the 82 countries where they operate imply "an increase of 47 million acutely hungry people due to the ripple effects of the war in Ukraine in all its dimensions." WFP has estimated that this year 345 million people will be acutely food insecure or at a high risk of food insecurity across the countries where they have an operational presence.
"After two years of a pandemic that was marked by extreme inequality, especially in vaccines, the world cannot afford another scramble — this time on fuel," Mayufis said.
The report called on developed countries in particular to manage energy demand.
Regarding short-term energy measures over the next three to 12 months, the report recommended publicly funded cash transfers and rebate policies as energy solutions for low-income households. Governments "should explore the most effective ways to fund these programs, including through windfall taxes on the largest oil and gas companies," the report said.
Governments should provide solutions for accessing affordable energy to vulnerable populations, the global crisis group said.
"Lessons have been learned from similar transfers made during the COVID-19 crisis, involving mobile cash payments that could quickly reach otherwise inaccessible communities," the report said. Where possible, such policies "should be enacted under longer-term frameworks of social protection investments for sustainable development," according to the report.
Since the group issued its second report June 8, "the impacts of the ongoing cost-of-living crisis have been felt more deeply and widely across the world," it said.
"The truth is that we are seeing excessive, scandalous profits of [the] oil and gas industry in a moment in which all of us are losing money," Guterres said during the media briefing. "I urge people everywhere to send a clear message to the fossil fuel industry and their financiers that this grotesque greed is punishing the poorest and most vulnerable people while destroying our only common home: the planet."
A representative for the U.N. did not immediately respond to a request for comment.
--Editing by Neil Cohen.
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