Managing Director Georgieva’s Closing Remarks EU Environment Ministers Videoconference

July 13, 2020

Thank you to Minister Schulze for convening this important meeting at the start of Germany’s EU Presidency.

Europe is unquestionably a leader when it comes to environmental sustainability and in the fight against climate change. And Europe will play an important part in driving a green recovery that is an opportunity to build a more resilient future.

I would like to make three points.

First, we recognize this is a unique moment. Governments are leaning forward with large fiscal measures and it is important that this public money is used wisely.

That means – as many of you have said --- that that we must accelerate green investments. We must ensure that high-emitting businesses that benefit from public support undertake to reduce their emissions. We must pay attention to supporting job-rich activities that are climate positive—for example sustainable agriculture, reforestation, or reducing energy intensity through building insulation.

Second, it is critical that we send the right signal through pricing carbon. Globally, carbon trades today at around $2 per ton, but to achieve the goals of the Paris Agreement it needs to be at the level of $75 per ton.

So, we must recognize that driving the carbon price up is essential. For Ministers of Finance faced with higher debt and higher deficits, acting on carbon can make an important contribution to fiscal sustainability.  Carbon pricing is the junction where fiscal sustainability meets environmental sustainability.

Globally, fossil fuel subsidies are a big issue. Now—when commodity prices are low—is the moment to phase out these subsidies.

Finally, just as we must price carbon, so we must learn to price climate risk. That means financial institutions need to disclose climate related risks, and price these risks accordingly.

At the Fund we are walking our talk. So, we are including climate action as part of our financial sector assessments. We are going to provide the necessary inputs to Ministries of Finance on pricing carbon and pricing risk. We are integrating transformations into our surveillance work. And, as we engage in program design, we are stressing opportunities for a green recovery.

Let me finish by saying—if you don't like pandemic crisis, you are not going to like the climate crisis one iota.

So, let's do the right thing and seize this opportunity to act.

Thank you.

IMF Communications Department


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