DEDICATED FOSSIL-FUEL EXTRACTION LEVY FOR CDR

Government introduces a charge on extracting coal, oil or gas specifically to finance carbon removal. Legislation identifies the producers who must pay, sets the rate by quantity of fuel, carbon content or production value, and reserves the proceeds for a CDR programme. A carbon-content basis links payment to the CO₂ the extracted fuel could release. Producers meet their obligation by paying the charge. A designated public body then purchases verified removals or supports projects delivering them. The central action is establishing a new payment duty with its own rate and collection rules. Earmarking carbon revenues redirects receipts from an existing charge; this lever creates a dedicated extraction charge with its own tax base, rate and collection duty.

Legislators must decide which fuels and producers are covered, how extraction is measured, what rate applies and when payment is due. A fixed charge per unit of carbon makes the climate responsibility explicit; it does not guarantee that the receipts will buy equivalent removals. An equivalent charge on imported fuel needs an explicit legal provision and a clear collection point. The law must identify permitted CDR expenditure, the body controlling the fund, payment safeguards and audit requirements. Conservative forecasts of declining production should determine how much revenue can safely support long-term contracts. Paying the levy does not confer an offset claim.

A dedicated charge can raise additional CDR funding from the companies supplying fossil carbon. Existing production records and tax collection systems can reduce the administrative work. Legislators can change the levy rate to fund an agreed removal programme without changing the rates of unrelated taxes. Ring-fencing the proceeds can give the spending agency a more dependable basis for awards, provided its commitments remain affordable as extraction declines.

Producers may pass costs to customers, under-report extraction or shift production abroad. Falling output reduces receipts, while a percentage charge on production value also exposes revenue to commodity prices. A protected fund may accumulate money without delivering removals, replace other climate spending or create political pressure to maintain fossil production. Weak project selection can waste the proceeds. The charge alone does not ensure that any particular quantity of emissions is balanced by removals.

Evaluation should reconcile reported extraction, assessed charges, receipts and arrears, then follow transfers into CDR awards and verified delivery. Reporting should distinguish additional funding from substituted budgets and examine price effects, production shifts and collection costs. Persistent shortfalls should prompt changes to the rate, enforcement, reserves or the pace of new spending commitments.

Finance ministries and extraction regulators should test measurement, collection and the burden on producers. Producers, workers and affected communities can identify likely price, employment and local impacts. CDR programme managers should specify realistic spending plans. Legislatures decide how revenue is protected and spent; auditors and civil society examine whether collections reach the stated purpose.

National governments can create the extraction charge, authorise its collection and reserve the proceeds for CDR. Regional and state governments can do so where their constitutional tax powers cover extraction within their territory. Either can use existing revenue agencies and assign expenditure to another public body. A separate legal decision is needed to charge imports or coordinate liabilities across jurisdictions.