Remarks by the Managing Director at the First High-Level Ministerial Dialogue on the New Collective Quantified Goal on Climate Finance
IMF News, November 9, 2022
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Bibliographic details
- Published: November 9, 2022
Context and event
- Speaker: Kristalina Georgieva (Managing Director)
- Event: First High-Level Ministerial Dialogue on the New Collective Quantified Goal on Climate Finance
- Location and date: Sharm El-Sheikh, Egypt; November 9, 2022
Measurement needs for climate investment
- Finding: Investment needs for climate adaptation and mitigation are very large—far exceeding the $100 billion that advanced economies have committed to provide to developing counties.
- Recommendation: Develop better measures of net investment needs for both mitigation and adaptation.
- Mitigation measurement considerations:
- Account for estimated energy savings and the avoided need for fossil fuel technologies.
- Reach agreement on how to measure mitigation efforts across countries and progress towards NDCs.
- Adaptation measurement considerations:
- Agree on a shared definition of what constitutes an adaptation measure versus a business-as-usual investment.
- Agree on how to estimate investment needs (example choices cited):
- Base estimates on ex-ante land management measures to minimize the impact of sea level rise.
- Or use the larger cost associated with ex-post coastal defenses.
- Rationale: Shared standards would make adaptation finance discussions more productive and meaningful, avoiding double-counting or under-counting.
Definitions and methodologies for climate finance
- Recommendation: Establish a common definition—or at least a shared understanding—of what constitutes climate finance.
- Recommendation: Agree an agreed methodology for calculating climate finance provided, mobilized, and received.
- Stated support: Full support for attention brought by the co-chairs of the New Collective Quantified Goal on Climate Finance ad hoc work program.
- Emphasis: Ensure not only the quantity, but also the quality of climate finance, and improved access, predictability, and transparency.
Country actions, policies, and mobilizing finance
- Recommendation: Each country must implement strong climate policies and frameworks to create an investment environment that directs capital towards low carbon opportunities.
- Examples of public investments and policies that facilitate private investment:
- Public investment in green infrastructure (e.g., power grids that accommodate renewables; charging stations for electric vehicles).
- Measures that price carbon directly or policies achieving equivalent outcomes (examples: feebates or regulations).
- Fiscal and revenue implications:
- These policies can reduce emissions and create important revenues to ease the transition.
- Quantitative illustration: IMF analysis shows that $100 billion climate finance would be approximately equal to 15 percent of the revenues generated by a $75 carbon tax in advanced economies.
IMF actions and instruments
- IMF commitments:
- Put climate into IMF surveillance, data, and capacity development.
- Launch a lending tool aimed at mobilizing climate finance.
- Instrument highlighted: The Resilience and Sustainability Trust (RST)
- Purpose: Offers financing to support national reforms, particularly those that help cut emissions and boost resilience.
- Aim: Alongside robust macro-fiscal policies, the RST aims to help catalyze climate financing from other public sources as well as from the private sector.
- Role: IMF will step up and play its part in collective efforts to define, measure, and mobilize climate finance.
Closing message
- Core argument: Measurement and definition challenges for climate finance require collective action; no country or institution can solve them alone.
- Call to action: Use fora such as the ministerial dialogue to promote informed debate and accelerate climate action.
Source: Remarks by the Managing Director at the First High-Level Ministerial Dialogue on the New Collective Quantified Goal on Climate Finance (Sharm El-Sheikh, Egypt; November 9, 2022).