Managing Director’s Opening Remarks at the Petersberg Climate Dialogue XI
IMF News, April 29, 2020
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Bibliographic details
- Published: April 29, 2020
Context and framing
- Speech title: Opening Remarks by Kristalina Georgieva
- Date: April 29, 2020
- Occasion: Petersberg Climate Dialogue XI, delivered amid the COVID-19 pandemic and the “great lockdown.”
- Central assertion: The COVID-19 health crisis and economic response create an opportunity—and an obligation—to pursue a “green recovery” that addresses the climate crisis while supporting economic recovery.
Three priority policy areas highlighted
- First — use public support wisely
- When governments provide financial lifelines to carbon-intensive companies, they should mandate commitments to reduce carbon emissions (example cited: automakers during the global financial crisis committed to higher fuel efficiency standards).
- With oil prices at record-low levels, phase out harmful subsidies.
- Prioritize investment in green technologies, clean transport, sustainable agriculture, and climate resilience.
- Energy-sector investment need cited: a low-carbon transition would require $2.3 trillion in investment every year for a decade. [The $2.3 trillion estimate includes the current investment of $1.8 trillion plus additional investment needs of $0.5 trillion.]
- Rationale: These investments would boost growth and jobs during the recovery phase and help steer the world toward lower emissions.
- Second — promote green finance
- Continue emphasis on green bonds and other forms of sustainable finance.
- Use parts of extended government guarantees to mobilize private finance for green investment.
- Mandate financial firms to better disclose climate risks in their lending and investment portfolios.
- Need to find better ways of pricing in climate risk; recent IMF analysis shows that over the past 50 years climate-related disasters have had only a modest effect on equity markets, implying many investors have not fully priced climate risk.
- Third — put the right price on carbon
- Carbon pricing is highlighted as a source of public revenue to help fund massive fiscal measures adopted during the pandemic and to reduce misallocation of investment that locks in high emissions.
- Current global carbon price cited as $2 per ton.
- Estimated carbon price needed to keep global warming under 2 degrees Celsius cited as $75 per ton.
- A substantially higher carbon price is needed to encourage climate-smart investment and accelerate the shift to cleaner fuels and higher energy efficiency.
- Equity and fairness measures: carbon tax revenues can be used to provide upfront assistance to poorer households, lower burdensome taxes, and support investments in health, education, and infrastructure.
International cooperation and support for developing countries
- Individual country measures require collective action to succeed.
- Vulnerable and developing countries need support both to reduce carbon emissions and to adapt to the consequences of climate change.
- IMF role emphasized: supporting member countries with policy advice, financial resources, capacity development support, and providing a global platform for joint action.
Key statistics, publications, and references cited
- Date of speech: April 29, 2020.
- Investment need for low-carbon transition: $2.3 trillion per year for a decade.
- Breakdown: current investment $1.8 trillion plus additional investment needs $0.5 trillion.
- Current global carbon price: $2 per ton.
- Carbon price estimated to keep warming under 2 degrees Celsius: $75 per ton.
- IMF Special Series Note referenced: “Fiscal Policies to Respond to COVID-19: ‘Greening the Recovery,’” April 20, 2020.
- IMF publication referenced: October 2019 Fiscal Monitor.
- Forthcoming IMF publication cited: April 2020 Global Financial Stability Report, Chapter 5: “Physical Risk and Equity Prices.”
Closing message
- The choices made during the COVID-19 recovery will reshape economies, societies, and humanity’s future on the planet.
- A “green recovery” is presented as a necessary bridge to a more resilient future: coming out of one crisis need not be a prelude to getting into another.
Source: Managing Director’s Opening Remarks at the Petersberg Climate Dialogue XI, April 29, 2020.