Remarks of the Managing Director at the High-Level Dialogue on Energy

IMF News, September 24, 2021

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Canonical URL: Remarks of the Managing Director at the High-Level Dialogue on Energy

Speaker: Kristalina Georgieva.
Event: High-Level Dialogue on Energy, under the auspices of the United Nations General Assembly.
Date: September 24, 2021.
Main premise: Scientific and economic imperatives require dramatic reductions in the use of fossil fuels to avoid "untold destruction" to the environment, harm to health and livelihoods, and to keep the 1.5°C goal of the Paris Agreement within reach.

Core argument: Getting fossil fuel prices right is key to achieving reductions in use; the "right prices must fully reflect both supply costs and environmental costs – especially carbon emissions and local air pollution."
Underpricing consequences:
- Undermines domestic and global environmental objectives.
- Predominantly benefits higher-income households.
- Deprives governments of fiscal resources that could be repurposed.

Global fossil fuel subsidies amount to around $6 trillion in 2020—this is 6.8 percent of global GDP.
More than 70 percent of these subsidies reflects undercharging for environmental costs.
Modeled impacts if fossil fuel prices increase to fully reflect environmental and supply costs by 2025:
- Global carbon emissions would fall by one-third—in line with keeping global warming to 1.5 degrees Celsius.
- Almost one million deaths due to air pollution would be avoided every single year.
- Additional revenues would rise by nearly 4 percent of global GDP.

Use additional revenues to:
- Boost green investment.
- Boost social spending.
- Ensure a just transition to the new climate economy.
Acknowledgement of political difficulty: "Raising fuel prices is, of course, very challenging."
Specific IMF staff proposal:
- An international carbon price floor among large emitters, set according to development levels, to help get the right price on fuel and accelerate global climate action.
Urgency: "And now is the time to do it."

Kristalina Georgieva — Remarks at the High-Level Dialogue on Energy, September 24, 2021, under the auspices of the United Nations General Assembly.