Remarks by the Managing Director at COP27's Finance Day Opening Ceremony

IMF News, November 9, 2022

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"We have widespread hunger. We see poverty going up. Energy prices are soaring. And most significantly, we are living through geopolitical fragmentation."
2021 context: "we finished the year with 6.1 percent global GDP growth."
Consequence: "At a time when we need each other the most—particularly to address the climate crisis—it is harder to work together."

Common claim: "we will cut emissions between now and 2030 by 11 percent."
IMF research finding: to keep the Paris Agreement dream alive, emissions need to be cut "somewhere between 25 and 50 percent."
Conclusion: "So, we are falling short."

Estimated investment cost: "between half and one percent of 2030 GDP to make the substantial investments that are required."
Framing: "That percentage of 2030 GDP global GDP is a lot – but it is not unaffordable. The alternative is we put humanity at risk."

Current average global price of carbon: "around $5 a ton."
Target price to change investment and consumer behavior: "at least $75 a ton by 2030."
Coverage: "we now have around 25 percent of emissions covered by a carbon price."
Policy rationale: "behavior doesn't change with saying please and having discussions—it changes with incentives" and "The best incentive we have for shifting to low emissions activities is to price carbon."

Imperative: "public money must work with private money, to make it possible for organizations ... to invest."
Role of civil society: "it means civil society must be a partner to help us do the right thing."
Need to scale proven mechanisms: examples include "de-risking equity investments" and "compensating private sector for more short-term risk," but "we don't yet see it being done at scale."
Specific barrier noted: "many investors see currency exchange as a serious obstacle" and while mechanisms exist to reduce this risk, "the task is to go to scale."

Commitments made at previous COP and status:
- "We promised to integrate climate mitigation and climate adaptation in our policy discussion with countries – we have done it."
- "We promised to create a long-term instrument that provides financing on concessional terms to low-income and vulnerable middle-income countries – we have done it."
Financing instrument: "Soon, $40 billion will be available through the Resilience and Sustainability Trust."
Implementation status: "Three countries have already crossed the finish line, and more are poised to cross soon."
Accountability focus: "We are going to hold ourselves accountable on how our funding unlocks the potential for private finance, and how improving the investment planning environment translates into an increase in financing."
Call to stakeholders: "I call on you to hold us accountable."

Moral appeal and personal accountability: "When you when you feel pressure to not to what is right: please take this picture. Look at that. This is who we are accountable to. Do the right thing."

International Monetary Fund