The United Nations Climate Change Conference (COP28) in Dubai is just weeks away. But it has become increasingly clear that only a bold financing initiative spearheaded by the United Arab Emirates could provide essential funding and support to the Global South.

Despite being preceded by a summer of devastating droughts, floods, and wildfires that underscored the need for urgent action, the pre-summit talks on a Loss and Damage Fund to help the world's most impoverished countries mitigate the effects of climate change have made little progress. The fund, it was decided, will be housed for four years at the World Bank - but there has been no agreement on the obligations of the historic emitters and, as yet, no substantial flows of cash.

As the president of COP28, the UAE's Sultan Al Jaber faces the crucial task of breaking the current impasse and delivering on his promise to devise a funding plan to bridge the Global South's annual $1 trillion shortfall in financing for mitigation and adaptation initiatives.

The UAE holds the key to closing the climate financing gap. Persuading the world's wealthiest petrostates to pay a 3% voluntary tax on their windfall 2022 revenues from oil and gas exports could raise $25 billion. Such a levy could provide the initial capital required to motivate the developed economies that account for most global greenhouse-gas (GHG) emissions to issue guarantees that would enable multilateral development banks (MDBs) to boost investment.

To be sure, Al Jaber is well aware of the urgent need for decisive action. In June, in a private communication to some governments, he emphasized the importance of adopting a coordinated strategy that would use state guarantees to leverage private capital, reflecting the UAE's vision of new, innovative financial mechanisms to leverage private finance. He also wants to use large-scale state-guarantee mechanisms to mobilize significant private investments, framing this as a way to unite all parties and stakeholders in promoting climate action.

But Al Jaber is not just the president of COP28; he is also the CEO of the Abu Dhabi National Oil Company. He is uniquely positioned to lead by example and steer his own country toward contributing its fair share. A $25 billion levy, representing less than 10% of the oil and gas industry's annual revenues in 2022, should be considered the minimum contribution expected from major oil-exporting countries.

The stark contrast between the oil-producing countries' record-breaking export earnings and the millions of people across the Global South pushed into poverty by soaring electricity costs underscores this imperative. In 2022, the export earnings of OPEC countries alone totaled $888 billion, a $266 billion increase from the previous year. The six wealthiest oil exporters alone raked in roughly $800 billion. The UAE's own oil-export earnings soared from $76 billion in 2021 to $119 billion.

The surge in energy prices has been particularly lucrative for the Middle East's petrostates. Qatar's energy-export earnings jumped from $87 billion to $132 billion in 2022, while Kuwait's increased from $63 billion to $98 billion, allowing both countries to pay a levy of $2 billion each. Norway, having nearly tripled its export earnings from $48 billion to $140 billion, could easily afford a $5 billion levy.

But the largest contribution should come from Saudi Arabia, whose oil-export revenues skyrocketed to $311 billion in 2022 - a staggering $120 billion increase from the previous year. A $9 billion contribution would be less than what the Saudis spend annually on football (soccer) and golf, and less than half of what they were reportedly willing to pay to acquire Formula One.

Moreover, a levy on windfall revenues from fossil fuels could incentivize all developed countries to contribute. The principle of fair burden-sharing is simple: those countries and industries that have historically contributed the most to GHG emissions and enjoy the highest per capita incomes should bear a larger share of the costs.

A portion of the $25 billion levy should be directly allocated to the Loss and Damage Fund. The rest should serve as paid-in capital for a new climate-financing facility aimed at supporting the Global South. This capital, in turn, would be supplemented with multi-billion-dollar guarantees from the world's largest emitters. MDBs could then leverage these funds and potentially quadruple the resources available to low- and middle-income countries.

This strategic use of guarantees has been endorsed by several international bodies and highlighted in three recent reports to the G20, including those authored by economist N.K. Singh and former US Treasury Secretary Lawrence H. Summers. Adopting the Singh-Summers proposal to triple the World Bank's annual spending to $390 billion, along with Barbadian Prime Minister Mia Amor Mottley's initiative to direct $100 billion in international funding to the Global South, would represent a major step toward mobilizing the $1 trillion in annual investment required for the world's poorest countries to accelerate their transition to a climate-resilient future and achieve their development goals.

From Project Syndicate